Polish Banks Bet on Corporate Lending Surge as Rate Cuts Loom

Polish banks are positioning themselves for a corporate lending boom in 2025, fueled by expectations of interest rate cuts from the National Bank of Poland (NBP) and a surge in government and EU-backed investment programs. Recent Q1 results from major lenders like Santander Bank Polska, Bank Pekao, and mBank highlight robust demand for corporate financing, driven by favorable economic conditions and anticipated monetary easing.

Corporate Loan Growth Takes Center Stage

Santander Bank Polska kicked off the year with a 22% year-over-year rise in new corporate credit sales (excluding factoring and leasing) in Q1 2025. CEO Michał Gajewski attributed this surge to anticipated rate cuts and EU-funded infrastructure projects. The bank’s focus on cash loans and Poland’s 4% GDP growth forecast for 2025 (per Bank Pekao) reinforces optimism about sustained demand.

Meanwhile, Bank Pekao, Poland’s second-largest lender by market cap, reported a 4% increase in total loans to PLN 186 billion, with its MID and SME segments—serving medium-sized and small businesses—leading the way. These divisions saw 12% growth in loan volumes to PLN 40.7 billion, driven by digital sales, which now account for 89% of all transactions. CFO Dagmara Wojnar noted that double-digit growth in SME cash loans (25% YoY) reflects strong credit demand across all business tiers.

The Rate Cut Catalyst

The NBP’s signaling of potential rate cuts has been a key driver of optimism. Governor Adam Glapinski hinted at reductions as early as May 2025, citing easing inflation (4.9% in March vs. a 5.4% projection). Bank Pekao analysts project a 100 basis-point cut by June, which would bring Poland’s benchmark rate down from its current 5.75% to 4.75%.

While the NBP remains cautious—leaving rates unchanged in April 2025—the central bank’s rhetoric has shifted from rigid hawkishness to a data-dependent stance. Analysts now broadly expect cuts to begin in the second half of 2025, with 50–100 basis points of easing by year-end, contingent on sustained disinflation and stable energy prices.

Risks and Resilience

Despite the positive outlook, risks persist. The NBP’s primary concern is inflation remaining above its 2.5% target due to administered energy price hikes and sticky wage growth. Additionally, Poland’s 4.5% non-performing loan (NPL) ratio—among the lowest in Europe—provides a buffer, but rising global energy costs could disrupt this stability.

Banks are preparing for rate cuts by hedging against margin compression. Bank Pekao, for instance, has PLN 20 billion in derivatives to offset a projected 20–25 basis-point decline in net interest margins per 100 basis-point rate cut. This strategic hedging, combined with strong capital positions (e.g., Bank Pekao’s 16.2% Tier 1 ratio), positions lenders to capitalize on the expected lending boom.

The Bottom Line: A Recipe for Growth

Polish banks’ Q1 performance and forward guidance paint a compelling picture for investors. Key catalysts include:
- Monetary easing: A potential 100 basis-point rate cut by mid-2025 could boost corporate borrowing.
- EU and government funding: Over PLN 100 billion in EU funds allocated to infrastructure and innovation projects will drive demand for long-term loans.
- Digital transformation: Bank Pekao’s 89% digital sales penetration and 3.5 million mobile users underscore operational efficiency.

With Santander’s 22% corporate credit surge, Bank Pekao’s 12% SME/MID growth, and Poland’s 4% GDP expansion forecast, the sector appears well-positioned to deliver returns. However, investors should monitor inflation trends and energy price developments closely.

Conclusion: Betting on Poland’s Banking Resilience

Polish banks are set to benefit from a confluence of favorable factors: declining rates, EU-funded investment waves, and a resilient economy. While risks like energy price spikes or inflation persistence could disrupt this trajectory, the sector’s strong fundamentals—low NPLs, robust capitalization, and digital agility—suggest these institutions are primed to capitalize on 2025’s opportunities.

For investors, the case for exposure to Polish banks hinges on their ability to navigate the rate-cut environment and sustain growth in strategic segments like SME lending. With corporate credit demand surging and the NBP’s dovish pivot, the outlook for Poland’s banking sector remains cautiously bullish.