Polish Retail Banking 2005

The lack of capital in the Polish market at the start of economic reform in 1990 implied from the very outset that foreign involvement would play a crucial role in the development of the banking sector. Foreign investment became more pronounced in the country from 1995 following the second round of reduction in Poland’s foreign debt by the London Club consortium of international private lenders and the passing of legislation for the mass privatisation programme - of which, Polish banks were a part.

The effects of these developments on the growth, modernisation and performance of the banking sector can be summarised as:

• A 27.6% expansion in the total asset value of banking products between 2000 and 2005.
• Growing concentration in the industry, driven by merger & acquisition activity by foreign investors.
• High rates of growth in mortgage lending due to low interest rates.
• Increasing corporate deposits.
• Integration into the European Union.
• High and continual growth in the supply of bank ATMs and credit cards.

The aim of this report is to present key data relating to these changes, present them in an accessible manner, providing analysis in order to assess the current state of the industry and, moving forward, to ascertain the key drivers of change. Although the report deals exclusively with Poland, its scope is occasionally broadened where insight may be gained from placing the domestic market in a wider international context.

This report analyses trends in the Polish Banking industry between 2000 and 2006. International comparisons are drawn where relevant in order to contextualise the state of the Polish Banking industry versus its European neighbours. Where current-year data are not available, unless stated otherwise, projections have been made based on historical data, with consideration taken of impacting events. Projections have been made using the average rate of exchange during the previous five years. Figures are presented in sterling, with zloty conversions for the current year calculated at an average exchange rate of £1: PLN 6.2

Sources of data of particular importance are publications from the National Bank of Poland, Fitch Ratings Reports, KPMG, the European Central Bank, Price Waterhouse Coopers, the Central Statistics Office and Annual as well as Interim Reports published by key players within the Polish banking sector (such as PKO BP, Bank Pekao (Unicredito Italiano), Bank Handlowy (Citibank), BPH (Hypovereinsbank) and Bank Slaskie (ING)). Relevant up-to-date articles (on and offline) in periodicals and business journals in the English and Polish languages are also used.

The report consists of five main sections. These are:

• Market Size, dealing with the value of the assets held by the Polish banking industry, identifying the relative power of the MPBG (Major Polish Banking Group) in context to the sector as a whole. This section also examines the total value of bank products in Poland, paying particular attention to MPBG. The size of the Polish market is assessed within the European context, and possible future trends are discussed. Market Sectors presents the main segments of the Polish Banking industry, namely the various aspects of saving and lending. This section identifies the importance of trends in banking deposits and loans by and to both corporate entities and households. Other forms of consumer lending are also discussed, with special attention being paid to the issue of credit cards and the role of international payment cards. This particular section also analyses the share of MPBG players in the issue and share of the credit and debit cards market and concludes with a subsection on the development of the ATMs network and the related growth in transactions.
• Market Share breaks down data on total assets by bank within the Major Polish Banking Group, in order to assess their relative presence in the market from 2002 to 2005 inclusive. The data on assets is further used to provide each bank’s relative share of total MBPG assets with a view to revealing the role of each player.
• Market Structure broadly assesses the strengths and weaknesses of MPBG through the analysis of annual average sales growth against market share.
• Key Players takes a more strategic look at the five largest players in the market (PKO
• BP, Bank Pekao (Unicredito Italiano), Citibank Handlowy (Citibank), BPH (Hypovereinsbank) and ING Bank Slaskie (ING), examining in detail their recent performance and future prospects.