Poll

Macroeconomic factors

Macroeconomic factors potentially affecting the Bank’s performance

 

Situation in the
economy will gradually
improve in 2014.
Internal demand is likely
to grow in the current
year.
Projection: +3.4% GDP YoY

According to the Bank, the macroeconomic situation will improve gradually in 2014 and the economic growth rate will increase to 3.4%. After the period when net exports were the key driver of economic growth in Poland, the year 2014 will bring the long-expected rebound of the internal demand. The process will be enhanced by improvement in the situation in the labor market and more optimistic consumer sentiments. Lower unemployment rate and growing employment will encourage households to draw up loans and, indirectly, they will foster private consumption. Growing salaries combined with inflation close to the lower deviation limit from the inflation target of the National Bank of Poland will also drive consumer spending. Additionally, easing the monetary policy will also encourage business activity. According to the Bank’s projections, the economic rebound, inflation and GDP outlooks will make the Monetary Policy Council tighten the monetary policy before early 2015. The Bank expects that at the end of 2014 the reference rate will amount to 2.50%.

New regulations will also apply and they will affect financial results of the banking sector in Poland, in particular:

  • Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC,
  • Regulation of the European Parliament and of the Council (EU) no. 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending the Regulation (EU) no. 648/2012,
  • reduction of the interchange fee from 1.25% to 0.5% from July 2014 in line with the applicable law.

Moreover, works and negotiations have been carried out on the following issues:

  • Draft Recommendation U covering good bancassurance practices – the recommendation prepared will set outa framework for appropriate identification, supervision and management of risks related to insurance products offered by banks and provide guidelines concerning accounting policy, internal controls and compliance function in banks, which should ensure appropriate direct and indirect regulation of the area discussed in the Recommendation in all processes related to the bank’s activities. Recommendation U is planned to enter into force not later than 1 November 2014.
  • elimination of the possibility to avoid a tax liability related to earning income on funds accumulated by the taxpayer due to their saving, keeping or investing (refers in particular to investment insurance products and structured products offered in the form of investment policies),
  • Draft Act on Bank Guarantee Fund, a structured list of banks and amendments to other acts of law – the draft does not foresee introduction of a new fee for an organized liquidation of banks fund.

Other challenges for the Polish banking sector in 2014 may include:

  • deterioration of the situation in the global economy due to escalation of the Kiev-Moscow conflict, crisis in the euro zone and normalization of the monetary policy by the Federal Reserve. This scenario would adversely affect Polish exporters and could hinder the economic growth rate. Additionally, reducing excessive liquidity of global financial markets could translate into equity outflow from emerging markets, including from Poland. This in turn, would entail a limited demand for services offered by the Bank and higher costs of risk related to the deterioration of the financial position of clients,
  • GDP growth rate lower than projected and improvement in the domestic labor market slower than expected. If this scenario materializes, the Bank’s risk will grow, which may entail a deterioration of the credit portfolio quality,
  • deterioration of perception of Poland among investors and capital outflow. This scenario would result in a weaker zloty and sale of domestic treasury bonds. It will also lead to higher costs of servicing public debt and limited possibility to finance business investments.

 

 

Annual Report 2013 - Bank Pocztowy