January 29, 2020 / 7:00 AM / 24 days ago

UPDATE1-Santander Polish unit profit slumps 36% on CHF mortgage provisions

WARSAW, Jan 28 (Reuters) - Poland’s biggest non-state lender Santander Bank Polska posted a 36% slump in fourth-quarter profit on Wednesday, as the bank set aside millions of zloty for court cases concerning foreign currency mortgages.

Net profit for the quarter ended Dec. 31 fell to 507 million zloty ($132.74 million) from 788 million zloty a year earlier. The figure, however, was better than an average estimate of 449 million zloty, based on a Reuters poll of 8 analysts.

The bank said earlier this month it had created provisions worth 357 million zloty, mainly connected to last year’s European Union top court ruling that emboldened consumers to sue banks for Swiss franc-denominated mortgages.

The ruling allowed Polish consumers who took out mortgages in Swiss Francs, which had become prohibitively expensive after the currency jumped in value, to change the terms of the loans, meaning Polish banks will have to refund some customers.

According to local media, in the first three quarters of last year 7,500 new lawsuits were filed, more than in the whole 2018, most of them aimed at changing loan terms.

Although it is up to Polish courts to decide on a case-by-case basis how the contracts are altered, all banks that had offered foreign exchange loans were forced to create provisions for legal risk.

Rzeczpospolita daily on Wednesday forecasted six big banks were hurt in the last quarter by legal risk provisions totaling 1.15 billion zloty. Santander Bank Polska was the first big local bank to report its fourth-quarter results.

At the end of November, the combined value of Swiss franc mortgages outstanding in Poland amounted to about 100 billion zloty, according to regulator KNF data. ($1 = 3.8196 zlotys) (Reporting by Marcin Goclowski; Editing by Aditya Soni)

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