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Outlook for the banking sector and mBank for 2018

Polish economy in 2018

Economic indicators 2016 2017 2018P
GDP growth (YoY) 2.9% 4.6% 4.6%
Domestic demand (YoY) 2.2% 4.7% 5.4%
Private consumption (YoY) 3.9% 4.8% 4.2%
Investment (YoY) -7.9% 5.4% 9.0%
Inflation (EOP) 0.8% 2.1% 2.2%
NBP reference rate (EOP) 1.5% 1.5% 1.5%
CHF/PLN (EOP) 4.11 3.57 3.45
EUR/PLN (EOP) 4.40 4.18 4.10

Source: mBank’s estimates as of February 6, 2018.


Despite the market consensus predicting a slight slowdown in Poland, the bank expects GDP growth at the level of 4.6% on a yearly average in 2018. The 2018 growth will be more balanced - the contribution of private consumption is likely to decrease slightly. At the same time, the role of investment will grow considerably.

The factors of private consumption mentioned in the earlier part of this report will still be present throughout 2018. Nominal salaries are likely to grow by 10% this year. What’s important, the contribution of credit to the current growth in consumption is marginal, which means that the consumption cycle is still far from maturity. Consumption will be also helped by the real property market which has entered 2018 with a great deal of momentum.

2018 is likely to see further revival on two fronts: in private and public investment. Growth in public investment will be helped by the launch of new investments financed with EU funds and the election season beginning with the local election in 2018. High capacity utilization accompanied by the need to improve efficiency, mitigate the consequences of employee shortages and replace obsolete fixed assets will result in an increase in private investment in the short term. Its pace in Poland may be lower than in Hungary and the Czech Republic, but its contribution to GDP growth will be higher than in 2017.

In the bank’s opinion, the contribution of the remaining GDP components will be close to zero. The expected revival in investment will probably result in an increase in imports, which in turn will offset the positive impact that the good condition of the global economy will have on the Polish exports. The public sector pay cap will not be eased in 2018, putting a curb on private consumption. The contribution of change in inventories will be positive, which is typical of the current phase of the economic cycle.

The trajectory of inflation which the bank forecasts for 2018 resembles a reverse U. After a decrease at the beginning of the year attributable to the base effects in the food category, inflation will approach (or even exceed) the inflation target in mid-year due to an increase in fuel prices compared with the previous year and an upward trend in the base categories. It will then start to decrease modestly at the year-end due to a high base in the food category and will reach 2%. With inflation close to the target and economy growing dynamically, the MPC will not change the policy and will keep rates at the current levels throughout the year. In the bank’s opinion, the MPC will take a more symmetric approach towards the inflation target than the previous councils and will tighten the policy only when inflation permanently exceeds 3% and a strong increase in the price pressure occurs in the base categories. This will not happen until 2019.


The bank expects the zloty to strengthen in 2018. However, the appreciation will not be considerable and fast. The MPC’s approach mentioned above is negative from the point of view of the exchange rate of the zloty in both short and medium term due to negative real interest rates. As interest rates are rising globally, the disparity of nominal interest rates is shrinking as well, which makes the Polish currency less popular. Nevertheless, the positive factors, in particular cyclicity, should prevail in one year’s horizon.

Banking sector and monetary aggregates

Banking sector – monetary aggregates 2016 2017 2018P
Corporate loans 5.0% 5.9% 12.9%
Mortgage loans 4.8% -0.1% 3.7%
Non-mortgage loans 5.5% 5.4% 8.0%
Corporate deposits 7.9% 2.4% 8.7%
Household deposits 9.7% 4.2% 7.4%

Source: mBank’s estimates as at February 6, 2018.


Credit volumes are expected to grow further in 2018 in both the retail and corporate area. Housing loans will have a slightly bigger contribution to the overall lending to households, but due to the high base (i.e. the volume of loans originated in the previous years) even a considerable increase in loan production would have only a limited impact on the overall growth in volumes in this category. The already solid growth in consumer loans will continue throughout 2018. Corporate loans are expected to grow at a faster pace driven by all sub-categories, in particular investment and real estate loans. Deteriorating liquidity may additionally boost companies’ demand for overdraft facilities and working capital loans.

Deposits of the non-financial sector will be growing slightly faster than dynamics of loans in 2018. The year-on-year growth in household deposits is likely to accelerate slightly helped by more attractive long-term deposits and a further increase in nominal incomes. Growth in corporate deposits will also be higher as it will no longer be impacted by the factors which pushed it down considerably in 2017 (including the significant strengthening of the zloty, the negative effects of the government’s efforts to close the tax gap and the impact of rising labour costs on the liquidity position of some companies). Nevertheless, growth in household and corporate deposits will be curbed by growing popularity of alternative ways of saving and investing.