Download The banking sector in Poland

Krzysztof Drachal*
Faculty of Mathematics and Information Science
Warsaw University of Technology
The banking sector in Poland
Abstract
A brief review of current Polish banking sector is given. Banks in Poland have not been hit so
severely by the recent financial crisis. Moreover, household debt is relatively small in
comparison to other European countries. Credit policy is regulated in a way that rather
hampers credit flows than allows to offer too risky loans by banks. On the other hand, it is
expected that the demand for credits will increase, for example due to some social and
economical processes. That can force some customers (with small chances to obtain a loan in
a bank) to seek other, non-banking, financial institutions, i.e. the ones that are not supervised
by reliable government institutions and not regulated by the banking law. There is also a
political discussion in Poland, whether banks should be less dependent on foreign investors.
Keywords: banks, banking sector, Poland.
JEL Classification: G21.
1. Introduction
Poland is a new member of the European Union. It was relatively long under the domination
of the Soviet Union. Afterwards, it has opened itself on Western countries and their
economies. Nevertheless, the way of the transition is sometimes criticized, because of the
increase of the unemployment rate, selling factories owned by the State Treasury, increasing
role of foreign capital and struggles for the domestic capital, which is usually not enough
competitive, some social costs, etc1. Fiscal policy is stable and most ratings for the country
remain at relatively high level2.
The aim of this paper is to shortly describe the current situation in the Polish banking
* Warsaw University of Technology, Faculty of Mathematics and Information Science, Koszykowa 75, 00-662
Warszawa, Poland.
1 M. Bałtowski, M. Miszewski, Transormacja gospodarcza w Polsce, Wydawnictwo Naukowe PWN, 2007.
2 A. Kotowicz, Raport o sytuacji banków w I półroczu 2013 r., Urząd Komisji Nadzoru Finansowego, 2013.
1
sector. To keep clarity, the analysis in done as a loose adaptation of PEST scheme3. At the end,
some arguments for and against high involvement of foreign capital in the Polish banking
sector are presented.
2. Political and economical factors
The current government is open on foreign banks and their capital. The State Treasury owns
only a small number of shares in banks listed on Warsaw Stock Exchange (WSE). Over 65%
of the banking assets remains under the control of foreign investors. This is significantly
higher ratio than the European Union (EU) average, which is 46%4. The desired value of this
ratio is currently under the debate. On the other hand, the biggest bank (PKO BP) is
controlled by the State Treasury5.
The political situation is friendly for foreign investors, but different regions of the
country are highly polarised6. For example, GDP per capita in the region around the capital
city is almost 60% higher than the average for the country. In comparison, GDP per capita in
some less developed regions is approximately 30% lower than the average. However, the ratio
of the most developed region is close to the EU average7.
Real growth of GDP in Poland is positive since last ten years, despite the recent
financial crisis. The dynamics of the growth is quite stable. The minimum was 1.4% in 2002
and the maximum was 6.8% in 2007. Despite the recent financial crisis, GDP grew by 1.6% in
2009. It is much better than EU average. Recently, it increased by 4.3% in 2011 and by 1.9%
in 20128. Banking assets constituted 84.5% of GDP in 2012. This is one of the smallest ratio
in Central and Eastern Europe (CEE)9.
The interest rates are very small. For example, the average rates for deposits in the
3 HIA, An introduction to PESTLE analysis, Housing Industry Association, 2011.
CIPD, PESTLE analysis, http://www.cipd.co.uk/hr-resources/factsheets/pestle-analysis.aspx, 2013.
4 Departament Relacji Inwestorskich MSP, Kondycja oraz perspektywy rozwoju polskiego sektora bankowego
w 2012 roku na tle Europy, Ministerstwo Skarbu Państwa, 2012.
5 PKO BP, Relacje inwestorskie, http://www.pkobp.pl/grupa-pko-banku-polskiego/relacjeinwestorskie/akcjonariat-i-dywidenda/, 2013.
6 (ed.) M. Nowicki, Atrakcyjność inwestycyjna województw i podregionów Polski, Instytut Badań nad
Gospodarką Rynkową, 2012.
7 EUROSTAT, GDP at regional level,
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/GDP_at_regional_level, 2013.
8 EUROSTAT, National accounts and GDP,
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/National_accounts_and_GDP, 2013.
GUS, Roczne wskaźniki makroekonomiczne, Główny Urząd Statystyczny, 2013.
9 Inteliace, Banking market in Poland 2013-2015, Inteliace Research, 2013.
2
domestic currency is 2.7% and for loans - 6.5%10.
There are 642 banks and credit institutions in Poland. 42 of them are commercial
banks. The number of banks and credit institutions has been quite stable throughout last few
years. 3 banks are controlled by the State Treasury, 582 are dominated by private capital and
57 by foreign capital. 5 biggest banks constitute over 46% of whole banking assets11. This is
relatively small ratio in comparison to other European countries. Therefore there is no risk of
"too big to fail" scenario in Poland.
Banks controlled by foreign investors constitute almost 64% of total banking assets in
Poland. This ratio systematically decreases since 2008, when it was over 72%12. This is
relatively small ratio in comparison with some other European countries. On the other hand, it
is much higher than the one in big European economies such as France, Germany, etc. In fact,
higher ratio is found in the new EU countries.
The banking sector in Poland is an efficient one. In 2007 the average ROE ratio was
approximately 22.5%. In 2009 it was approximately 8.1% and at the end of 2010 - 10.5%. At
the end of 2012 it exceeded 12%. ROA ratio at the end of 2012 was only 1.2%. Before the
crisis it was close to 1.7% in 2007. In 2009 it was only 0.8%13. Moreover, during last 5 years
interest expenses declined by approximately 19%. As a result net income increased over 57%.
Net income from banking activity decreased by approximately 7%14.
There is a significant correlation between bank size and market to book ratio on Polish
market. Banks with equity less than 6 billion PLN have market to book value less than 1.5.
On the other hand, two banks with equity over 22 billion PLN have also market to book value
over 1.75. However, there are some exceptions. For example, in 2013 market to book value
for Alior Bank was almost 2, whereas its equity was approximately 2 billions PLN15.
3. Social and technological factors
There are over 7330000 pensioners in Poland (19% of total population). The average pension
10 NBP, Statystyka stóp procentowych,
http://www.nbp.pl/home.aspx?f=/statystyka/pieniezna_i_bankowa/oprocentowanie_n.html, 2013.
11 Departament Bankowości Komercyjnej i Specjalistycznej oraz Instytucji Płatniczych UKNF, Zagregowane
dane miesięczne - październik 2013, Komisja Nadzoru Finansowego, 2013.
12 M. Bartol, M. Rapkiewicz, Skutki "repolonizacji" sektora bankowego, Centrum Analiz Fundacji
Republikańskiej, 2013.
13 GUS, Roczne ..., op. cit.
14 Departament Bankowości Komercyjnej i Specjalistycznej oraz Instytucji Płatniczych UKNF, Zagregowane
..., op. cit.
15 Inteliace, Banking ..., op. cit.
3
is relatively small - approximately 460 EUR. (Although the domestic currency is złoty,
denoted by PLN, amounts in this paper are expressed in EUR. The average exchange rate16
for November 2013 was used in calculations.) Almost three quarter of pensions are less than
548 EUR17. The minimum wage systematically rises. The average real wage also becomes
systematically higher. Currently it is approximately 850 EUR18. On the other hand, the
unemployment rate increased after the financial crisis. Currently it is 13.4%. In comparison, it
was 9.5% in 2008. Approximately 61% of the population is living in urban areas and 64% of
the population is in working age19.
People, especially young, become more familiar with Internet and new electronic
technologies, which becomes an important part of their lives. The number of customers who
signed a contract activating Internet banking channel increased by 10% between the second
quarter of 2012 and the second quarter of 2013. The number of those intensively using this
channel increased by almost 12%. Also non-cash transaction become more popular20.
As much as 25% of the population regularly uses electronic banking products. It is
worth to mention that Polish banking sector is one of the most innovative and safe ones in
Europe. Nevertheless, the penetration of electronic banking is smaller than the one in Sweden,
United Kingdom, Finland, France and Netherlands. But it is greater than the EU average and
many other European countries, including e.g. Germany. Norway, Denmark, Austria, Italy,
Switzerland21. Changes in people's lifestyles seem to accelerate this kind of banking activity.
Polish customers focus mainly on quality of electronic channel, branch proximity and
attractive offer (mainly price of the offered products). 38% of customers use smartphones in
banking activity. This is actually the average ratio for developed countries. Polish customers
are also quite interested in new banking products22. However, 31% customers state that they
would not chose their current bank once again and would not recommend it to others, but they
rarely change their banks. Only 12% of customers has an experience with more than one
bank. The most satisfied and loyal customers can be found in new banks23. Similar ratio of
dissatisfied customers as in Poland is found in Romania and Czech Republic. Slovaks and
16 NBP, Aktualne kursy walut, http://www.nbp.pl/home.aspx?f=/kursy/kursy_wiecej.html, 2013.
17 Departament Statystyki i Prognoz Aktuarialnych ZUS, Struktura wysokości emerytur i rent wypłacanych
przez ZUS, Zakład Ubezpieczeń Społecznych, 2013.
18 GUS, Przeciętne miesięczne wynagrodzenie w gospodarce narodowej, Główny Urząd Statystyczny, 2013.
19 GUS, Roczne ..., op. cit.
20 ZBP, Raport NetB@nk, Związek Banków Polskich, 2013.
21 Biuro Komunikacji Społecznej MSP, Bankowość internetowa w Polsce, Ministerstwo Skarbu Państwa, 2013.
22 BAIN & COMPANY, Lojalność klientów w bankowości detalicznej, BAIN & COMPANY, 2013.
23 Deloitte, Kurs na zmiany. Doświadczenie klienta w relacji z bankami w Polsce, Deloitte, 2012.
4
Hungarians are more satisfied with their banks24.
Polish customers have relatively few loans. Consumers loans to GDP was
approximately 30% in 2009. Generally, this ratio is rather small in Poland, despite some
increase in new loans in recent years. This trend is expected to continue in the long term25.
Nevertheless, household debt has slightly reduced recently. Mainly as a result of recent
financial crisis26. Residential debt to GDP was 20.3% in 2012. This is one of the smallest ratio
in the EU. The EU average is 52%. Similar situation happens with the residential debt to
disposable income of households, which is respectively 33.7% in Poland and 81.8% in the
EU27. Also, there is less consumer loans from year to year since 2009. It might be the result of
the new T-recommendation, which had set a limit on borrower's debt to income ratio28.
However, this recommendation has been loosened recently. On the other hand, the new Srecommendation will come into force in 2014. For example, credit worthiness for a loan in a
foreign currency will have to be estimated as the loan would be in the domestic currency.
Moreover, own contribution in case of mortgages would be obligatory29.
Loans to households constituted 68.8% of total credits in 2011. This is similar ratio as
the one in the Eurozone. Housing loans have increased rapidly since 1996 and loans to
enterprises become smaller part of the whole credit market. However, housing loans market is
still small in comparison with the Eurozone. Dynamical increase is mainly due to the role of
loans in CHF30.
There are 58 bank outlets per every 1000 km2 in Poland. In some regions it is 173, in
others - 28. If bank outlets are measured as a ratio per 1 million of citizens, the average value
is 468 with the minimum 396 in some region and the maximum 513 in another region. There
are 18022 bank outlets in the whole country31. The largest bank in Poland, PKO BP, has
almost 1200 own branches and over 1200 franchised agencies. It has also over 2500 ATMs. In
comparison, PEKAO has nearly 1000 branches, BZ WBK - 630, Millenium - 447. The rest of
24 Deloitte, Setting a new course. The customer experience challenge facing Central Europe's retail banks,
Deloitte, 2012.
25 P. Białowolski, Zadłużenie polskich gospodarstw domowych - zagrożenie czy szansa?, Fundacja Inicjatywa
Obywatelska, 2010.
26 A. Chmelar, European household credit markets continue to fall, European Credit Research Institute, 2013.
27 European Mortgage Federation, Key Figures 2012, http://www.hypo.org, 2013.
28 BIK, Po zmianach w Rekomendacji T kredyty ratalne mogą wrócić do banków,
http://www.bik.pl/informacje-prasowe/-/article/2013-03-26-po-zmianach-w-rekomendacji-t-kredyty-ratalnemoga-wrocic-do-bankow, Biuro Informacji Kredytowej, 2013.
29 KNF, Rekomendacja S, Komisja Nadzoru Finansowego, 2013.
30 J. Pruski, Bilansowe uwarunkowania rozwoju akcji kredytowej w Polsce, Związek Banków Polskich, 2012.
31 Inteliace, Baza placówek bankowych w Polsce 2013 oraz statystyka powiatów, Inteliace Research, 2013.
5
the banks have much less branches32. Most of the banks are universal ones.
At the end of 2012 there were over 175000 people employed in banking sector. Till the
end of 2013 this number has slightly decreased. Since 2008 banks reduced the number of their
workers. It might be due to the increasing role of electronic channels and trend in closing
bank agencies or increasing the role of credit institutions with lighter loan policies in view of
the recent crisis and worsening potential debtors' situation33. Indeed, cooperative banks and
credit institutions increase the employment34.
4. "Repolonisation"
The discussion of whether the "repolonisation" of Polish banking sector is reasonable is
intensified in view of the forthcoming parliamentary election in 2015. During the recent
financial crisis the reputation of banking institutions has fallen heavily. Moreover, they started
to be perceived as arrogant towards society and definitely not public trust.
From one point of view, decreasing the number of banks controlled by foreign capital
can lead to the slowdown in credit action. But the credit action is needed to increase
consumption and investments. Foreign banks are also the source of the "know-how" and their
existence on the Polish market have increased the ratings of the Polish market as a whole. In
fact, Polish banking sector has been greatly modernised due to foreign banks. Their existence
on the market is also positively correlated with foreign direct investments (FDI). Further, FDI
are necessary to continue the economic growth35. Moreover, banks controlled by the domestic
capital can be under too much pressure from local politicians, etc. At least, there is a question,
how the capital needed for "repolonisation" should be obtained36. Actually, the share of banks
controlled by domestic investors in total banking assets has increased since 200837.
On the other hand, "repolonisation" understood in wider context can lead to
strengthening of the customers' relations with banking institutions and greater stabilisation of
the whole sector. Moreover, in such a scenario profits would stay in Poland. Foreign banks are
32 L. Wilk, Leader on the stable market, PKO Bank Polski S.A. Group, 2012.
33 W. Boczoń, Zatrudnienie w bankowości najniższe od 5 lat, http://www.bankier.pl/wiadomosc/Zatrudnieniew-bankowosci-najnizsze-od-5-lat-2888061.html, 2013.
34 Departament Bankowości Komercyjnej i Specjalistycznej oraz Instytucji Płatniczych UKNF, Zagregowane
..., op. cit.
35 M. Bartol, M. Rapkiewicz, Skutki ..., op. cit.
36 M. Piotrowski, Repolonizacja polskich banków. Czy warto i jak to zrobić?,
http://wyborcza.biz/biznes/1,100896,12618785,Repolonizacja_polskich_bankow__Czy_warto_i_jak_to.html,
2012.
37 M. Bartol, M. Rapkiewicz, Skutki ..., op. cit.
6
sometimes criticised for not honestly treating Polish market. It would be desired that domestic
managers, educated in foreign institution, take the leading role instead of foreign ones.
Moreover, foreign capital can be the source of greater risk and lead to bubbles. As show the
examples of Ireland and Baltic countries, too much impact of foreign capital on the economic
growth can lead to very risky situations. The positive role of foreign banks in credit action is
also questionable. Despite the fact that Poland noticed positive changes in GDP during the
recent financial crisis, foreign banks slowed their credit actions on Polish market, because
they had problems on their domestic markets. In fact, they have been the domestic banks,
which stimulated credit action for corporates in Poland recently38.
5. Conclusions
Polish banking sector seems to be able to face even heavy economy slowdown. The liquidity
of banking assets is good. There is also a pressure from regulating institutions to strengthen
the housing loans policies. Profitability of the sector is expected to increase. Moreover, ratings
for the sector are good. Polish banking sector is the leading one in CEE, but it is still small in
comparison with the EU. Further consolidations might occur on the market. In view of the
forthcoming parliamentary election in 2015 there is also a discussion of the "repolonisation"
of banking sector.
References
1. BAIN & COMPANY, Lojalność klientów w bankowości detalicznej, BAIN &
COMPANY, 2013.
2. M. Bałtowski, M. Miszewski, Transormacja gospodarcza w Polsce, Wydawnictwo
Naukowe PWN, 2007.
3. M. Bartol, M. Rapkiewicz, Skutki "repolonizacji" sektora bankowego, Centrum Analiz
Fundacji Republikańskiej, 2013.
4. P. Białowolski, Zadłużenie polskich gospodarstw domowych - zagrożenie czy szansa?,
Fundacja Inicjatywa Obywatelska, 2010.
5. BIK, Po zmianach w Rekomendacji T kredyty ratalne mogą wrócić do banków,
38 S. Kawalec, Banki w Polsce powinny być pod krajową kontrolą,
http://www.obserwatorfinansowy.pl/2011/11/02/banki-w-polsce-trzeba-spolonizowac-ale-nie-upanstwowic/,
2011.
7
http://www.bik.pl/informacje-prasowe/-/article/2013-03-26-po-zmianach-wrekomendacji-t-kredyty-ratalne-moga-wrocic-do-bankow, 2013.
6. Biuro Komunikacji Społecznej MSP, Bankowość internetowa w Polsce, Ministerstwo
Skarbu Państwa, 2013.
7. W. Boczoń, Zatrudnienie w bankowości najniższe od 5 lat,
http://www.bankier.pl/wiadomosc/Zatrudnienie-w-bankowosci-najnizsze-od-5-lat2888061.html, 2013.
8. A. Chmelar, European household credit markets continue to fall, European Credit
Research Institute, 2013.
9. CIPD, PESTLE analysis,
http://www.cipd.co.uk/hr-resources/factsheets/pestle-analysis.aspx, 2013.
10. Deloitte, Kurs na zmiany. Doświadczenie klienta w relacji z bankami w Polsce,
Deloitte, 2012.
11. Deloitte, Setting a new course. The customer experience challenge facing Central
Europe's retail banks, Deloitte, 2012.
12. Departament Bankowości Komercyjnej i Specjalistycznej oraz Instytucji Płatniczych
UKNF, Zagregowane dane miesięczne - październik 2013, Komisja Nadzoru
Finansowego, 2013.
13. Departament Relacji Inwestorskich MSP, Kondycja oraz perspektywy rozwoju
polskiego sektora bankowego w 2012 roku na tle Europy, Ministerstwo Skarbu
Państwa, 2012.
14. Departament Statystyki i Prognoz Aktuarialnych ZUS, Struktura wysokości emerytur i
rent wypłacanych przez ZUS, Zakład Ubezpieczeń Społecznych, 2013.
15. European Mortgage Federation, Key Figures 2012,
http://www.hypo.org, 2013.
16. EUROSTAT, GDP at regional level,
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/GDP_at_regional_level, 2013.
17. EUROSTAT, National accounts and GDP,
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/National_accounts_and_GDP,
2013.
18. GUS, Przeciętne miesięczne wynagrodzenie w gospodarce narodowej, Główny Urząd
Statystyczny, 2013.
8
19. GUS, Roczne wskaźniki makroekonomiczne, Główny Urząd Statystyczny, 2013.
20. HIA, An introduction to PESTLE analysis, Housing Industry Association, 2011.
21. Inteliace, Banking market in Poland 2013-2015, Inteliace Research, 2013.
22. Inteliace, Baza placówek bankowych w Polsce 2013 oraz statystyka powiatów,
Inteliace Research, 2013.
23. S. Kawalec, Banki w Polsce powinny być pod krajową kontrolą,
http://www.obserwatorfinansowy.pl/2011/11/02/banki-w-polsce-trzeba-spolonizowacale-nie-upanstwowic/, 2011.
24. KNF, Rekomendacja S, Komisja Nadzoru Finansowego, 2013.
25. A. Kotowicz, Raport o sytuacji banków w I półroczu 2013 r., Urząd Komisji Nadzoru
Finansowego, 2013.
26. NBP, Aktualne kursy walut,
http://www.nbp.pl/home.aspx?f=/kursy/kursy_wiecej.html, 2013.
27. NBP, Statystyka stóp procentowych,
http://www.nbp.pl/home.aspx?
f=/statystyka/pieniezna_i_bankowa/oprocentowanie_n.html, 2013.
28. (ed.) M. Nowicki, Atrakcyjność inwestycyjna województw i podregionów Polski,
Instytut Badań nad Gospodarką Rynkową, 2012.
29. M. Piotrowski, Repolonizacja polskich banków. Czy warto i jak to zrobić?,
http://wyborcza.biz/biznes/1,100896,12618785,Repolonizacja_polskich_bankow__Czy_warto
_i_jak_to.html, 2012.
30. PKO BP, Relacje inwestorskie,
http://www.pkobp.pl/grupa-pko-banku-polskiego/relacje-inwestorskie/akcjonariat-idywidenda/, 2013.
31. J. Pruski, Bilansowe uwarunkowania rozwoju akcji kredytowej w Polsce, Związek
Banków Polskich, 2012.
32. L. Wilk, Leader on the stable market, PKO Bank Polski S.A. Group, 2012.
33. ZBP, Raport NetB@nk, Związek Banków Polskich, 2013.
9