Banking Market in Poland 2007 - CEE Banking Series- Update H1 2007 The

Intelace Research
October 1, 2007
111 Pages - SKU: INTL1585867
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Countries covered: Poland

Profits are going up.
In 2006 the combined net profit of commercial banks in Poland increased 17% to 2.6 bn EUR. Key profitability ratios of banks improved significantly: ROAA rose to 1.7%, while ROAE exceeded 16%. These favorable developments were attributable in the first line to quickly growing volumes (commercial banks assets increased by 16%) and other factors like stable margins and well controlled costs

Concentration is growing.
The upcoming merger of Pekao with large part of BPH will produce a new market leader in terms of assets, controlling ~17% of the market. The new Pekao will play a key role in corporate business (~32% and 24% market share in deposits and lending respectively as of 2006) and will hold 2nd position in retail. Apart of this big merger there have been recently three smaller M&A transactions on the market: GE Money Bank won the BPH200 tender, Fortis took over Dominet bank and DnB Nord acquired BISE

New investments in infrastructure.
Since 2005 there is a visible trend among banks to expand physical distribution networks. Despite significant growth of electronic channels, banks try to exploit the opportunity of coming closer to clients by opening more smaller and multifunctional outlets. The combined investment plans of commercial banks add to over 1500 new outlets until 2008. It is noticeable that a big part of newly opened outlets are franchising/partner networks operated by 3rd parties. At the same time banks invest in specialized networks (new brands) focused on a single product or customer segment and improve functionality of direct channels

Perspectives better than ever.
Strong economic growth, rising corporate spending and growing wealth of individuals will translate into increased demand for banking services. In mid-term horizon retail banking will remain the key growth driver with very strong mortgage lending business. At the same time increased corporate investments will also revive lending that has stagnated for several years until 2006. In short term perspective a moderate rate increase by Central Bank (25-50 bp. in 2007) can be anticipated in reaction to accelerating inflation. As a result, rising market rates may negatively affect lending margins until rate adjustments will take place. As for the whole market, we expect banking assets to rise at 18% p.a. through 2009.


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