Moody's: outlook of Polish banks remains stable

Moody's Investors Service said the outlooks for the 15 Polish financial institutions it rates remain stable despite an increasingly competitive environment due to the banks' ongoing focus on improving earnings and developing their retail banking activities.

The banks' ratings are largely driven by the support provided by their foreign strategic investors and the owners' experience of rationalizing institutions in Central and Eastern Europe, the agency said. Moody's predicted that going forward, the presence of major foreign banks should continue to strengthen the sector in terms of stability, strategies, risk management, quality of service and client focus and product and technological expertise.

The foreign currency bank deposits ratings of many of the bank remain constrained by the country's A2 country ceiling, however, and most Polish banks' financial strength ratings continue to reflect their weak recurring earnings power, profitability, efficiency and asset quality indicators. Competition remains fierce, and although the banks' overall risk profile is improving and non-performing loans are falling thanks to workouts and an increasing amount of recoveries, Polish banks continue to exhibit the highest level of problem loans in the region, according to Moody's.

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