Banking situation stable in first half of 2016: KNF

The situation in the banking sector remained stable in the first half of 2016, due to robust GDP growth and record low interest rates, according to a report by the Polish Financial Supervision Authority (KNF). The KNF reported that in the first half of this year there was a further strengthening of the capital base of banks. Equity grew from PLN 159.1 billion at the end of last year to PLN 170.4 billiin at the end of June this year, i.e. 3.2 percent; the Tier I capital ratio grew from 15 percent to 15.8 percent, and the total capital ratio from 16.3 percent to 17.4 percent. “Despite the relative satisfactory current situation, it is recommended that banks maintain their strong capital base, and in the case of certain banks, that they strengthen it further. The main risk factor in terms of capital remains the question of housing credit denominated in foreign currencies. In addition, the declining profitability of the banking sector has led to a reduced ability to create capital through accumulation of profits,” the KNF stated in its report.