Activities of the Bank

Macroeconomic factors

Domestic demand
remains the key driver of
the Polish
3.8% GDP growth

According to the Bank, the macroeconomic situation shall slowly but steadily improve in 2016, although certain threats occur. The economic growth rate should increase to 3.6-3.8% of GDP. Domestic demand shall continue to grow, while the Russian sanctions and slowly rebounding economic growth in the Eurozone shall still 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 in the labor market (payroll and employment growth), the planned launch of the 500+ Program of payments to families with children and stable low prices of goods and services, which increase the purchasing power of households. Consumption may also be boosted by higher appetite for consumer credit among households due to advantageous interest rates and a wider range of loans offered after enacting the so-called bank tax on 1 February 2016. Further disbursements of EU funds from 2014-2020 Perspective and record low interest rates should positively affect the investment level. The Bank expects that at the end of 2016 the reference rate of the National Bank of Poland may be reduced to 1.25%. 

In 2016 other challenges for the Polish banking sector and for the Group may include:

  • The bank tax which will enter into force as of 1 February 2016 (Act on Tax on Certain Financial Institutions of 15 January 2016, Journal of Laws of 2016, item 68) along with higher payments to the Bank Guarantee Fund, increased capital requirements and possible financial difficulty of other credit unions and cooperative banks. Accumulation of charges imposed on the banking sector will considerably reduce the banks’ profits and force them to cut costs. The lawmaker estimates that the tax on certain financial institutions will amount to PLN 4.4 billion in 2016. A liability resulting from this tax, estimated based on the value of the Bank Pocztowy’s assets as at 31 December 2015 will amount to ca. PLN 6 million.
  • 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. Further rapid devaluation of PLN vs. CHF and other currencies would result in an imbalance on financial markets, threaten the stability of the financial system and the economy. Translation of mortgage loans in CHF will not directly affect Bank Pocztowy, as it holds PLN mortgage loans in its portfolio.
  • Risk of deflation in Poland lasting longer than in Q2,2016 and its increase due to a drop in global prices of commodities (mainly crude oil) and agricultural products. In such a case, the Monetary Policy Council may further reduce interest rates, to levels lower than expected. Reducing interest rates to another record low level would strongly affect banks’ revenues.
  • Further deterioration of Poland’s rating. After S&P cut Poland’s long-term foreign currency sovereign credit rating from A- to BBB+ on 15 January 2016, which was the first downgrade since 1995 and changed the rating outlook to negative, further downgrades by S&P or other rating agencies are possible. This scenario would result in a weaker zloty against all major currencies and sale of domestic treasury bonds.
  • Fed discontinuing its easement policy faster than expected. This would have an adverse effect on the exchange rate of PLN and the value of domestic treasury securities. It would also lead to higher costs of servicing public debt and limited possibility to finance business investments.
  • 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.