On Wednesday, December 3, the Monetary Policy Council reduced interest rates for the sixth time this year on the wave of falling inflation. Since May, the total cuts amount to 1.75 percentage points. This is good news for borrowers, but negative for banks. The higher the rates, the higher the loan margins to be realized, this is already a well-established tradition. Conversely, falling rates contribute to lower interest margins for banks. However, after the banks' results published by the National Bank of Poland on Wednesday, it turns out that they did not notice any reductions until October.
The net profit of the banking sector in October amounted to PLN 4.2 billion, i.e. it increased by 1.6%. year to year. Interest income decreased by 3% y/y. up to PLN 15 billion, but interest costs dropped even more, by 7.3%. up to PLN 5.7 billion. As a result, interest income almost did not change year to year and amounted to PLN 9.3 billion. Application?
Banks no longer offer depositors attractive offers on deposit interest rates. This is their way of mitigating the effect of falling rates on their profits. And since customers still keep their money in banks, it means they have accepted this situation. The value of deposits even increased by PLN 209 billion year on year to PLN 2.5 trillion, the NBP reported.
The second way is increasing commissions and here we can also see the banks' yet timid steps. Commission income increased by 2.6% in October. year on year to PLN 2.3 billion while cutting the costs of these commissions by 4.7%. up to PLN 551 million. As a result commission income increased by as much as 5.1% year on year. up to PLN 1.7 billion.
Wages of bank employees go up
Another element that has a strong impact on banks' profits are employment costs. However, here there were no cuts at all, but even solid raises. Employee costs jumped 7.7 percent in October. year to year, which is well above inflation (2.8%).
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Provisions in October 2025 amounted to PLN 628 million and were 12% higher. rdr. As much as 62 percent impairment losses on financial assets decreased to PLN 254 million. This is the result of improved loan repayment rates.
Loans are better repaid
The value of bad loans for households decreased year-on-year by as much as PLN 3.9 billion, including PLN 1.3 billion of the most risky consumer loans.
The above shows the reasons for maintaining high profits by banks despite the rate cuts by the Monetary Policy Council:
- less and less problems with borrowers' solvency,
- worse interest rates for deposits,
- increasing bank commissions.
