BIK – forecasts for 2020 and summary 2019 in the lending market

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BIK summed up lending in 2019 and forecasts for 2020, announcing 75 billion consumer loans and over 70 billion housing loans. In 2019, thanks to the BIK Antifraud Platform, over PLN 100 million was protected against fraud.

Although 2019 was characterised by a high GDP growth of around 4% in the Polish economy, accompanied by salary increases and a still record low interest rate level – i.e. a good environment for borrowing – it was also, especially in its second half, marked by the risk of an impending economic slowdown. Although a slight slowdown became a fact at the end of the year, it did not translate into a decrease in the growth rate of consumer and housing loans taken out by Poles in the last months of the year.

The year 2019 was also marked by very high sales dynamics of housing loans and credit cards, as well as the fact that it was in 2019 that the CJEU issued two judgments which are and will be of significance now and in the years to come, both for the consumer and housing loan market. The value of the portfolio of private loans and loans shows the dominance of housing loans, which constitute 69% of the portfolio, with a value of PLN 460.1 billion and consumer loans – a 23% share of PLN 157.1 billion, with a small share of installment loans – 3%, credit cards – 2%, credit limits -2% and loans -1%.

Cash loans

The increase in the number of consumer loans granted in 2019 by 1.9% and 4.9% was influenced by the persistently low interest rates and an increase in household income, as well as the extension of contractual periods for which loans were granted. In 2019, banks and SKOK-i granted a total of 7.45 million consumer loans, which in value terms amounted to PLN 88.66 billion (including PLN 72 billion in cash loans alone). Almost half of the value of the cash loans granted is related to consolidation. This translated into the structure of consumer loans – the highest growth rate of the number of cash loans granted was recorded in the case of high-value loans exceeding 30,000 (7% y/y).

Low-quota cash loans have negative dynamics. Currently, over 41% of cash loans granted are loans exceeding PLN 50 thousand. The period of granting cash loans has also been extended – in 2019 it amounted to 45.5 months, with 23.1 months of actual repayment period. 54% of cash loans granted in 2019 are concluded for over 5 years. This trend may be halted in 2020 by the so-called “small CJEU”, i.e. a judgment of the EU court concerning the proportional reimbursement of commissions in the case of early repayment of a loan. With a fixed number of borrowers, this meant that Poles are taking out more and more high-value cash loans, which are largely consolidated.

– This is particularly important because high-value loans are the most harmful and closely related to the long loan period,” says Mariusz Cholewa, President of BIK.

– With the ratio of consumer loans to Polish GDP, which places Poland in the third highest position in the European Union, this indicator, which has been maintained for several years at the level of 9%, will not be conducive to further growth this year.

Non-banking loans

In total, in 2019, loan companies cooperating with BIK granted 2,745.1 thousand loans for a total of PLN 6.821 billion. In the sale of the whole 2019, loans up to PLN 1 thousand dominate in numerical terms, which constitute 38% of the granted financing. In value terms, loans granted for amounts below 1,000 PLN had a 9% share in sales. The highest positive dynamics of the number of loans granted in the whole 2019 concerned the ranges of low value loans (< 1 thousand PLN) and amounted to (+4.8%) and from the range of 2-3 thousand PLN (+5.7%). In value terms, the positive growth rate of loans from these two ranges was (+5.1%) and (+5.9%) respectively. The highest negative dynamics in terms of numbers and values in the whole 2019 in comparison to 2018 were recorded by loans from the amount range above PLN 5 thousand respectively: (-7.4%) and (-8.0%).

– For the lending companies, 2019 was a difficult year characterised by high regulatory uncertainty, which suspended a number of investment decisions and had a negative impact on the amount of loan sales – emphasises Mariusz Cholewa.

– Additionally, the improvement of the material situation of Poles reduced the demand for non-banking loans.

This translated into the result in 2019, in which loan companies granted only by (+0.8%) more loans than in 2018. In value terms, in 2019, financing was provided for a lower amount of
by (-3.5%) than in the previous year.

77% of people who use loans simultaneously have active loans in the banking sector. The total amount of debt of these borrowers is PLN 29.7 billion, their highest debt is due to cash loans – PLN 15.8 billion. Another is housing loans – here the borrowers’ debt reaches PLN 6.0 billion, followed by non-bank loans – PLN 5.3 billion.

– The quality of repayment of these liabilities in 2019 was not the best, and it may still deteriorate with the economic slowdown,” notes Mariusz Cholewa, especially if it is related to the shrinking labour market and decreasing real income (if only due to rising inflation).

Housing loans

The optimistic forecasts of the Credit Information Bureau concerning the sale of housing loans in 2019 were not as optimistic as the actual sales. BIK’s caution in forecasting the number and value of housing loans granted in 2019 was also due to the fact that it was difficult to assess the effect of the lack of a previously functioning housing support program for MDM.

In the housing loan market, we had a boom in 2019 and an indicator showing a debt to GDP ratio of housing loans as one of the lowest in the EU – which gives room for further growth. In the 12 months of 2019, banks granted housing loans for the amount of PLN 65.02 billion, i.e. 14.9% more than in the same period last year. However, the boom mainly concerned high-capital loans, which was related to rising property prices. The repayment quality of housing loans was highly stable at 0.78% at the end of December 2019. (average value of the “Residential loan portfolio quality index”).

– However, it may be of concern that the majority of loans are still granted at a variable interest rate and the fact that high-capital loans are characterised by a higher level of claims – says Mariusz Cholewa.

– Among such borrowers there are a lot of entrepreneurs, which may mean that high-value loans are taken by them to finance business activity. The economic slowdown will affect micro-entrepreneurs the most, which in consequence may result in a decrease in their income and, ultimately, in the late payment of liabilities under a housing loan – adds Mariusz Cholewa.

– As long as we have low interest rates, good economic situation, the quality of housing loans is very good, but a significant slowdown and increase in rates could change it. The installment would then be much higher and there could be problems with repayment.

The increase in the value of housing loans taken out in 2019 was largely due to an increase in the average loan value – by 10% (PLN 272.8 thousand). Among the factors positively influencing high demand and high sales of housing loans, one can point out the growing income of households, low interest rates and the increase in property prices.

– The development of the housing loan market in 2020 will be primarily influenced by rising property prices. The growth is also supported by the still high demand and a possible further increase in the number of people treating the purchase of apartments as an investment alternative – explains President Cholewa.

– Significant shortages of land resources may prove to be a brake, which will translate into a decrease in the number of developers’ offers and changes in the credit policy resulting from a probable change in the credit cycle, which will cause a decrease in availability and an increase in the credit price.

It should also be remembered that there is a high concentration on the residential loan market, about 75% of mortgage loan sales belong to 5 banks, which means that a change in the credit policy in one of them may limit supply.

The BIK Antifraud Platform protected the credit market in 2019 against a scam over PLN 100 million

Tangible progress in the field of fraud risk management in the financial sector in Poland is reflected in the systemic BIK service, the pillars of which are the latest technology and innovative approach to data management – sharing of information on fraud between all participants in the common system, which is essential for effective protection against fraud.

The heart of the anti-fraud system created by BIK is the innovative technologies “Hunter” and “FraudNet” by Experian, the world leader in IT services and data management. The solution has proven its effectiveness. Since its first launch, i.e. since November 2017, the BIK Antifraud Platform has already protected the banking sector from fraudulent activities for over 171 million PLN.

– The BIK Antifraud Platform is an initiative that implements the idea of broad protection against fraud of the entire financial market in Poland. It is a unique solution from the point of view of applying modern technologies, but above all, it brings benefits to the entire market – says Dr Mariusz Cholewa, President of the Board of BIK.