In 2014, the growth of lending activity was recorded in all main market segments. The loans granted to enterprises recorded the highest increase in three years.
The situation in the Polish banking sector
In 2014, the banking sector generated the highest net profit in its history, which amounted to PLN 16.2 billion and was 7% higher than in 2013. This result was achieved at a time of faster economic growth and, at the same time, record low interest rates and strong changes in the regulatory environment. The improvement in the financial results of the banking sector in 2014 was mainly the result of the following:
- an increase in the result on banking activities (+3% y/y), including net interest income (+7.1% y/y),
- maintaining the control of administrative expenses (-0.9% y/y).
Net impairment allowance, which was 5.6% higher than in 2013, had a negative impact on the financial results of the banking sector.
As at the end of 2014, the impaired receivables increased by 0.8% y/y, which was due to an increase in the value of non-performing housing loans (+4.3% y/y), an increase in the value of non-performing loans granted to enterprises (+4.2% y/y), and a drop in the value of non-performing consumer loans (-9.4% y/y). In spite of this, with growth in lending activity, the quality of the loan portfolio improved. In 2014, the share of the impaired receivables in total receivables dropped by 0.4 pp. to 8.1%; the ratio of non-performing loans to total loans granted to enterprises dropped to 11.2%, for consumer loans it dropped to 12.7%, and for housing loans it remained at 3.1%.
As at the end of 2014, the banking sector’s total assets increased to PLN 1 532 billion (+9% y/y). The banking market was characterised by a high growth rate of deposits and a lower growth rate of loans. Thus, the gap between loans and deposits decreased to PLN 37 billion (by PLN 16 billion y/y), as a result of which the loans to deposits ratio improved to 103.8% compared with 106% as at the end of 2013.
In 2014, the total balance of loans increased by PLN 66.7 billion (7.1% y/y). The change in the volume of loans was adversely affected by the depreciation of the Polish currency (increases in the exchange rates: PLN/USD of 16.4% y/y, PLN/CHF of 4.8% and PLN/EUR of 2.8%) – after an adjustment for changes in the exchange rates, the increase in the value of loans was smaller.
In 2014, the growth of lending activity was recorded in all main market segments. The loans granted to enterprises recorded the highest increase in three years: PLN 19.9 billion (however, approx. 1/3 of this growth was the effect of the depreciation of the Polish currency). Loans to small and medium enterprises represented approximately 51% of the increase in the value of loans granted to enterprises. The recovery of lending activity in the enterprise segment was backed by the increased investment activity of companies, the easing of lending policies by banks, and the government programme titled ‘Portfolio de Minimis Guarantee Facility’. The demand for loans in this segment was still limited by the continued evaluation of the economic situation.
In 2014, the housing loans market grew steadily; the increase in loans in this segment was PLN 19.6 billion (5.8% y/y) higher than in 2013, with approx. 20% being the effect of the depreciation of the Polish currency. The growth of lending activity on the housing loans market was backed by low interest rates, the stabilisation of prices on the housing market, as well as the ‘Mieszkanie dla Młodych’ programme.
In 2014, a further increase in the value of consumer loans was recorded; the growth amounting to PLN 6 billion (4.5% y/y) was twice as high as in 2013. The situation in this segment was significantly affected by the easing of lending policies by banks as a result of, i.a. an improvement in the quality of the loan portfolio, rising consumption, and a reduction in interest rates on the loans (as a result of a reduction in the Lombard rate of 1 pp. to 3%, three times of which constitutes the maximum interest rate on consumer loans).
In 2014, in spite of the low interest rate levels, the deposit market grew dynamically. The increase recorded in total deposits was nearly twice as high as in 2013 (PLN 82.8 billion). This situation was due to the improving situation on the labour market, the improving financial position of enterprises and, on the other hand, a prolonged adjustment on the stock market at the WSE which backed the aversion to taking risk with regards to investing surplus funds. The main source of the growth in deposits were the deposits of households which increased by PLN 56.7 billion (10.5% y/y); the deposits of enterprises increased by PLN 19.7 billion (9.1% y/y), and the deposits of government and local government institutions increased by PLN 5 billion (8.7% y/y).