Bargain-basement banking
Contrary to popular belief, banking costs in Poland are not only among the lowest in the EU, but they are also falling.
According to the Polish Bank Association (ZBP), the cost of basic banking services fell by three percent in Poland in recent years, while worldwide they have fallen by just 1.5 percent. In the last four years, interest rates on mortgage loans have decreased from 12 percent to 5.75 percent. Consumer loans have also become cheaper - their interest rates have fallen by three percentage points on average.
The president of ZBP, Krzysztof Pietraszkiewicz, underlined that the average annual cost of a basket of standard banking services was much cheaper in Poland than in other EU states. "In Poland it amounted to EUR 81 [zł.318], in Central Europe it was EUR 83 [zł.326], in the eurozone - EUR 88 [zł.345]," he said.
Costly cash
The cost of non-cash transactions in Poland has decreased by as much as 40 percent in the last few years, from zł.12 in 2000 to the average of zł.7.4 today. However, more than 70 percent of all banking transactions using banking cards involve cash. When considering services such as transfers, withdrawals, deposits and general maintenance of the account, transactions performed with the help of modern distribution channels, such as the internet and telephone, are much cheaper than traditional ones.
"Cash operations weigh heavy on the cost of banking services in Poland," said ZBP's general director, Andrzej Wolski. For example, money transfers ordered by telephone are 6.6 times cheaper than cash deposits, while in the case of the internet the same transaction can be even as much as 16.5 times cheaper.
"Even a simple money transfer is 2.5 times cheaper," Wolski said. Why are cash operations so expensive? "Banks and agents must undertake a total of 40 operations during cash transactions," Pietraszkiewicz explained.
Customers are noticing the trend - in the last five years the number of accounts with electronic access has grown thirteen-fold. According to ZBP statistics, as of June 2006 there were almost 8.6 million entities using internet banking.
However, ZBP admitted that the cost of managing a bank account has increased in recent years. Last year, in the 22 commercial banks polled by the organisation, the cost grew from zł.3.07 in 2002 to zł.4.64 per customer per month. "Even if we wanted to lower the cost of banking services, we simply can't do it - the penetration is low, the level of use of services is low, as is the average number of transactions per person. We are also last in the EU as far as transactions using banking cards go," Wolski said.
Get online
The prices of banking services depend on the banking penetration rate. In Poland it is significantly lower than in other EU member states - the number for our country is 59 percent while the EU average is around 84 percent. "While 70 percent of Polish households have a bank account, over 95 percent of those in the old EU can boast one," Pietraszkiewicz said.
While the widespread introduction of new technologies in banking would result in the lowering of costs and thus prices, the use of modern infrastructure in banking faces serious obstacles in Poland. Telecom services in Poland are among the most expensive in the world, and internet access is not widespread and is also relatively expensive. As far as internet use goes, Poland is ranked 20th among EU members.
But there are also positive sides to the story. "Poland has a unique chance of skipping over the era of expensive financial services, just like we have leap-frogged the check era," Pietraszkiewicz said, adding that the widespread use of the internet and telephone in banking could provide Poles with attractive prices.
Bumper revenues
While the banks' customers might be complaining about the price of services, the banks have no reason to be upset, as the industry has been experiencing significant growth. The Pekao SA group had a consolidated profit of zł.865 million in the first half of the year, which represented an increase of over 19 percent year-on-year. The company's revenue grew by almost eight percent, to reach zł.2.3 billion in H1 of this year. Bank BPH, the other half of this year's controversial merger, followed with zł.608.7 million, increasing its profits by 34 percent in relation to the first two quarters of last year.
Other banks boasted good results as well, Bank Zachodni WBK netted a profit of zł.463.6 million after the first two quarters of the year - almost 60 percent more than in the same period of 2005. The Kredyt Bank group made zł.296.4 million in the first half of the year - 27 percent more than in the corresponding months of the previous year. Millennium Bank's profits grew more modestly, by eight percent, to reach zł.140 million. The market leader Bank PKO BP is to release its results this week and company sources disclosed that its results could be record-breaking.
