Assets of the Polish banking sector – value and structure compared to Europe
The Polish banking sector, measured by the value of its assets, is in the middle of the ranking of European markets.
According to the figures of the European Central Bank (ECB), at the end of 2023, the Polish banking sector’s assets totaled EUR 6 7.4 billion up +19.0% y/y). The largest banking sector in the European Union is that of France (EUR 9 376.0 billion at the end of 2023), with Latvia occupying the other end of the spectrum (EUR 25.6 billion at year-end 20231). The assets of European banks (EU-27) as at the end of 2023 stood at over EUR 38.4 trillion (about EUR 34.4 trillion in the eurozone).2
The Polish banking sector’s asset-to-GDP ratio remains one of the lowest in the European Union. At the end of 2023, the value of this ratio for Poland was 89%, slightly increasing from last year’s result. This was slightly below the average for Central and Eastern European countries (97%) and significantly lower than in the Eurozone (239%) and the European Union as a whole (226%). The Polish banking sector provided services mainly to residents, and its activities outside the country were limited. One bank operated through a subsidiary in Ukraine, and three operated as branches of credit institutions in other EU Member States. The total assets of these entities accounted for about 1% of the banking sector’s consolidated assets.3
Despite its relatively small scale, Poland’s banking sector achieved record financial results in 2023, which translated into the highest level of return on assets since 2014. For the first time since 2020, the indicator surpassed the averages for the eurozone and the European Union as a whole, although it still remained the lowest in the region. The improvement in profitability was an EU-wide phenomenon, with interest rate hikes in 2021–2023 being the main driver of the increase. The effect was particularly strong in CEE countries outside the eurozone, where increases started earlier and reached higher levels than in the eurozone.4
In Poland, as in other countries in the region, the key source of profitability growth was the net interest margin. The banks’ high profitability was further supported by a large share of variable-rate loans and high liquidity in the sector, financed mainly by readily available deposits from the non-financial private sector. At the end of 2023, the level of margins and the share of interest income in banks’ income (88%) were among the highest in the European Union, next to the Baltic Countries. At the same time, the sector’s profitability was constrained by specific market factors, such as the high cost of legal risk of foreign currency loans and the effects of statutory credit vacations.5
The Polish banking sector operates according to the classic financial intermediation model, in which banks extend credit to the non-financial sector, financing it with client deposits.
At the end of 2023, loans to the nonfinancial sector accounted for 38% of Polish banks' assets, down from 43% in 20216. At the same time, the overall share of loans in assets was 51%, remaining below the average for European Union Member States, which is around 60%7. The asset structure has changed – although loans to the non-financial sector still dominate, their share is declining in favor of investments in securities, continuing a trend that began during the pandemic. In 2023, their value increased by 25% y/y, representing the main factor in the growth of banking sector assets.8
Source: Own calculations based on Eurostat and European Central Bank figures
Source: Own calculations based on Eurostat and European Central Bank figures
The asset structure was affected by limited activity in the loan market, due to high interest rates and tightened credit policies, especially in the consumer loan segment. In the second half of the year, growth in gold loans was supported by the “Bezpieczny Kredyt 2%” Secure Loan 2%) program, but overall debt levels remained under pressure from overpayments and early repayments of housing loans. Business loans grew at a slower rate than in previous years, due in part to the high level of inventories and working capital at companies.9
The asset structure of the Polish banking sector differs from the average in the European Union, mainly due to the high share of securities. In Poland, their share of banks’ assets is close to that of loans to the nonfinancial sector, while in the European Union credit receivables dominate. This is due to Polish banks’ large investments in Treasury debt securities, especially after the COVID-19 pandemic.10
At the end of 2023, the value of loans in the Polish banking sector amounted to EUR 355.4 billion, which places Poland in the middle of the ranking of European Union countries. The average value of loans furnished in the European Union in 2023 was EUR 883.1 billion.11
Compared to other European Union states, Poland’s banking sector is small as regards the ratio of loans to the country’s GDP. The ratio declined in 2023 due to reduced credit demand and high nominal GDP growth. Bank loans in the Polish banking system are at the level of 47% of GDP, while the European average is 124%. Finland (215%) and France (201%) have the highest loan-to-GDP ratios.12
Poland’s corporate loan market in 2023 was still characterized by a relatively low share of corporate loans compared to total loans to the non-financial sector. The ratio remained at around 36%,13 which still placed Poland among the European Union Member States with the lowest share of business loans. The slowdown in corporate lending growth was therefore in line with general trends in the credit market, including lower loan demand in 2023.
In 2023, the dynamics of lending in Poland’s corporate sector slowed markedly, continuing the downward trend that began in Q3 2022. Loan growth was much weaker than in previous years, especially compared to 2022, when short-term loans grew faster than long-term loans. The decline in demand for loans, especially shortterm loans, was due to a high reference base and lower demand for inventory and working capital financing. As a result, Poland’s corporate sector debt-to-GDP ratio was about 13%, which was significantly different from the European Union average of about 36%. In addition, a temporary increase in demand for long-term loans was observed in the second quarter of 2023, but this phenomenon mainly affected large companies and was not permanent.14
In contrast, in the first three quarters of 2023, the tightening of banks’ lending policies affected the lower availability of credit for small and medium-sized enterprises (SMEs), although the overall percentage of approved loan applications remained relatively high. The main reasons for credit denials were lack of creditworthiness and insufficient collateral.15
In 2023, after a year-long decline in household consumer loan debt, the growth rate of this portfolio began to increase, reaching 2.3% y/y in December. The trend was due to improved consumer sentiment and less anxiety about the financial situation. Unlike most European Union Member States, in Poland the value of loans to households declined in 2022–2023, and in the second half of 2023 also loans to businesses.16
The growth rate of household credit claims in 2023 was decoupled from GDP growth and average wages, a significant change from previous years. After eliminating the impact of foreign exchange rates, the decline was 1.8%, continuing the trend of 2022. Housing loans declined, while consumer loans grew, reaching a higher growth rate than in the previous year. The decline in other receivables was slower than in 2022.17
In 2023, households improved their financial situation, as reflected by higher incomes and increased savings. The value of financial assets increased by 12.1%, reaching PLN 2 020.4 billion, and their ratio to GDP rose to 59.2%. Loans to households remained the dominant part of bank lending, with housing loans accounting for about 42% of non-financial sector loans.18
Mortgage loans account for the highest share in household loans in Poland (61.5%).19 Poland’s lower share of mortgage loans in bank assets results from the fact that these loans are a relatively new product. In comparison, in 2005, said share in household loans amounted to around 30% in Poland, while in some Western European countries it exceeded 80%.
Impact of the “Bezpieczny Kredyt 2%” (Secure Loan 2%) program on the housing loan market situation.
The “Bezpieczny Kredyt 2%” (Secure Loan 2%) program, launched in July 2023, has significantly increased demand for housing loans, reversing an earlier downward trend. By the end of the year, more than 100 thousand applications for subsidized loans had been submitted, and their share in December 2023 accounted for about 70% of all loan applications – an increase of 270% over December 2022. The total value of loans granted under the program was about PLN 24 billion, accounting for more than half the value of all new housing loans in the second half of the year.20
The program has also affected the structure of housing loans, increasing the share of periodically fixed-rate loans both in new loans and on banks’ balance sheets. Even so, these proportions are still far from averages in the European Union, where fixed-rate loans dominate.21
In Poland, to a greater extent than the average for the European Union, banks finance their business with deposits from the non-financial sector. As at the end of 2023, they contributed 60.2% of the banking sector’s balance sheet total. 61.9% of total non-financial sector deposits are private deposits.22 Debt issuance was marginal, accounting for about 2% of total assets. However, the entry into force of the MREL target level has increased the nominal value of eligible liabilities, including the issuance of debt instruments.23
In Central and Eastern European countries, the deposit-to-GDP ratio in 2023 has declined-value in the Czech Republic, for example, was 67.2% (-3.0 p.p. y/y), in Hungary 37.5% (-4.7 p.p. y/y), and in Poland 52.9% (-0.5 p.p. y/y). A similar deleveraging trend was observed in the Eurozone, but the ratio remained much higher there, with the rate at 87.6% (-6.8 p.p. y/y). In Poland, banks focused on traditional services, such as accepting deposits from non-financial entities and extending loans to them, which was a key component of their operations.24
Compared to the European Union, Poland stood out for its low loan-to-deposit ratio in the banking sector, which at the end of 2023 was about 64%, one of the lowest levels in the EU. Between 2022 and 2023, in contrast to most EU Member States, the value of loans to households in Poland decreased, and in the second half of 2023 also to businesses. At the same time, deposit growth – both households and businesses, especially term deposits – was much stronger than in other European banking sectors, due in part to pandemic support for companies from PFR funds.25
The structure of bank financing in Poland remained stable, with the dominant role of non-financial sector deposits, especially households. The value of these deposits rose steadily, although their share of banks’ liabilities was relatively constant. Alternative sources of financing, such as the issuance of debt instruments, were still of limited importance.26
Situation on the banking market in Poland
In 2024, the sector's performance remained high due to the persistently high interest rates – despite two cuts by the Monetary Policy Council (in H2 2023), the reference rate remained high at 5.75% at the end of June 2024. The banking sector's profitability was negatively impacted by charges for legal risk provisions and credit vacation costs27.
At the end of 2024, there were 29 commercial banks, 489 cooperative banks and 33 branches of credit institutions operating in Poland and abroad. The banking network comprised a total of 4 943 branches, 2 211 offices, agencies and other client service outlets and 2 551 representative offices. Therefore, the banking network comprised a total of 9 705 outlets, i.e. 301 fewer outlets than at the end of 2023.
Headcount in the banking sector at the end of December 2024 rose to 146.7 thousand people and was higher by 1,274 (+0.9%) than at end of 2023.
In 2024, the banking sector generated a net profit of PLN 42.2 billion, compared to PLN 27.9 in 2023, up PLN 14.2 billion. What had the largest impact on the higher net result was interest income (up by 11.6 billion y/y), mainly due to an increase in interest income (+PLN 7.2 billion y/y) with a simultaneous decrease in interest expense (-PLN 4.4 billion y/y). At the same time, net income was negatively impacted by a PLN 5.5 billion y/y increase in bank operating expenses and depreciation and amortization combined. Net interest margin rose to 3.77% at the end of December 2024, compared to 3.72% at the end of December 2023.
At the end of December 2024, the asset value of the banking sector was PLN 3 335 billion, up 10.8% from December 2023.
In December 2024, the value of credits in the nonfinancial sector amounted to PLN 1 145 billion, an increase of 4.5% compared to December 2023. Business loans increased by PLN 13.0 billion (3.3% y/y) to the level of PLN 401.6 billion at the end of 2024. Stronger growth by PLN 36.6 billion (+5.2 y/y) to PLN 735 billion was noticeable in household loans.
At the end of December 2024, deposits of the nonfinancial sector totaled PLN 1 957 billion, an increase of 7.8% compared to the end of 2023. In the structure of non-financial sector deposits, household deposits recorded the highest growth, of 9.7%, and amounted to PLN 1 377 billion at the end of 2024. Corporate deposits increased by 3.6% y/y to PLN 539 billion at the end of 2024.
The banking sector’s own funds for capital ratios, calculated in accordance with the regulations laid down in the CRR Regulation, were at PLN 255 billion at the end of September 2024, up 3.8% from the end of September 2023.
In 2024, the sector’s capital situation remained stable. The banking sector’s total capital ratio at the end of September 2024 was 21.36%, while the Tier I capital ratio at the end of this period was 20.01%.
1. https://www.bank.lv/en/about-us/operations/monthly-balance-sheet; https://datnes.latvijasbanka.lv/ar/AR/LB_AR_2023.pdf
2. EBC data, data.ecb.europa.eu
3. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
4. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
5. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
6. Figures from the National Bank of Poland
7. EBC data, data.ecb.europa.eu
8. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
9. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
10. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
11. EBC data, data.ecb.europa.eu
12. EBC data, data.ecb.europa.eu; Eurostat; excluding Liechtenstein exceeding 580%, where a significant portion of contributions were generated by cross-border activities
13. Figures from the National Bank of Poland
14. NBP, Development of the financial system in Poland in 2023; NBP, Report on financial system stability – December 2023
15. NBP, Financial System Stability Report – December 2023
16. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
17. Polish Bank Association, Report on the economic situation of banks. Banks 2023
18. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
19. Figures from the National Bank of Poland
20. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
21. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
22. Figures from the National Bank of Poland
23. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
24. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
25. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
26. National Bank of Poland, Rozwój systemu finansowego w Polsce w 2023 r.
27. In 2024, borrowers could suspend loan and interest payments for 2 months in the period 01.06.24–31.08.24 and for 2 months in the period 01.09.24–31.12.2024
28. ROA and ROE indicators – the relation of the sum of the financial result of 12 consecutive months to, respectively, average assets and average capital in the same period of 13 consecutive months. ROE relates to the aggregate commercial and cooperative banking sector (without branches of credit institutions), ROA relates to the entire banking sector.
29. R/I ratio – relation of write-offs and provisions (provisions+impairment or reversal of impairment) to revenue (total net operating income) – rolling average from 12 months.
30. C/I ratio – relation of costs (costs of an operation+depreciation of fixed assets and intangible assets) to revenue (total net operating income) – rolling average from 12 months.
31. KNF, Monthly data of the banking sector as of the end of December 2024.