Interest on deposits in Pekao reached 8%. “Banks are in trouble”
“The liquidity problem is so big that banks are fighting for deposits,” Skiba said in an interview with ISBnews, commenting on the recent wave of increases in interest rates at many banks. Including a week earlier, Bank Pekao offered a promotional interest rate on the savings account in the amount of 8 percent.
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“Banks have problems with outflows resulting from various factors, e.g. we had a wave of purchases of retail bonds, but also with the collateral that banks have to prepare as part of transactions for companies” – added.
However, Skiba believes that this investment war will not prove devastating for the market in the long run.
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“We are seeing a large wave of funds moving from” free “current accounts to interest-bearing deposits. it is more important than whether the interest rate on deposits is 5 or 7 percent.“- said the president.
President of Pekao: risk costs will increase
Leszek Skiba also points to other challenges faced by the financial sector.
“The cost of risk will increase, and the proportion of loans that will not be repaid may also increase next year. This is a natural phenomenon for banks in a situation of economic slowdown and persistently high interest rates, “Skiba told ISBnews.
“If our costs of risk increase to 60 bp, it will be in line with the targets set out in our strategy,” he added, making a reservation that it is difficult to clearly forecast the level of costs, because it all depends on how long the slowdown will last.
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Bank Pekao’s strategy for 2021-24 assumes the level of standard risk costs at 50-60 bps. At the end of the first half of 2022, standard costs of risk amounted to 51 bps, after taking into account the provisions for covid effects and the risk related to Swiss franc loans – 67 bps.
“It can be expected that some banks will face greater increases in the cost of risk, depending on the funding structure“- pointed out the president.
In his opinion – if the optimistic forecasts that the recession will last through the winter and in the middle of next year will start to decline in the middle of next year are met – we may not even feel the turbulence.
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“However, if the market problems last two years, the scale of cost increases may be more serious“- Skiba summed up.
Bank Pekao is part of the PZU group – the largest financial group in Central and Eastern Europe. Since 1998, the bank has been present on the Warsaw Stock Exchange. The bank’s total assets amounted to PLN 250.57 billion at the end of 2021.
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