Pros and cons of Polish banking. The year 2026 will be a “maturity test” for banks

In 2025, the banking sector achieved record profit and high profitability – said Marek Lusztyn from SGH and vice-president of mBank. He assessed that the past year also highlighted the limitations of the current industry growth model, which is based largely on high margins and growing exposure to public debt.

Vice-President of mBank and assistant professor at the Institute of Banking, Economic and Social College of the Warsaw School of Economics, Ph.D. Eng. Marek Lusztyn pointed out that although 2025 will end impressively for the Polish banking sector, it highlights the limitations of the current growth model, based largely on a high interest margin, excess liquidity and growing exposure to public debt, with a relatively low level of credit for the non-financial sector and one of the lowest banking assets in the EU in relation to GDP.

In his opinion, from the point of view of financial stability, this is a comfortable starting point because banks are well capitalized and liquid, and at the same time highly resistant to shocks.

“The problem, however, is that this model is more conducive to financing the debt of the State Treasury than to financing the growth of the economy,” Lusztyn emphasized. He added that the high share of treasury bonds in banks' balance sheets, the growing importance of legal risk and the increase in corporate income tax limit the sector's capital space for further growth in lending in the coming years.

In 2025, the net profit of the banking sector will nominally amount to PLN 40.5 billion, i.e. 14.6 percent. more year to year, and the return on equity of the entire industry exceeded the EU average in 2025, which could not be achieved in 2017-2023. “Thirdly, there has been a breakthrough in terms of acquisitions after a decade of stagnation in the ownership structure,” he noted. In this context, he pointed out that, among others, VeloBank is to take over the retail part of Citi Handlowy, and the Austrian Erste Group is entering the Polish market through the acquisition of Santander Bank Polska, which will reduce the presence of Spanish capital in Polish banking.

As the expert added, at first glance the Polish banking sector looks very good. “However, if we look more broadly – beyond the current financial result – e.g. at one of the lowest ratios of bank assets to GDP in the EU, the low share of credit in financing the economy, growing legal risk and sudden unfavorable tax changes – the picture becomes less clear,” Lusztyn said.

Lusztyn recalled that in 2025, the Monetary Policy Council reduced the NBP reference rate to 4%, after a series of six reductions by a total of 175 basis points. “Despite this, thanks to effective management of interest rate risk in the banking book and hedging strategies, the sector's interest margin remained high,” he noted. He also pointed out that in the past year, Polish banks struggled with employee costs, which was alleviated to some extent by the digitization and automation of operational processes.

He concluded that banks benefited from the effects of securing the interest margin achieved during the period of higher interest rates in the previous quarters and maintained a significant surplus of liquidity, largely invested in treasury bonds. “This combination – high margin and record liquidity – largely explains the scale of good results, following many years of poor profitability, when the rate of return on equity systematically remained below the cost of capital,” Lusztyn said.

In his opinion, 2026 will be a “maturity test” of the sector and a test of whether Poland can use the “harvest time” in the banking sector “not only to temporarily increase state budget revenues, but also to build the foundations for long-term economic growth based on the sound foundations of its banking sector.”

From the new year, regulations will come into force increasing the bank income tax rate, which will amount to 30%. in 2026, 26 percent in 2027 and 23 percent from 2028

More on this topic in “Gazeta SGH Insight”, which will be published in mid-January and will be available at https://gazeta.sgh.waw.pl/aktualny-numer. The Polish Press Agency is the media patron of the 120th anniversary of the Warsaw School of Economics. (PAP)

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