Big profits thanks to high interest rates
“Results of the banking sector in Poland published by National Bank of Poland for September 2024, they showed PLN 31 billion in net profit. This is about PLN 10 billion more than last year, which is actually a big increase,” Cieślak said in an interview with PAP.
When asked about the reasons for the increase, he said that “we still live in an environment high interest rates“, which directly translates into the level of banks’ interest margin; it increased by over 20 basis points year on year. “This is actually the main growth lever,” he emphasized.
He pointed out that the second important effect we are dealing with is the improvement related to the result on provisions and write-offs, i.e. the decreasing risk costs of banks.
“We have lower write-offs for legal risk related to Swiss franc loans, which results from the growing number of settlements concluded. Most clients who were supposed to sue banks have already done so,” Cieślak noted.
The Eldorado of banks will last for a while, but it will not last forever
When asked about the prospects for banks in the coming months or quarters, he pointed out that interest rates will most likely be kept unchanged in the coming months. The first rate cuts can be expected only after the second quarter of 2025. “This will certainly shape the position of banks in the coming months. This eldorado will last for a while. However, let us also be aware that it will not last forever,” said the expert.
Cieślak also referred to the challenges facing the banking sector. As he stated, one of the main goals will be to improve the structure of the result, namely increasing the share of commission income. He added that currently approximately 80 percent banks’ result is interest income. Only 20 percent is the commission result; Polish banks lag behind the EU average, which is approximately 30%.
“There is something to fight for, there is something to improve. Such golden times for banks are a good time to build a strong foundation in the form of commission income, which is a safety cushion for worse times.” – he said.
Financing the energy transformation
He added that in the long term, the challenge for banks will be to participate in financing the energy transformation in Poland and large infrastructure expenses. It will remain an open question to what extent the Polish banking sector will be able to bear this on its own, and to what extent financing will have to be obtained from foreign banks and private equity funds.
Results of the banking sector
At the beginning of November, the National Bank of Poland published data about results of the banking sector after nine months of 2024. They show that the banks’ profit after September amounted to over PLN 31.06 billion, while in the same period of the previous year it was PLN 21 billion. Interest income amounted to almost PLN 127.4 billion and was almost PLN 4 billion less than a year ago, when it was PLN 123.55 billion. In turn, banks’ interest costs this year reached PLN 49.2 billion, and a year earlier it was just over PLN 54.13 billion.
author: Bartłomiej Pawlak
