Polish banks' profit steady in 2013 despite rate cuts - regulator
WARSAW Feb 7 (Reuters) - Polish banks withstood a profit margin squeeze last year, with their joint net profit falling a mere 0.3 percent despite record low interest rates, the local financial watchdog said on Friday.
Polish banks' aggregated net profit in 2013 was almost unchanged from 2012 at 15.4 billion zlotys ($5 billion), the regulator KNF said.
In an effort to support sluggish economic growth, Poland's central bank cut its main interest rate last year to 2.5 percent from 4.25 percent in December 2012.
Most banks, though, were resilient enough to withstand the pressure on their margins.
"Some time ago the Polish regulator forced banks to curb their appetite for hazardous lending and this resulted in a lower cost of risk last year, which partially offset the drop in margins caused by rate cuts, " said Kamil Stolarski, an analyst at Espirito Santo.
"Another important factor that allowed banks to maintain their profits last year was the fact that they were no longer forced to create new reserves for the ailing construction sector which almost went bankrupt in 2012, " Stolarski added.
Bad loan provisions fell last year by 8 percent to 7.35 billion zlotys, KNF said in a statement.
Poland's banking sector, 70-percent owned by foreign players, avoided the wider bad debt problems still dogging many European counterparts, with the local watchdog shielding the industry through strict regulations.
Economic growth in Poland, the sixth largest European Union country with 38 million people, has outperformed that of the euro zone since 2008 and is seen reaching 3 percent in 2014.
All three major banks that have published fourth-quarter results so far - mBank, BZ WBK and Bank Millennium - reported year-on-year profit growth.
($1 = 3.0733 Polish zlotys) (Reporting by Marcin Goclowski; Editing by Mark Potter)