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Polish Loan Market Sees Gradual Return to Balance After Legislative Changes

FINANCEPolish Loan Market Sees Gradual Return to Balance After Legislative Changes

After a challenging period of legislative changes, when the loan market significantly slowed down, it is now gradually returning to balance – this is indicated by the January data, which is the first month when the industry came under the supervision of the Polish Financial Supervision Authority (KNF). According to an analysis by the Foundation for the Development of the Financial Market, lending institutions, excluding the BNPL segment, granted 334 thousand loans amounting to PLN 1.177 billion in January. In comparison to last year’s results, this represents an increase of 11.5 percent in numerical terms and nearly 15 percent increase in terms of the value of provided financing. However, such double-digit growth dynamics are not a sign of a revival in the market but an effect of the low comparative base from last year, following the tightening of regulations governing the loan market.

The beginning of the year in the lending industry is generally a worse period in terms of sales. After the noticeably increased sales during the holiday season, January and February are usually characterized by deep declines. However, this time the sector’s results may surprise. Lending institutions granted 334 thousand loans in January compared to 330 thousand a month earlier (+1.5 percent) and 300 thousand in the same month of the previous year (+11.5 percent). The value of granted financing reached 1.177 billion PLN in January compared to 1.143 billion PLN in December (+3.0 percent) and 1.025 billion PLN a year ago, which is as much as 14.8 percent more y/y.

The Foundation for the Development of the Financial Market emphasises that there were two factors having a favorable impact on the sector’s results: the greater number of working days in January 2024 compared to the compared periods, and the weak results of the industry from the previous year, when the market was just adjusting to the new conditions imposed by new regulations. January 2023 was the first full month of implementing new regulations that significantly limited the amount of consumer loan costs beyond interest, which constitutes the main source of income for loan institutions. At the time a significant reduction in loan supply was observed with a significantly increased demand for non-bank financing. According to CRIF data, interest in loans has not weakened and still continues to remain at a higher level – in January the number of queries about customers applying for a loan reached a record value of 1.136 million, representing an increase of 10.5 percent compared to December and an increase of 26.2 percent year-on-year.

December less generous for the BNPL market than November

The BNPL (Buy Now Pay Later) market, for which the latest CRIF data is available for December 2023, recorded slight sales declines compared to the November figures. This does not mean, however, that the BNPL market is slowing down – quite the contrary, considering results in relation to the year, which are characterized by high double-digit growth. This time it is largely due to seasonality. November e-commerce promotions associated with Black Friday and Cyber Monday significantly drive the sales of deferred payments, hence, there is a high comparative base in relation to month-on-month. Number of transactions in the buy now pay later formula reached 1.08 million in December, while a month earlier the result was 11.4 percent higher (1.21 million transactions). On the other hand, the value of financing provided by deferred payment operators was 14.4 percent lower than in November, reaching the level of PLN 353.1 million in December. Nevertheless, the year-on-year results are still clearly positive: 36.9 percent in numerical terms and 32.7 percent in terms of value, which confirms the thesis that the market is still in a growth phase. The number of customers using deferred payments was about 500 thousand in November, and the average amount of a single transaction was 327 PLN.

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