Polish banks increased net profit 60.1% yoy to PLN 6,862 mil in the second quarter of 2023 and generated an annualized ROE of 12.0%. Operating income rose 8.65% yoy, cost to income dropped to 44.5% and banks' share of bad loans grew to 4.09%. In the last quarter, Pekao generated the biggest profit while mBank produced the biggest loss.
Revenues increased 8.65% yoy to PLN 26,662 mil in the second quarter of 2023. Net interest margin increased by 0.294 bp to 3.36% of assets driven by a positive asset growth (6.71% yoy) and higher interest rates (up 5 bp to 6.90%).
Operating costs fell 14.7% yoy and banks operated with a cost to income ratio of 44.5% in the second quarter of 2023. With 143,887 employees in the sector, staff accounted for 51.2% of total costs. Banks paid their staff PLN 14,092 per person last quarter.
Banks put aside PLN 5,209 mil in provisions in the second quarter of 2023. Provisions have "eaten" some 38.3% of operating profit in the second quarter of 2023 as cost of risk reached 1.31% of average loans. Share of bad loans increased to 4.09% of total loans compared to last month and provisions covered 84.0% of non-performing loans.
Asset growth slowed down to 2.05% qoq and loans decreased 0.064% qoq (up 0.522% yoy). Mortgages fell 1.64% qoq (up 4.69% yoy), consumer loans rose 1.20% qoq (down 3.02% yoy) and corporate loans decreased by 1.75% qoq (up 1.05% yoy).
Deposits grew 2.00% qoq and rose 7.57% yoy, so loans to deposits reached 77.5% at the end of the quarter. Polish banks remain well-capitalized with Tier 1 ratio at 18.5% at the end of June 2023.
Pekao was the most profitable bank in the second quarter of 2023 with a net profit of PLN 1,694 mil, mBank was the most cost efficient (cost to assets at 1.31%), Santander Bank Polska grew its loans the most (up 1.37% qoq) while PKO BP had the biggest increase in deposits (4.68% qoq).