Central bank warns over Polish banking sector profitability

By bne IntelliNews July 11, 2012

Tim Gosling in Prague -

The National Bank of Poland (NBP) issued a stark warning to investors in the country's banks on July 10, forecasting that, despite Polish banks remaining stable and resilient, net profit for the sector could be set to plummet 30% by 2014 should the Eurozone crisis worsen - and that some may even need recapitalisation.

Just a day after announcing increased worries over the economy's growth prospects, the NBP said in its biannual financial stability report that under its base case scenario, average net profit in the banking sector will fall to PLN10.3bn (€2.46bn) by the end of 2014, mainly due to a sharp rise in bad loan provisions and reduced revenue from lending. That is at odds with earlier optimism for the sector, which kicked off 2012 by beating the record profits seen in 2011 in the early months.

The report supports the basic case that the Polish banking sector is stable and should prove resilient to the crisis in Europe: "The ability of banks to absorb any potential losses remains high and the financial system is stable." However, it also warned that tough times are ahead, and that banks should reduce risk to ensure they can withstand any external shocks. It added that some may require fresh capital if the crisis deepens.

"Nevertheless, the economic outlook over the forecast period has deteriorated and uncertainty as to the development of the economic situation abroad is high," the report warns, outlining a series of suggestions. In particular, the banks should distribute dividends cautiously - a process already being strictly overseen by the financial regulator as the country guards against foreign parent banks searching for extra capital - as well as diversifying funding sources and reducing risk related to mortgage loans with a high loan/value ratio.

Related Articles

UK demands for EU reform provoke fury in Visegrad

bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more

Poland's Law and Justice nominates hardline cabinet

Wojciech Kość in Warsaw -   Poland’s Law and Justice (PiS) party, which won an outright majority in the parliamentary elections on October 25, has announced a hardline ... more

Kaczynski expected to appoint hardline cabinet

Wojciech Kość in Warsaw -   The Law and Justice (PiS) party, which won an outright ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss