Hard times are coming for banks
The main threats for the Polish banking sector are loan vacations, liquidation of WIBOR, problems with foreign currency loans and excessive consumer protection.
According to bank presidents, the Polish banking sector is facing tough times. The problem is credit vacations, liquidation of WIBOR and the issue of foreign currency mortgages. One must also reckon with long-term high interest rates and energy and food shortages. Banks, however, are not ready for such serious turmoil. They complain about poor dialogue with the government. They have not received an invitation to consultations on credit vacations, which may cost the sector PLN 20 billion.
Bank presidents claim that the industry’s problems are not caused by the external environment, war or inflation. They are the result of policies pursued by the government. Regulatory uncertainty frightens investors away from the Polish banking sector. As a result, the industry has become incomprehensible and risky for them. The valuation of banks on the stock exchange has fallen sharply. This is because the return on capital in their case is much lower than the cost of its acquisition.
In total, banks may record a profit this year, but it will be much lower than it was assumed even before the war in Ukraine. ROE, on the other hand, may be only between 2-4 percent.