FX mortgage solutions seen as credit positive for banks - Moody's

According to the rating’s agency Moody’s, the recommendations presented by the macroprudential body KSF regarding the FX-denominated mortgages are credit positive for the Polish banking sector. “The committee’s framework is credit positive for Polish banks because it aims to strengthen their loss-absorption capital buffers and diminish the systemic risk from foreign-currency mortgage loans,” Moody's said. “We estimate that the financial effect of the risk-weight increase on the entire banking sector will be up to PLN 12 billion, equivalent to an approximately 120-basis-point decline in the sector’s Tier 1 capital ratio. Nonetheless, this will gradually amortize as the foreign-currency loan book amortizes. Additionally, we expect that banks will be able to accommodate the capital requirements with their existing capital buffers without curtailing lending,” Moody’s explained. Banks with the highest FX mortgage exposure, Millennium, mBank and Getin Noble Bank, will be the most affected.