This year, the Warsaw Banking Institute has prepared - for the 20th time - its annual report on the situation of the banking sector in Poland dubbed "BANKS." This publication is unique in the sense that it it the only report that has been published for many years, prepared by the banking sector and not by public institutions such as the banking supervisory authority, the central bank or the statistical office. Therefore, the report presents an assessment of the banking environment concerning the conditions and major changes taking place in the banking sector in the past year.
Macroeconomic conditions of banks’ operations in 2012
While assessing the conditions of running a banking business in 2012, one has to point to gradual worsening of macroeconomic data in Poland. In subsequent quarters, we have seen the slowing down of the country’s economic growth. This trend has been taking place in the aftermath of the deterioration of global economic situation, where the level of economic growth of the biggest economies in 2012 was clearly below the 2011 level. A similar phenomenon also concerned the majority of member states of the European Union, Poland’s key economic partners. Many EU countries have experienced recession.
For several years, the Polish economy has shown significant resistance to turbulence arising in the global economy. This time, however, it has experienced the effects of worse business climate to a stronger degree, similarly to other countries. According to the GUS’s preliminary estimates, gross domestic product in Poland rose, in real terms, by 2 per cent last year compared to growth of 4.3 per cent a year earlier. This deceleration of Poland’s economic dynamics has been caused – primarily – by weakening domestic demand: a decline of domestic consumption as well as halting of the growth of public investments. The only driving force of economic growth in 2012 was the rise of exports’-oriented activity.
Last year, the National Bank of Poland carried out relatively tight monetary policy, which was designed to help realize the assumed inflation target. However, during most of 2012, inflation remained above this target, chiefly due to supply-side factors, often operating beyond Poland. Monetary policy’s restrictiveness has been proved by, among others, increasing interest rates by the Monetary Policy Council at a time of slow-down in economic growth. Interest rates’ cut were implemented only at the very end of 2012.
This basic, briefly presented, information set on the country’s economic development has not been favourable for running a banking business in Poland and achieving good financial results. Therefore, it is even more worthwhile to stress that in 2012, the Polish banking sector posted financial results that may be assessed as very good. Even though the pace of banking assets’ growth was lower than a year earlier, the sector’s net profit was on a record-high level, with a noticeable growth of own capitals – both in nominal terms and measured on the basis of the solvency ratio. These results have again confirmed the high stability of economic situation and the safety of banks’ operations as well as high competence of running a business on the background of often difficult macroeconomic and legal environment.
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