Downloadthe full PDF report
Font size: A A A
Poll

Macroeconomic factors

Macroeconomic factors potentially affecting the Bank’s performance

 

Domestic demand will
be the key driver of
the economic growth in
Poland in 2015

GDP growth by approx.3.6%

According to the Bank, the macroeconomic situation shall slowly but steadily improve in 2015. The economic growth rate should increase to 3.5-3.6% of GDP. Domestic demand shall continue to grow, while the Russian-Ukrainian conflict and poor economic growth in the Eurozone shall further hamper export of goods and services. An increase in internal demand shall result from a growth in both consumption and investments. Consumption should be supported by further improvement of the labor market standing (payroll and employment growth) and with deflation, which will maintain at least through the first half of the year and increase the purchasing power of salaries. The increasing interest in household consumer loans due to attractive interest offered should also improve consumption. The lenient monetary policy to be continued by the Monetary Policy Council and disbursement of EU funds for 2014-2020 Perspective should positively affect the investment level. The Bank expects that at the end of 2015 the reference rate will remain at 1.50%.

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

 

Regulation Change description Effect on the Group
Act of 28 November 2014 amending the act on payment services (Journal of Laws of 2014 item 1916). The Act provides for a reduction in the maximum statutory interchange rate to 0.2% for debit cards and to 0.3% for credit cards. Fee and commission income
Resolution No. 28/2014 of the Banking Guarantee Fund Council of 19 November 2014 determining the rate of the 2015 annual fee payable to the Banking Guarantee Fund through entities subject to the obligatory guarantee system. The Banking Guarantee Fund Council determined the annual fee for 2015 as 0.189% of the product of the total of capital requirements pertaining to each risk type and to the exceeding of limits and other standards determined in the Banking Law and 12.5. Administrative costs
Resolution No. 29/2014 of the Banking Guarantee Fund Council of 19 November 2014 determining the rate of the 2015 annual fee payable to the Banking Guarantee Fund through entities subject to the obligatory guarantee system. The Banking Guarantee Fund Council determined the prudence fee for 2015 as 0.05% of the product of the total of capital requirements pertaining to each risk type and to the exceeding of limits and other standards determined in the Banking Law and 12.5. Administrative costs
Resolution No. 148/2013 of the Polish Financial Supervision Authority dated 18 June 2013 on issuing Recommendation S on good practices in managing mortgaged credit exposures (Official Journal of the Polish Financial Supervision Authority of 2013, item 23). According to PFSA guidance, since January 2015 own contribution required for real property purchases credited by banks has been increased from 5% to 10% of the property value. Resolution No. Impairment losses
Resolution No. 183/2014 of the Polish Financial Supervision Authority dated 24 June 2014 on issuing Recommendation U concerning good practices in bancassurance (Official Journal of the Polish Financial Supervision Authority of 2014, item 12). In particular, banks shall be obliged to ensure client’s freedom of choice regarding the insurer. Banks cannot act as insurers and insurance agents at the same time, while their fee for the insurance products offered shall be determined proportionally to the costs incurred by them. Recommendation U was issued to improve the standards of cooperation between banks and insurance companies with regard to offering clients insurance products through banks and determining conditions for stable long-term bancassurance market development. Banks shall be obliged to implement Recommendation U by 31 March 2015. Fee and commission income, fee and commission costs, Bank's offer
Resolution No. 218/2014 of the Polish Financial Supervision Authority dated 22 July 2014 on issuing “Corporate governance principles for supervised institutions” (Official Journal of the Polish Financial Supervision Authority of 2014, item 17). The purpose of the principles is to improve corporate governance standards in financial institutions and transparency of their operation. The document determines shared principles for entities from all financial market sectors supervised by PFSA, ensuring their proportional application due to the scale, nature of each entity and business specifics.

PFSA expects the principles to be introduced as of 1 January 2015.		 Changes in corporate governance principles applied

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

Project name Projected changes Projected effect on the Group
Act amending the Banking Law and certain other acts The projected act is to transpose 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 (CRD IV) to the Polish law. Corporate governance, remuneration policy, capital adequacy
Act on the Banking Guarantee Fund, resolution of banks and amendment of certain other acts The project includes a new fee for so-called fund for resolution of banks. Administrative costs
Act on insurance and reinsurance activities The new regulation shall enable PFSA to ban or limit distribution of certain insurance investment products, certain financial activities, insurer or reinsurer practices. Fee and commission income and expenses
Act amending the Tax Ordinance and certain other acts The Ministry of Finance commenced the legislation procedure aimed at implementing of requirements arising from Agreement between the Government of the United States of America and the Government of the Republic of Poland to Improve International Tax Compliance and to Implement FATCA. FATCA is a set of regulations combatting tax evasion by American taxpayers using foreign bank accounts. FATCA is to prevent using foreign financial institutions to conceal income and build aggressive tax planning structures by American taxpayers.
For countries not joining FATCA, all financial transfers from the U.S. to foreign financial institutions are charged with 30% withholding tax.
 		 Ministry of Finance is obliged to transfer to the U.S. data regarding bank accounts held by American taxpayers (i.e. in particular individuals holding American citizenship,
born in the U.S., having the status of U.S. residents, residence or correspondence address in the U.S.)
Recommendation P regarding the system of monitoring financial liquidity of banks The projected Recommendation P includes international guidelines and implementation of recommendations regarding in particular: determining the tolerance of bank’s liquidity risk, recognizing the full scope of all liquidity risk types, to include the risk of unexpected need for liquidity, stress-tests and their functional relation to liquidity emergency plans, security management, maintaining an encumbrance-free buffer, high quality liquid assets, using the mechanism of allocating costs, revenue and liquidity risk under the internal transfer pricing system, mid-day liquidity management, disclosing of information regarding bank’s liquidity. Bank's liquidity, stress-tests, liquidity emergency plan

Other challenges for the Polish banking sector in 2015 may include:

  • Risk of deflation in Poland lasting longer than Q3 2014 and increasing due to a drop in global prices of supplies (including crude oil) and agricultural products. In such a case, Monetary Policy Council may further reduce interest rates, including the lombard rate. Reducing interest rate to another record level would strongly affect banks’ revenues.
  • Fed discontinuing its easement policy faster than expected. This would have an adverse effect on the exchange rate of PLN and value of domestic treasury securities. It would also lead to higher costs of servicing public debt and limited possibility to finance business investments.
  • Translation of mortgage loans granted in CHF in recent years. Possible mass translation of loans granted in CHF would force banks to purchase large amounts of the Swiss currency, thus resulting in devaluation of PLN. Rapid devaluation of PLN vs. CHF and other currencies would result in imbalance on financial markets, threaten the stability of the financial system and the economy.
  • Further reduction of interest rates by Swiss Central Bank (SNB). Although this would reduce the value of CHF vs. other currencies, to include PLN, and improve lenders' ability to pay their liabilities to banks, LIBOR CHF rates getting more and more negative would affect banks holding large portfolios of CHF-denominated loans.

 

Annual Report 2014 - Bank Pocztowy