WOOD Flash – Polish banks: BFG charges hiked - the first risk to 2019E banks’ earnings materialises

The BFG has announced the 2019E contributions to both the resolution and deposit guarantee funds. The banks have been asked to pay PLN 2bn to the resolution fund and PLN 791m to the banks’ guarantee fund, in total. The combined amount of PLN 2.8bn represents a hike of c.27% vs. 2018, higher than our current assumptions for 2019E for the Polish banks under our coverage: we had allowed for a c.5%+ increase of contributions vs. last year. In light of recent market discussions on the viable risk of contributions rising materially in 2019E, however, we see the announcement as only confirming the market’s negative expectations, and thus believe that the outcome might have been digested already. We also note that, yesterday, Polish lawmakers moved forward with FX mortgage relief fund draft bill, as Parliament’s finance committee approved a draft of the law and sent it to a vote in the full house, after two days of debate. While we are still not convinced that the FX mortgage relief fund draft bill would go through, we note that we also consider it a risk factor, and keep our 12M PTs for the Polish banks adjusted for an equivalent of two-year contribution to the fund. This is another factor that could be damaging to sentiment which we raised in our latest update on the Polish banks. We keep our cautious stance on Polish banks.