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Slower Growth But Higher Profitability – a Mixed Outlook for the Banking Sector in Poland Through 2013

Warsaw, Poland, April 15, 2011 --( “The growing nominal interest-rate environment will help banks to temporarily increase margins and to boost revenues in 2011, but the stagnating real income of the population due to elevated unemployment rates and the growing cost of living will prevent a significant growth in deposits and loans… Higher interest rates are also likely to negatively affect existing mortgage loans portfolios of banks in a one- to two-year perspective,” explains Marcin Mazurek, Director of Intelace Research, a consulting company specializing in CEE financial-markets research.

Economy And The Banking Sector In Poland
With its real GDP increasing by 3.8%, Poland ranked among the top three fastest-growing economies in Europe in 2010. Favorable developments in the economy have been reflected also in the solid performance of the banking sector. Bank deposits increased by 9% YoY, driven by both: retail and corporate savings. A similar growth in lending volumes (+9% YoY) was primarily driven by new lending in the household sector, while outstanding loans to corporate clients contracted by 2% YoY.

Slightly increasing market interest rates helped banks to improve margins. The net interest income jumped by 19%, while F&C margin advanced by 10%. On the cost side, banks were able to reduce risk costs (net reserves) by 10% and allowed only a slight (3%) increase in operating costs, including personnel expenses. As a result, the 2010 pre-tax result of banks jumped by 45% YoY to 13.5 billion PLN.

Future Outlook

Intelace Research expects moderate, single-digit, annual growth in key banking volumes in Poland through 2013. The increasing interest-rate environment will initially boost interest revenue of banks; however, it is also likely to contribute to higher NPL rates, especially in the case of residential mortgages. The persisting elevated unemployment rates and stagnating real income of the population may limit the growth rates of retail deposits and could be also a major barrier to further lending expansion in the household sector.

For more information on recent developments in the Polish banking market, please refer to the publication "Banking Market In Poland 2011–2013," available at:

About Intelace Research
Intelace Research is an independent consulting company that focuses on the financial markets in Central and Eastern Europe. Intelace Research specializes in management consulting and custom research services, including market entry strategy, product launch, performance, and benchmarking analysis.

During 2005–2010, Intelace Research provided its products and services to over 50 clients, including major CEE banks and several "The Banker" top world banks. To learn more about the company, visit Intelace Research’s webpage:

Contact Information
Intelace Research
Marcin Mazurek

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