Results of PKO Bank Polski SA and Pekao SA in the European stress tests

Following the publication of the 2023 bank stress test results by the European Banking Authority (EBA) (please see EventID 22384 in this context), the Polish Financial Supervision Authority (KNF) has published a statement in this context. Therein, KNF informs of the stress test and briefly describes the current situation of Polish financial institutions in light of the European Court’s judgement with respect to foreign currency housing loans.
#### The stress test
The stress test evaluated 70 major banks in the EU and Norway, constituting around 75% of the banking sector’s total assets, using the highest level of consolidation in the EU. The evaluation assessed the resilience of EU banks under both a baseline and an adverse scenario over a three year period (2023-2025), thereby using static balance sheet data as of December 2022. Importantly, the evaluation did not consider any adjustments to business strategies and management actions as a consequence to a crisis. The results may be found here.
#### Participating Polish banks and institutions‘ current capital situation
Two Polish banks, PKO Bank Polski S.A. and Pekao S.A., took part in the stress test. Overall, the KNF notes, has the banking sector demonstrated stability in recent months, with banks working towards restoring profitability. However, there remains a notable impact from legal risks linked to foreign currency housing loans following the judgement of the European Court. Therefore, the KNF is closely monitoring both the sector and individual banks.
The KNF concludes by stating that it was primarily the prudent dividend policy established by the KNF and the correct handling of these requirements by the banks, that financial institutions have been able to build up sufficient capital reserves and were so well prepared for major crises such as the COVID-19 pandemic or the Ukraine conflict.