Polish banking sector compared to Europe

Banking assets in Poland have recorded a significant increase since the transformation. Since the end of 2008, they have grown annually by approx. 6% on average. Currently, the Polish banking sector ranks around the European median in terms of assets. According to data of the European Central Bank (ECB), in 2018 the Polish banking sector’s assets totaled¹ EUR 444 billion. Europe’s largest banking sector is in the United Kingdom (EUR 10 trillion in 2018) and the smallest one is in Estonia (EUR 26.6 billion). In 2018 the assets of European banks amounted to EUR 41 trillion (EUR 26 trillion in the euro area)².

The Polish banking sector operates in accordance with the classic model of financial intermediation in which banks mainly provide loans to the non-financial sector using their customers’ deposits in the process. This is reflected in the high share of loans in the banking sector’s assets, which accounted for 68% of total assets and was higher than the average for the banking sectors of the European Union (62%)³. The share of other types of assets in the banks’ balance sheets, in particular assets held for trading, was much lower in Poland, just like in other Central and Eastern European countries, than in developed economies.

At the end of 2018, loans in the Polish banking sector totaled EUR 302 billion, which placed Poland in the middle of the pack.

Loans per capita (2018, EUR) in relation to the banking market growth rate (2012-2018)

Source: Own calculations based on ECB and NBP data

Compared to other European Union states, Poland’s banking sector is relatively small in relation to the country’s GDP. Bank loans in the Polish banking system account for 61% of GDP while the European average is 126%. Netherlands, Finland and Denmark have the highest ratios of loans to GDP.

Share of loans in GDP (2018, %) in relation to GDP per capita (2018, EUR)

Source: Own calculations based on ECB and NBP data

The Polish banking market features a low, though rising percentage of business loans in the total amount of loans extended to the non-financial sector (34.5%). In turn, Poland is the fourth country in the European Union in terms of household loans stated as a percentage of all the loans in the banking sector⁴.

The recent research conducted by the National Bank of Poland indicates that households in Poland are significantly less indebted than in the euro area: the average household has total liabilities of 5.5% of gross assets while in the euro area the average debt is 26% of assets in total⁵.

Mortgage loans account for the highest percentage of household loans (roughly 60%); in the European Union that percentage is higher (roughly 70%). Housing loans in Poland account for 38.5% of the GDP, which is similar to the European Union average. The growth rate of consumer loans is higher than the GDP growth rate and Poland is a country with one of the highest share of debt of this type in relation to the GDP in the European Union. The quality of high-amount loans is currently slightly lower than of other consumer loans⁶.

Consumer loans in Poland compared to EU countries

Source: NBP, Stability report, December 2018

Banks are financed with client deposits in Poland to a greater extent than in other countries in the European Union. Financial assets (deposits, mutual funds, equities, bonds, life insurance and voluntary pension plans) stated as a percentage of households’ assets are markedly smaller in Poland than in the most economically developed countries in Europe. In 2016, they stood at 8.5% in Poland, while they were 17.8% of gross assets in the euro area. This disproportion is also very visible in absolute figures: EUR 3.5 thousand in Poland versus EUR 10.6 thousand in the euro area. On the other hand, financial assets, even though they are small, are a popular form in which Polish nationals accumulate financial means. 91% of all households hold them, with deposits being the most popular form of accumulating financial assets (85% of all households have deposits). Households much more rarely invest their savings in mutual funds (3.8% of households), though on average the amounts involved are higher (EUR 19.6 thousand). NBP’s research shows that the increase in financial assets was the main driver of the growth in net assets⁷.

1 As at the date of the report, the most up-to-date data for Europe’s banking market are available for 2018
2 European Central Bank, https://sdw.ecb.europa.eu/
3 European Central Bank, https://sdw.ecb.europa.eu/
4 Polish Financial Supervision Authority, Standing of the banking sector January-March 2019
5 BZGD research is conducted in the international research network called Household Finance and Consumption Network (HFCN).
Central banks and statistical offices representing euro area countries, Poland and Hungary participate in this undertaking initiated in 2006 and coordinated by the European Central Bank (ECB). https://www.nbp.pl/home.aspx?f=/aktualnosci/ wiadomosci_2018/ZGDwP_20180109.html
6 National Bank of Poland, Report on the stability of the financial system, December 2019
7 National Bank of Poland, Affluence of households in Poland, 2017