Performance of the banking sector

The growth of the banking sector’s net result was determined by the increase in total net operating income by PLN 6.3 billion, i.e. 9.8% YoY. The increase resulted mainly from the improvement of interest income (by PLN 4.4 billion, i.e. also by 9.8% YoY), which was a consequence of a much higher growth of interest income than interest expenses. Increase in commission income by PLN 1.0 billion (8.3% YoY), dividend income by PLN 0.6 billion (i.e. 41.4%) and other operating income by PLN 0.3 billion (i.e. 4.6% YoY) also positively influenced the revenue of the sector.

On the other hand, a significant negative contribution to the change in the net result of the sector YoY had an increase by PLN 2.9 billion, i.e. 8.0% YoY of the sector’s cost base, resulting mainly from a twofold increase in the contribution to the BFG banks’ compulsory restructuring fund (which resulted in the increase in BFG total costs by over ¼ YoY), and from the growth of salaries in the banking sector.

In addition, the increase in the sector’s cost base was accompanied by a major deterioration in the result on impairment of financial assets (an increase by PLN 1.2 billion, i.e. by 11.8% YoY), which resulted mainly from the creation of significant provisions for legal risk related to FX mortgage contracts.

The condition of the banking sector in 2019 remained stable. Generated financial results, despite the occurrence of negative, mainly regulatory factors proved to be satisfactory.

The value of loans granted to non-banking customers reached PLN 1,303 billion and was by PLN 62 billion higher than last year, with dynamics of 5.0% YoY. This increase was lower than noted in 2018 (7.1%) which was caused by a decrease in the dynamics of loans to non-financial business entities.

The increase in loans to non-financial business entities significantly slowed down to 1.8% compared to 6.8% in 2018, it was the lowest growth rate in the analyzed period since 2015. The decrease in growth rate in the second half of 2019 was caused by the growing fear of an economic slowdown.

The increase in loans to individual customers was slightly lower compared to 2018 (7.0% YoY to 7.5% YoY), which was caused by a faster decrease in the balance of FX mortgages in 2019 than in 2018. Excluding the impact of FX mortgage loans, the nominal growth of loans to individual clients amounted to PLN 50 billion and was PLN 5 billion higher than in the previous year, with comparable percentage dynamics (10.6% in 2019 against 10.5% in 2018). The dynamics of loans to individual customers was affected by mortgage loans denominated in PLN, which increased nominally by PLN 35 billion reaching the level of PLN 326 billion and increasing the dynamics YoY from 11.6% in 2018 to 12.2% in 2019.

According to BIK (a credit information bureau) data, the value of newly granted mortgage loans increased by 14.9% compared to the previous year and amounted to PLN 65 billion. Factors contributing to such high sales were: raising household incomes, record low unemployment, persistently low interest rates and rising prices of real estates. In 2019 the nominal increase in consumer loans was maintained at the level comparable with 2018, i.e. PLN 15 billion, but the dynamics fell from 9.3% in 2018 to 8.4% in 2019. According to BIK, in 2019 the new sales of cash loans alone amounted to as much as PLN 72 billion, but almost half of them constituted consolidation loans, therefore the increase in a total consumer debt in the sector was limited. As in the case of mortgage loans denominated in PLN the factors that positively influenced the sale of consumer loans were the increase in wages and low unemployment. Additionally, of key importance was the aforementioned growing process of debt consolidation by households affecting, among others the average amount of a newly-granted consumer loan.

Stable economic situation and risk aversion translated into an 8.2% increase in non-bank customer deposits in 2019. The growth rate of individual customer deposits accounted to 9.3% YoY and was slightly lower compared to the previous year (9.7% YoY). This increase was noticeable only in the category of current deposits, which increased by 15.5%, with the decline in the category of term deposits by 0.4% The structure of growth in individual customer deposits were affected by persistently low interest rates and good liquidity condition of banks, which translated into record low offered interest rates. Deposits of non-financial business entities increased nominally by PLN 39 billion with increasing dynamics from 6.2% in 2018 to 10.3% in 2019. Accumulation of savings of non-financial business entities was associated with a favorable economic situation and at the same time with a prudent approach to new investments, observed especially in the second half of the year.

In 2019, BNP Paribas Bank Polska S.A. Capital Group was the sixth largest banking group in Poland in terms of assets. In the category of loans to non-banking customers, the Bank’s share in the sector at the end of 2019 accounted to 5.6%. The Bank’s position on the credit market was stronger in the sector of non-financial business entities, (despite the absence of a factoring company in the consolidated result of the Group) where the market share was 8.7% with 4.7% share in the market of loans to individual customers). The Group’s share in the Bank of deposits for non-banking clients accounted to 6.1%, with 9.3% in the non-financial corporate segment and 5.0% in the retail deposit segment.