In May 2026, Poland’s banking sector earned less than a year earlier, mainly because interest margins continued to narrow following interest-rate cuts. At the same time, banks are expanding lending, loan-book quality has improved to its strongest levels in years, and high capital and liquidity surpluses continue to reinforce the stability of the entire system.
The latest data from the Polish Financial Supervision Authority show a banking sector at a crossroads. Net profit after the first five months of 2026 was clearly lower than a year earlier, while net interest margins continued to narrow as a result of the interest-rate cutting cycle. At the same time, lending activity is accelerating, the quality of loan portfolios is improving across almost all segments, and capital and liquidity buffers remain many times higher than the regulatory minimum.
Sector Structure and Concentration
At the end of May 2026, 30 commercial banks, 488 cooperative banks and 35 branches of credit institutions and foreign banks were operating in Poland. Commercial banks accounted for 88.8% of the sector’s assets, cooperative banks for 8.0%, and foreign branches for 3.2%.
Foreign capital controlled 47.0% of sector assets, the State Treasury 42.7%, and domestic private capital 10.3%. The branch network continued to shrink: over the past year, the number of branches fell from 4,898 to 4,860, although employment in the sector remained broadly stable at around 149,700 people.
The CR5 concentration ratio, measuring the share of the five largest banks in total assets, stood at 55.2%, while the Herfindahl-Hirschman Index reached 801 points. Under commonly used thresholds, this indicates that the market remains competitive.
Financial Results Under Pressure From Narrowing Margins
The banking sector’s cumulative net profit after the first five months of 2026 amounted to PLN 17.7 billion, down PLN 3.3 billion, or 15.6% year on year, from PLN 21.0 billion in the corresponding period of 2025.
May itself brought an improvement compared with April. Net profit reached PLN 4.4 billion, up PLN 0.6 billion, or 15.5%, month on month.
The largest single factor reducing profits year on year was lower interest income, down PLN 7.5 billion. This reflected the National Bank of Poland’s interest-rate cutting cycle, which began in May 2025. The decline was partly offset by lower interest expenses, which improved the result by PLN 6.2 billion, as well as lower bank tax and corporate income tax charges, together reducing the year-on-year burden by PLN 4.9 billion.
Profitability: Net Interest Margin Is Narrowing Sharply
The decline in profit is reflected in the sector’s efficiency indicators. Sector return on equity, measured on a trailing 12-month basis, fell to 14.76% from 15.98% a year earlier.
Net interest margin narrowed from 3.77% to 3.42%, its lowest level in the available data series since May 2024. The cost-to-income ratio also increased, reaching 45.1%, compared with 43.0% a year earlier.
The only factor supporting profitability was a lower cost of risk. The ratio of impairment charges and provisions to income fell to 10.7% from 15.0% a year earlier, indicating that banks are creating significantly fewer provisions than they did in 2025.
Why the Margin Is Narrowing
Since May 2025, the Monetary Policy Council has cut the NBP reference rate from 5.75% to 3.75%. Banks, which are financed largely through deposits that typically carry a lower cost than loans, are affected asymmetrically by this process. Loan interest rates fall faster than the cost of funding, putting pressure on net interest margins.
The growing share of more expensive term deposits in the liability structure has deepened this effect. Term deposits accounted for 31.0% of non-financial sector deposits, compared with 17.6% five years earlier.
Lending Activity Is Accelerating
Despite pressure on margins, banks significantly increased the volume of loans granted. Gross receivables from the non-financial sector rose by PLN 9.9 billion in May 2026, or 0.7% month on month, and by 8.4% year on year, reaching PLN 1,335.3 billion.
Household lending increased by PLN 5.2 billion month on month, while loans to enterprises rose by PLN 4.7 billion. On an annual basis, lending to households grew by 7.5%, while corporate lending expanded by 10.1%.
Consumer loans are growing the fastest, rising by 11.0% year on year to PLN 233.5 billion, the strongest pace in at least five years. The portfolio of housing loans to households increased by 7.4% year on year to PLN 516.3 billion, continuing its recovery after the deep decline of 2022–2023, when volumes were falling by as much as 9.3% annually.
Loan Quality: Best in Years
Improving asset quality is one of the strongest features of this year’s data. The share of impaired loans, classified as Stage 3, in the non-financial sector portfolio fell to 4.5% from 4.9% a year earlier, with impairment coverage at 57.6%.
The improvement is visible in almost every segment. Household mortgage loans had the lowest NPL ratio in the entire dataset, at 1.2%, compared with 1.5% a year earlier. Consumer loans fell to 5.5% from 6.3%, while loans to small and medium-sized enterprises declined to 6.2% from 6.6%.
The only segment moving in the opposite direction was large enterprises, where the NPL ratio increased to 7.0% from 6.8% a year earlier. This may indicate that weaker economic conditions are affecting larger corporate borrowers more than small and medium-sized businesses.
Deposits: Households and Companies Continue to Save More
Deposits from the non-financial sector rose to PLN 2,185.8 billion in May 2026, up 10.4% year on year. Household deposits reached PLN 1,541.3 billion, increasing by 9.6%, while corporate deposits rose to PLN 597.6 billion and recorded their fastest growth in years, at 13.0% year on year.
The loan-to-deposit ratio increased to 59.1%, meaning that banks still have a substantial surplus of deposit funding over lending activity.
The long-term shift from current accounts towards term deposits is also continuing. Term deposits accounted for 31.0% of all deposits, compared with 17.6% five years earlier.
Capital and Liquidity: Safety Buffers Remain Strong
The sector’s capital and liquidity position remains strong and stable, significantly exceeding regulatory requirements.
| Indicator | Value | Required Minimum | Comment |
|---|---|---|---|
| Total Capital Ratio (TCR) | 21.3% | approx. 10.5%–13.5%* | Commercial and cooperative banks, March 2026 |
| Tier 1 Capital Ratio | 19.8% | approx. 8.5%–11.5%* | March 2026 |
| Own Funds | PLN 291.6 billion | — | +9.6% year on year |
| Liquidity Coverage Ratio (LCR) | 234% | 100% | Commercial banks, May 2026 |
| Net Stable Funding Ratio (NSFR) | 171% | 100% | Commercial banks, March 2026 |
* Minimum capital requirements differ between banks depending on individual supervisory buffers, including Pillar II requirements, the countercyclical buffer and the systemic-risk buffer. The ranges above are indicative only.
The Final Stage of Swiss Franc Mortgages
The portfolio of Swiss franc-denominated household mortgage loans continues its long-term wind-down. The number of active contracts fell to 96,400 from 159,700 a year earlier.
The portfolio value, already reduced by provisions for legal risk in line with IFRS 9, declined to CHF 3.6 billion from CHF 9.2 billion a year earlier. This reflects both repayments and currency conversions, as well as increasing impairment coverage for legal risks related to Swiss franc mortgage litigation.
Methodological Note
Significant changes in some values and ratios between December 2025 and January 2026 result from the exclusion of receivables and liabilities relating to flow-through funds from reporting submitted by Bank Gospodarstwa Krajowego, as well as the reclassification of these items by banks from the financial sector to the general government sector.
The change followed NBP Management Board Resolution No. 45/2025 of 18 December 2025. Data marked with an asterisk in this article refer to categories materially affected by this change and should not be interpreted as a purely market-driven change in the scale of banking activity.
Source: Polish Financial Supervision Authority, Commercial Banking Department, Banking Sector Analysis Team, “Monthly Data on the Banking Sector as at the End of May 2026”, based on NBP reporting submitted on 30 June 2026. Own analysis based on UKNF materials. This article is for information purposes only and does not constitute investment advice.
