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May 18, 2021
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Banks are becoming liquid – says economist PKO BP – Blocksats

“The ratio of loans to deposits fell to 92 percent, the lowest since June 2007. In February it was 92.6 percent” – He said bankier.pl PKO BP economist Marcin Czaplicki. He added that banks are becoming “Surplus liquidity”.

PKO BP expects an increase in deposits and a slowdown in lending

On the one hand, we expect a rapid increase in deposits in the short term, supported by the NBP asset purchase program. In the medium term, the slowdown in wage growth, and even a decline in it, as well as a decrease in turnover in the economy should weaken the growth rate also in this category – believes Czaplicki. – On the other hand, we expect a slowdown in lending – completes this picture.

He added that the increase in total deposits in March accelerated (10.3 per cent year-on-year versus 8.8 per cent year-on-year in February, after correction about course).

“This was primarily due to growth volume government deposits (by over 28% month to month, adjusted for exchange rates), but also enterprises and non-monetary financial institutions. Households were more willing to change term deposits to current ones ”

– added.

Salaries are rising relatively fast, and unemployment – as can be seen from the Central Statistical Office data – is not growing yet, which means that Poles’ wallets are larger and the money is usually kept in deposits – notes Czaplicki.

Banks will start having problems?

“Loans will grow more slowly. There are no specific incentives for banks to increase lending “

– he assessed in an interview with bankier.pl.

He also believes that the costs associated with launching credit lines and the greater risk of credit defaults due to the worsening economic situation will lead to a decline in banks’ profits.

As a result, banks become excess liquid, having a surplus of deposits that they cannot use to finance new lending, and this reduces their profitability. Lower profitability means less retained capital and lower loan growth in the future, and thus a further decline in the loan-to-deposit ratio and the circle is closing. “

– forecasts.

So, in a sense, are we going to repeat the banking crisis of 2008? This would be another strong blow to markets, but also a pro-growth signal for cryptocurrencies.

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