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Bank profits in 2021 lower than before pandemic


h2Bank profits in Poland in 2021


Our Polish banking lawyers report that in 2021, the second year of the pandemic, banks’ profits reached almost PLN 9 billion. The result would have been much better, but two large organizations created provisions of up to PLN 3 billion in their balance sheets related to mortgage loans in Swiss francs.

According to KNF’s data, banks’ profits in 2021 amounted to slightly more than PLN 8.8 billion. This result is PLN 9.2 billion better than the year before. However, it was also quite lower than the multiyear average before the pandemic, when it did not fall below PLN 13 billion.

Positive financial result of banks in Poland


In 2020, the sector’s loss (PLN 0.32 billion) resulted from PKO BP posting the costs of potential damages resulting from Polish court litigations regarding foreign currency loans. Originally, the sector recorded a profit of PLN 7.8 billion.

In 2021, 21 entities from the commercial sector and 495 cooperative institutions earned bank profits. Their combined financial result is PLN 12.5 billion. On the other hand, 25 organizations (nine commercial and 16 cooperative banks) recorded a total loss of PLN 4 billion.

The vast majority of that amount (PLN 2.96 billion) was borne by mBank and Bank Millennium, which at the end of last year booked the costs of potential damages and settlements with the so called „franking parties” in their balance sheets. Excluding these charges, the two organizations would have made PLN 3.3 billion profit.

The source of Polish bank’s profits in 2021


In 2021, the sector’s interest income decreased by PLN 5.6 billion (10%) – to PLN 51.1 billion. This is a consequence of interest rates remaining near zero until October.

On the other hand, banks’ profits in 2021 were positively impacted by 15% (+ PLN 2.3 billion). On the other hand, banks’ profits in 2021 were positively affected by higher fee and commission income by 15% (+ PLN 2.3 billion). These include account and card fees, commissions on ATM withdrawals and card transactions.

Interest expenses were lower by half (- PLN 5 billion). This category includes benefits paid to deposit holders. The interest rate on deposits in 2021 remained at a record low level.

Provisions and write-downs were also lower by 1/3 (decrease from PLN 18.8 billion to PLN 13.3 billion) than the year before. On the other hand, dividend income increased from PLN 0.9 billion to PLN 1.4 billion.

As a result, the growth rate of the banks’ total operating income (PLN 68.16 billion) was five times bigger than that of total expenses and depreciation (PLN 40.1 billion). The former increased by 10%, the latter by 2%.

Due to higher revenues, banks paid income tax that was 50% higher than in the previous year. In the scale of the entire sector, discharged last year CIT (corporate income tax in Poland) exceeded PLN 6.1 billion (+ PLN 2.1 billion).

Author team leader DKP Legal Piotr Putyra
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