ZBP report: The disinflation process is slower in Poland than in the euro area

The Polish banking sector, despite solid capital basics, is one of the smallest in Europe in terms of scale of assets whose relation to GDP in Poland is 95 percent. – results from the report “Poland and Europe: investments, security, the future” of the Polish Bank Association.

“The small size of the Polish banking sector is also evidenced by the account of equity to GDP, which places us in the penultimate place among the analyzed banking sectors. Also the account of loans to deposits in the Polish banking sector remains one of the lowest among the analyzed” – noted ZBP.

The union informed that in 2023 the banking assets to GDP amounted to 88.7 percent.

The authors of the report added that the sector has the potential to increase the financing of the Polish economy by approx. PLN 380 billion and is available to a higher level than the average for the European Union.

The President of ZBP Tadeusz Białek, cited in the report, pointed out that smaller than Polish banking sectors are located in Slovenia, Latvia and Romania. “The Polish economy needs a strong banking sector that will develop at a rate exceeding the GDP growth of the country. Only the dynamic development of banks will ensure the ability to finance investments necessary for further growth,” Białek argued.

In the opinion of the authors of the publication, despite high profits, the banking sector has an average profitability compared to Europe. They pointed to REE (the profitability rate of equity – PAP), which in the fourth quarter of 2024 amounted to 14.7 percent. The lowest value in Europe during this period was recorded in Germany (6.4 percent), and the highest in Latvia (17.3 percent). In turn, RoA (assets of assets – PAP) in Poland reached 1.26 percent, which is more than in France (0.44 percent), but less than in Latvia (2.1 %).

According to the report, the account of loans for the non -financial sector to GDP in Poland is 31.1 percent, which is one of the last results in Europe next to Latvia, Hungary and Romania. According to ZBP, inflation, public debt and geopolitics are the greatest threats to the sector. “Although there are signs of expiry of price pressure throughout the EU, Poland still notes indicators (inflation – PAP) above the average” He noticed the relationship. He added that the disinflation process is slower in Poland than in the euro area, and its pace depends on wage and prices in the service sector.

Referring to public debt, the report pointed out that in July this year. The state budget deficit increased by PLN 37 billion to PLN 156.7 billion, which “practically exhausts the space of the Ministry of Finance to increase the deficit this year.” “The ministry may increase the debt by only PLN 132 billion (and therefore no more than in the same period of 2024). Currently, debt and budget deficit issues are the most important economic problems in Poland and Europe” – emphasized the PPP.

The Russian -Ukrainian war, tensions in transatlantic relations and growing competition from non -European economies are also important risk factors – noted Tadeusz Białek. (PAP)

JLS/ MMU/