WARSAW: Moody’s has warned that Poland’s incoming bank tax threatens the profitability and credit ratings of the country’s lenders.
This is not the first time the policies of Poland’s new government have drawn criticism from credit rating agencies, writes Joel Lewin. Earlier this month, Standard & Poor’s downgraded Poland’s credit rating and put it on negative watch, after which Polish stocks, bonds and the zloty fell heavily. The downgrade did not go down well with Poland’s government, which branded it “incomprehensible”.
The new bank tax, brought in by the new Law and Justice (PiS) government, requires Polish lenders to pay 0.44 per cent of their adjusted assets every year. Moody’s estimates this will cost the sector PLN4.4bn (€1bn) this year, which equates to 32 per cent of banks’ annual earnings for the first 10 months of 2015/16. That could lop a third off bank’s return on assets (which was 0.9 per cent in the first 10 months of 2015) and their return on equity (8.5 per cent in the same period).
“Such a decline in net income would reduce banks’ ability to absorb shocks,” says Moody’s. The rating agency also warns the forced conversion of foreign currency mortgages being considered by PiS could “threaten the stability of the banking sector”. Moody’s says the bank tax could slash 16 – 64 per cent off banks’ net profit, pushing Bank BGZ BNP Paribas into a loss for 2016.
