Fitch: Polish banks likely to be upgraded

Fitch Ratings said in a special report that Polish banks could see further upgrades in their individual ratings over the next year on the back of a strong economy and increased demand for corporate lending. Most Polish banks continued to show improved performance at the net and operating levels for the first half of 2006.

Four Polish banks have had upgrades to their individual ratings in the past year, while none have had downgrades.

"While retail banking has been in the spotlight in recent years, many Polish banks remain dependent on corporate business. The pickup in demand in this area will provide a significant boost," Chris Birney of Fitch's financial institutions group in London said in the report.

While profitability and asset quality have been improving, liquidity has been decreasing and is likely to continue to decline, in the agency's opinion. Nonetheless, Fitch said that low loans-to-deposits ratios for most of the major banks mean that they are unlikely to be under pressure any time soon, even if the growth of assets in mutual funds at the expense of the retail deposit base continues and lending growth remains buoyant.

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