Polish loan growth should accelerate marginally from -0.6% year on year in May 2023 to 1.8% at the end of 2023 because a new housing programme will considerably boost demand for mortgages, says Fitch Solutions in a note.
However, lending will remain weak because factors such as elevated inflation and high interest rates will weigh on consumer demand for loans. The ongoing fallout surrounding Swiss franc mortgages will continue to reduce banks’ appetite for extending loans. On June 15, 2023, the European Court of Justice ruled in favour of Swiss franc mortgage holders, stating that Polish banks encouraged customers to take out the loans more than a decade ago.
After a lengthy debt reduction process, mortgages denominated in Swiss francs accounted for 7.2% of the total in July 2023, compared with 51.2% in 2011.
Following elections on October 15, Poland’s opposition parties won enough seats in Sunday’s general election to take power from the Law and Justice party which has ruled the country since 2015.
The future government will face three major economic challenges: a marked slowdown in growth, a deterioration in budget deficit and an increase in credit risk, according to BNP Paribas. The Polish economy is expected to decelerate sharply and grow by 0.5% in 2023.
The Polish banking system remains well capitalised, with an equity ratio of 17.3% on average in the first quarter of the year, says BNP Paribas. The Covid-19 pandemic has had little impact on non-performing loans, which have remained at 2.4% since 2021. The increase in the cost of risk has probably already been provisioned by banks.
