Banking sector remains resilient despite foreign currency mortgage threat

Rafał Guz/PAP

The Polish banking sector has remained highly resilient, with mortgages denominated in foreign currency being its only threat, shows a report by the central bank.

"The legal risk connected with the portfolio of mortgages denominated in foreign currency and the weakness of some institutions has remained the most significant source of threats to the Polish financial system," the Financial Stability Committee (KSF) reported after discussing on Friday the report prepared by the National Bank of Poland (NBP).

"The banking sector has remained highly resilient, even in a situation when several sources of risk have materialised," the KSF wrote in a statement and added that there is high macroeconomic and geopolitical uncertainty caused by Russia's invasion of Ukraine.

The KSF also said that the cost of the pressure exerted by expectations of support for borrowers could create another burden for banks.

The Financial Stability Committee is a body responsible for shaping macroprudential policy. It comprises four main institutions responsible for the security of the financial system, namely, the NBP, the Financial Supervision Authority, the Ministry of Finance and the Bank Guarantee Fund.