1

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, etc

1

. Fiscal policy is stable and most ratings for the country

remain at relatively high level

2

.

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.

2

sector. To keep clarity, the analysis in done as a loose adaptation of PEST scheme

3

. 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 Treasury

5

.

The political situation is friendly for foreign investors, but different regions of the

country are highly polarised

6

. 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 average

7

.

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 2012

8

. 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/relacje-

inwestorskie/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.

3

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 assets

11

. 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 PLN

15

.

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.

4

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 rate

16

for November 2013 was used in calculations.) Almost three quarter of pensions are less than

548 EUR

17

. The minimum wage systematically rises. The average real wage also becomes

systematically higher. Currently it is approximately 850 EUR

18

. 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 age

19

.

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 popular

20

.

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,

Switzerland

21

. 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 products

22

. 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 banks

23

. 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.

5

Hungarians are more satisfied with their banks

24

.

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 term

25

.

Nevertheless, household debt has slightly reduced recently. Mainly as a result of recent

financial crisis

26

. 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

EU

27

. 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 ratio

28

.

However, this recommendation has been loosened recently. On the other hand, the new S-

recommendation 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 obligatory

29

.

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 CHF

30

.

There are 58 bank outlets per every 1000 km

2

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 country

31

. 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-ratalne-
moga-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.

6

the banks have much less branches

32

. 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' situation

33

. Indeed, cooperative banks and

credit institutions increase the employment

34

.

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 growth

35

. 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 obtained

36

. Actually, the share of banks

controlled by domestic investors in total banking assets has increased since 2008

37

.

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/Zatrudnienie-

w-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.

7

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 recently

38

.

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.

8

http://www.bik.pl/informacje-prasowe/-/article/2013-03-26-po-zmianach-w-

rekomendacji-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-lat-

2888061.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.

9

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-spolonizowac-

ale-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-i-

dywidenda/, 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.