Banking sector overview | Banking today and tomorrow | May 2023

8 May 2023 | Banking today and tomorrow, Knowledge, News

The potential for profit growth in banks has run out

The dynamic growth of the interest margin, which determines banks’ earnings, has stopped. And this situation could continue throughout the year.

Almost all of the banks that have so far presented a report for Q1 2023, have reported a decrease or at most a slight increase in the interest margin compared to the end of last year. This could herald a qualitative change, as since the end of 2021 the margin had been steadily rising, allowing banks to multiply their earnings in an environment of higher interest rates.

Source: Rzeczpospolita

Extension of credit holidays. When will the government make a decision?

A decision on whether to extend credit holidays for another year has not yet been taken and the situation will be analysed – as per earlier announcements – in the middle of this year, said Artur Soboń, Deputy Minister of Finance.

Source: Forsal

CJEU Advocate General: Banks are not entitled to remuneration for the use of capital. Judgment due in June

Banks may not claim remuneration for the use of capital when a loan agreement has been invalidated. Since the invalidity is due to the use of abusive clauses by the bank, the bank may not benefit from this situation. This is without prejudice to consumers’ claims for remuneration for the use of their money (instalments) obtained by the bank, the CJEU Advocate General stated in his opinion. The Court will announce its judgment in this case on 15 June.


Extraordinary appeals in CHF mortgage loan cases. Some have already been heard

The Prosecutor General has already submitted 46 extraordinary appeals to the Supreme Court in CHF mortgage loan cases. In eight out of nine cases examined so far, the Court has finally set aside orders for payment.

As communicated by Łukasz Łapczyński, the spokesman for the National Prosecutor’s Office, with regard to the orders for payment that were set aside, the Supreme Court shared the arguments of the Prosecutor General and ruled in favour of consumers, finding a violation of their rights under the Constitution and EU law. In relation to the appeals pending, the prosecutor argues that courts issued orders for payment without examining the loan agreements (which very often they did not even have), and sanctioned the abusive clauses contained therein.

Source: TVN24

More mortgage going into arrears. Why the sharp increase?

In March 2023, the value of mortgages that went into arrears exceeded PLN 700 million for the first time. The trend of rapid deterioration in portfolio quality has continued for almost a year. (…) The value of mortgages in default (in arrears of more than 90 days) has reached a record level of more than PLN 700 million.


Banks announce tightening of lending criteria for all types of loans

The deterioration of the economic outlook and the increase in the share of non-performing loans have prompted banks to tighten their policies on consumer and corporate loans in the first three months of 2023. By June, things will not be any better in this respect for all types of loans, including mortgages.

  • After nearly two years of tightening lending policies, in the first quarter of 2023 banks eased their criteria for granting mortgages
  • However, this is not set to be a permanent change. In fact, the policy is likely to be tightened again as early as in the second quarter
  • Other than raising credit margins, banks did not significantly change the terms and conditions of lending. They have also not seen significant changes in demand for consumer loans

Source: Business Insider

Amendment to the Investment Funds Act signed by the President

The President has signed the Amendment to the Act on Investment Funds and Management of Alternative Investment Funds, the Act on Bonds, and the Act on the Bank Guarantee Fund (BFG), which concerns the possibility for banks, brokerage houses and reinsurance companies to issue securities with a loss absorption mechanism, the Chancellery of the President said.

Source: Dziennik Gazeta Prawna

Ministry of Justice changes interest rates on loans for public prosecutors and judges

For several months now, public prosecutors and judges have been complaining about an increase in the instalments of housing loans granted to them under judiciary system laws. The reason for the increase is that interest rates depend on the level of budgeted inflation. The Ministry of Justice has decided to improve the situation by adding in the relevant ordinance that the interest rates may not exceed the NBP reference rate, i.e. currently 6.75%.


The ECB raises interest rates. This is not the end, says Lagarde

The European Central Bank raised interest rates by 25 basis points to 3.75% for the key rate and 3.25% for the deposit rate, as expected by analysts.

Source: Rzeczpospolita

Will more US banks fail? This could be the calm before the storm

The first weekend of May was unusually quiet with no US regional bank failures announced. However, the crisis could return, especially if the Federal Reserve does not pivot from tight to loose monetary policy in the near future.

  • US regional banks rallied in the last trading session on Friday 5th May after falling sharply last week. PacWest and Western Alliance were up 33% and 22%, respectively
  • The US is reluctant to accept the severe consequences of a further major bank collapse, such as Lehman Brothers from over a dozen years ago. US regulators let bank shareholders lose money, but not bank clients
  • Investors who bet against US regional banks in the stock markets have made about USD 7 billion this year

Source: Interia

The World Bank has a new leader. He has a background in big business

Ajay Banga has been elected president of the World Bank, starting in his new role next month. The former head of Mastercard, an Indian-born American, has just been appointed to lead the World Bank for a five-year term, and is the first Indian-born head of the World Bank.

Source: Rzeczpospolita

New President of the Polish Bank Association

The General Meeting of the Polish Bank Association has elected a new Management Board and Council of the Association, with Dr. Tadeusz Białek, the former Vice-President of the Association, as its President. In addition, Agnieszka Wachnicka, Włodzimierz Kiciński and Bartosz Kublik have been appointed to the Management Board for a three-year term of office. The General Meeting has also elected a new Council of the Association.

Source: Polish Bank Association

2022 BANKS report

This is the thirtieth annual banking report, which assesses the state of the banking sector over the past year, the economic conditions in which it operates, and the opportunities and challenges for the near future.

Source and full text of the report: Polish Bank Association

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See also

Banking today and tomorrow | An overview of the banking sector | April 2023

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