Financial Stability Report – June 2009
The “Financial Stability Report” is published by the National Bank of Poland twice a year and it presents the assessment of the current standing of financial institutions and the outlook for risks to stable functioning of the financial system. Financial system stability is a situation when the system performs all its functions in a continuous and effective way, even when unexpected and adverse disturbances occur on a significant scale.
The latest edition – "Financial Stability Report – June 2009" is based on data available up to June 10, 2009.
In the opinion of the NBP, the conditions in the economic environment of the domestic financial system have worsened markedly due to the global crisis. However, as Polish financial institutions entered the period of difficult economic conditions in a sound financial position, the global crisis has so far had only a limited impact on the safety of financial system functioning.
The liquidity of the domestic interbank market has been low since the fourth quarter of 2009. The resulting risks to stable functioning of financial institutions have decreased, however. Banks that had had so far relied on the domestic interbank market for a large portion of their funding, received funds from their foreign strategic investors. Banks that could have difficulties in raising liquidity in the market or hedging FX risk can use instruments offered by the National Bank of Poland under the "Confidence Pact".
In the medium term, the main risk to financial stability will be posed by the deteriorating macroeconomic outlook. The economic slowdown will lead to materialization of credit risk undertaken by banks during the period of rapid credit growth. The share of impaired loans in banks’ portfolios may therefore be expected to rise.
Macro stress tests conducted by the NBP show that the majority of the sector is able to absorb the increase in impaired loans without threat to its capital adequacy. These analyses show that even if banks' revenues significantly decreased, the majority of the banking sector is able to absorb the rise in credit risk costs with the revenue it generates and the capital buffer it holds