At the end of April, Getin Noble Bank published reports on 2021 and the first quarter of 2022. Its financial position has deteriorated. Due to the large reserves of francs, a net loss of approximately 1.1 billion PLN was recorded in 2021.In addition, the revaluation of the treasury portfolio (0.4 billion PLN) contributed to a further decline in equity (at the end of March, it was only PL530 million). However, some elements of the first quarter results brought some optimism. We recently wrote about the capital situation in Getin In this textin turn, the chances of getting out of trouble on your own We have described it here.
“The fact that Getin is still operating suggests it may still have a future,” S&P analysts assess. They noted that in the first three months of this year, the bank experienced some outflow of deposits (this concerns the entire sector due to the war), but it was – as announced by the management – a “plan”. Analysts noted that the funding base from the deposits of retail customers remains almost the same and the bank has sufficiently high liquidity ratios.
Getin has a positive profitability before deducting the Swiss Franc mortgage allowance from the result, and the negative impact of the decrease in the valuation of treasury bonds on the bank’s equity must be reflected in the future – experts of Standard & Poor’s point out. More importantly, the first quarter results brought a glimmer of hope in a potential rise in net interest income due to higher interest rates.
The problem is that the yield on Treasuries is increasing (and their prices are falling), which will continue to hit Getin’s shaky capital. “Another increase in interest rates in the second quarter and a decrease in the valuation of the bank’s assets will lead to a loss of equity, but this will likely be mitigated by an increase in interest income,” we read in the commentary.
See also: KNF presents a trustee to Getin Noble Bank. The company responds and announces a new plan
Experts expect an increase in the bank’s revenue, as well as the industry as a whole, due to higher prices, but they are paying attention to the costs. Although they do not expect a significant increase in credit write-downs, they are concerned about the cost of political plans. It concerns the government’s ideas to support borrowers, which were presented by Prime Minister Mateusz Morawiecki on April 25. Banks will bear the costs of implementation, You can read more about it in this text.
The Board of Directors of Getin Noble Bank has submitted a new recovery plan to the Polish Financial Supervisory Authority and is awaiting approval. However, his assumptions are confidential. The previous plan was rejected by the Polish Financial Supervisory Authority at the end of 2021. Now, such a risk also exists, but even if it is accepted, two main questions arise – write S&P analysts.
The first is that How many additional provisions for mortgage loans in Swiss francs still to be made. The franc is a big problem for Getin, as it is worth 8.8 billion zlotys, or 27 percent. Loan portfolio which is 16 times larger than the bank’s equity. The second question is How quickly management will be able to close the equity gap. Currently, it is estimated at 2.5-3.2 billion PLN.
See also: Getin Noble Bank should try to deal on its own. It may not be possible to raise capital
Analysts write that KNF now has a conundrum of what to do with Getin. If supervision determines there is a chance of getting out of trouble, the credibility of the bank’s recovery plan will be key. It will be important how reliable and judicious the board’s assumptions are regarding franc reserves and whether it has found a source of new capital, or whether it will depend on accumulated profits expected in the future.
If the KNF and the Bank Guarantee Fund have doubts about Getin’s future, the report reads, one option may be to sell it under a mandatory restructuring or if the bank continues to operate. “Because Getin has sufficient liquidity, all options are on the table. If liquidity dries up, it could speed up decision-making on insolvency” – assessed S&P analysts.
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