In April 2024, compared to April 2023, banks and credit unions (SKOKs) issued a higher number and value of all types of loans. Numerically, there was an increase in installment loans (+87.1%), housing loans (+66.8%), cash loans (+25.6%), and more credit cards were issued (+6.7%). The value of loans also increased, with housing loans up by (+93.2%), cash loans by (+42.1%), installment loans by (+33.3%), and credit card limits by (+16.9%).
From January to April 2024, banks and SKOKs issued more housing loans (+150.3%), installment loans (+94.5%), cash loans (+14.4%), and more credit cards (+0.9%) compared to the same period last year. The value of these loans also saw significant growth, with housing loans increasing by (+204.4%), installment loans by (+34.9%), cash loans by (+26.3%), and credit card limits by (+10.6%).
All credit products maintained a growth trend in sales in both numerical and value terms in April 2024. Installment loans showed high sales dynamics (+33.3%), especially for amounts up to 1,000 PLN. Numerically, the growth was even more spectacular, reaching (+87.1%). This high growth is mainly attributed to low-amount installment loans, which result from converting unpaid obligations from interest-free periods in deferred payment transactions (BNPL) into installment loans through the purchase of these receivables by banks.
The activity in cash loans also had a positive outcome for the banking sector. The number of cash loans increased by over one-fourth (+25.6%) in April this year, and the value of loan issuance rose by (+42.1%) year-over-year.
The average value of installment loans granted in April 2024 was 1,829 PLN, which was 28.8% lower than in April of the previous year. Meanwhile, the average value of cash loans was 26,119 PLN, an increase of 13.2% compared to April of the previous year.
There was also a noticeable increase in interest in credit cards in April 2024. Compared to April of the previous year, the number of credit cards issued rose by 6.7%, and their value increased by 16.9%.
Housing loans deserve a separate analysis as they continue to be in high demand despite the lack of a new borrower support program. The previous program accounted for about 60% of loan activity in the second half of 2023. What then accounts for the still strong loan activity? There are several main sources of this phenomenon.
– In April 2024, banks issued 16.4 thousand housing loans worth 6.77 billion PLN. The continued high sales compared to the first half of last year are influenced by higher creditworthiness, primarily due to a real wage increase (about 10%) and the stabilization of interest rates at about 1.0 percentage point lower than last year. This directly translates into a higher value of granted housing loans. In April 2024, the average loan amount was 413.1 thousand PLN, 15.8% higher than a year earlier – says Professor Waldemar Rogowski, Chief Analyst of the BIK Group.
– The impact of the “Safe Credit 2%” Program on April’s loan activity is almost non-existent. According to BIK statistics, from the pool of applications submitted in December 2023 under this Program, banks issued 536 loans (3% of all housing loans granted) worth 237 million PLN (3% of the total amount of all loans) in April – confirms Professor Rogowski.
– Compared to the historically record-breaking January, the value of mortgages granted in April decreased by approximately 3.53 billion PLN. The absence of new applications from last year’s Program is also visible in the number of people applying for a housing loan – 32.36 thousand in April compared to 46.34 thousand in December 2023. Until the launch of a new program, a further decline in loan activity can be expected in the coming months. It is estimated that the absence of a program could reduce loan activity by about 4-4.5 billion PLN compared to January. However, this decline may be partially offset by housing loans taken out by individuals who, due to rising property prices, expedite their loan decisions but cannot formally benefit from the new program. The introduction of a new government program could stimulate an increase in property prices, a phenomenon that occurred last year. It might be worth reflecting on this.
Good Quality of Granted Loans Remains
The monthly reading of the Quality Index for the housing loan portfolio in April 2024 was 1.11%. Over the past 12 months (from April 2023 to April 2024), the quality of the portfolio slightly deteriorated, as evidenced by the index increase of (+0.06 percentage points).
– The current reading of the Housing Loan Quality Index is better than a month ago (a decrease of -0.12 percentage points). The default rate of złoty-denominated loans is low, and loans granted in an environment of higher interest rates are also being well repaid. Under these circumstances, it is hard to justify the continuation of credit moratoria this year, especially for loans taken out at periodically fixed interest rates. For individuals facing real issues in managing their loans, the appropriate support tool is the Borrower Support Fund (FWK), especially since access to it has been liberalized – says Waldemar Rogowski.
The current – April reading of the Installment Loan Portfolio Quality Index was 1.31% – only 0.20 percentage points higher than the Housing Loan Quality Index. Cash loans, however, exhibit significantly higher default rates, the highest among all product groups. The April reading of the Cash Loan Quality Index was 4.15%.
– Compared to April 2023, the value of both the Cash Loan Quality Index and the Installment Loan Quality Index improved (decreased) by 0.68 percentage points and 0.25 percentage points, respectively. Further quality improvement should be mainly supported by the real wage growth with a stable level of interest rates. The value of the Credit Card Quality Index in April was 3.42%, the highest value of the Index among all product categories except cash loans. Annually, however, the value of the Index decreased (improved) by (-0.48 percentage points) – notes the BIK analyst.
