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PKO: Impact From CHF Mortgages Growing; Negative For Local Banks

FINANCIALS

PKO (PKO PW) reported the costs of CHF mortgage restitution after the European close on Friday. Credit negative for Polish banks, Santander and ING both having assets in the country.


  • Mgmt sees additional costs of PLN1.128bn from mortgages “denominated and indexed to” CHF after a range of recent ECJ (European Court of Justice) cases.
  • This will bring the total 4Q23 legal provisioning expected to PLN1.988bn which looks like it will fully wipe out the quarter’s earnings (consensus has net income at c.PLN1.6bn).
  • The CHF mortgage issue is a known risk, but the continued negative court actions are growing the impact. This looks to be credit negative but relatively minor, the above figure is 4.6% of Sep-23 CET1, so contained and more of an equity risk. PKO reports on 8-Mar.
  • Could be viewed negative for Santander (SAN SM) and ING (INGA NA) via their local subsidiaries, Santander Polska and ING Slaski, along with the other Polish majors (Pekao and Millenium).
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