In 2013 the low economic growth rate and historically low basic interest rates influenced financial results of banking sector in Poland. As at the end of 2013, the net profit of the banking sector amounted to PLN 15.4 billion and was just a little lower than in the previous year (-0.3% y/y). The drop in the net profit was mainly due to a lower result on banking activities (-5.6% y/y), including net interest income (-3.8% y/y). Lower net impairment allowance (-8.2% y/y) and maintaining the control of administrative expenses (-0.6% y/y) positively influenced financial results in 2013.
In 2013, the operating efficiency of the banking sector deteriorated slightly: as at the end of 2013 the C/I ratio amounted to 53.1% compared with 50.9% in the previous year. The capital adequacy ratio remained high: it amounted to 15.8% and was higher than in the previous year (+1.0 pp.); the Tier1 ratio amounted to 14.2%.
The impaired receivables decreased by 0.7% y/y as at the end of 2013, and the share of such receivables in total receivables dropped to 8.5% from 8.9% as at the end of 2012. The drop in the value of non-performing consumer loans (-12.9% y/y) and non-performing loans to small and medium enterprises (-0.9% y/y) was recorded. As at the end of 2013, the ratio of non-performing loans to total loans granted to enterprises amounted to 11.5%, for housing loans it amounted to 3.1%, and for consumer loans it amounted to 14.6%.
As at the end of 2013, the banking sector’s total assets increased to PLN 1 407 billion (+4.2% y/y). The banking market was still characterised by low lending activity and a relatively stable rate of growth in deposits. The change in the loan volumes was affected by changes in the exchange rate of PLN (in 2013, the PLN/CHF exchange rate increased by 0.6% and the PLN/EUR exchange rate increased by 2.6%, and the PLN/USD exchange rate dropped by 0.1%).
In 2013, total loans increased by PLN 34.8 billion i.e. 3.8% y/y as compared with 1.5% y/y as at the end of 2012. After an adjustment for changes in the exchange rates, the rate of growth in total loans decreased and amounted to 4.2% y/y compared with 4.7% y/y as at the end of 2012, and the increase in total loans was approx. 8% smaller than in the previous year.
In 2013, a low level of lending activity addressed to enterprises was recorded. The amount of loans in this segment increased by PLN 4.6 billion, with approx. 52% of the increase being the effect of the depreciation of the PLN. After eliminating foreign exchange differences, the growth rate decreased to 1% y/y from 3.1% y/y as at the end of 2012. The increase in loans related mainly to loans for large enterprises. The market for loans to small and medium enterprises showed a tendency to stagnation in spite of the launch of the government programme titled ‘Portfolio de Minimis Guarantee Facility’. The lending activity addressed to enterprises was limited by the low demand which accompanied the slowdown in economic growth and the maintenance of stricter lending policies by the banks.
The housing loans market grew steadily, but the increase in these loans was the lowest in the last few years. In 2013, housing loans increased by PLN 14.3 billion (4.5% y/y). After eliminating changes in the exchange rates, the increase amounted to PLN 17.1 billion. In spite of the fact that the growth of lending activity in this segment was backed by low interest rates and the stabilisation of prices on the housing market, demand was also adversely affected by a lack of support from the State after liquidation of the ‘Rodzina na swoim’ programme, the prospect of introducing stricter lending policies arising from the new Recommendation S and the prospective borrowers’ fears about their financial position in the future.
After two years of decrease, in 2013 the value of consumer loans increased by PLN 2.8 billion (2.3% y/y), and after an adjustment for changes in the exchange rates this increase amounted to PLN 3.2 billion (2.7% y/y). Significant impact on this situation had one-off transactions made in the third quarter of 2013, which resulted in the transfer of loans from non-banking companies to the banking system, and the liberalisation of lending policies arising from the new Recommendation T and the easing of lending policies by the banks as a result of an improvement in the quality of consumer loans.
In 2013, the total balance of deposits increased by PLN 47.3 billion (5.6% y/y) compared with PLN 47.1 billion in 2012 (5.9% y/y). The main source of this growth were the deposits of households which recorded an increase of PLN 32.4 billion (PLN 36.1 billion in the previous year) and the deposits of enterprises which increased by approx. PLN 19 billion (a drop of PLN 14.2 billion in the previous year). A drop of PLN 5.1 billion was recorded in the deposits of government and local government institutions. The increase in the deposits was due to low level of interest rates, as well as competitive rates of return realised on the investment fund market.
As at the end of 2013, the gap between loans and deposits amounted to approx. PLN 54 billion and it was approx. PLN 13 billion lower than as at the end of 2012. In consequence, the loans to deposits ratio improved and amounted to 106% as at the end of 2013 compared with 107.9% as at the end of 2012.