The Borrowers Who Took the Bank to CourtThin moat

PKO Bank Polski (PKO) — moat facet

Tens of thousands of PKO's own mortgage customers are now its litigation counterparties.

Somewhere in PKO's customer base is a group of Swiss franc mortgage holders whose loans have cost the bank 4 365 million złoty in 20251 and something close to 4 900 million the year before2.

Cost of legal risk on convertible-currency mortgages (zl m)20242025H1 2026 x2H1 2026 added 685m; annualised that would be about a third of the 2025 charge
Tens of thousands of PKO's own mortgage customers became its litigation counterparties. The half-yearly addition is the first sign the tail is closing.

They are the most consequential customers PKO has, and almost none of them defaulted. The loans were serviced; what failed was the contract. Polish and European courts have progressively found the currency-conversion clauses unenforceable, so a borrower who paid as agreed can still have the loan restructured or voided.

That is a category of customer risk which does not appear in any credit statistic. PKO's cost of credit risk is 0,30%3, and it is silent about the largest loss the bank has taken in a decade.

The bank's response is settlement rather than litigation: it offers mediation through the Arbitration Court at the Polish Financial Supervision Authority and has extended settlements on a large scale4.

The first half of 2026 added 685 million złoty following an update to the legal risk model5 — far below the annual run rate, which is what a book running off looks like.

The measure is the annual charge. It fell 534 million in 2025 and the half-year addition is smaller again. The quarter it rises instead is the quarter the courts, rather than the bank, are still setting the number.

Moat trajectory: Widening

The 2025 charge of 4 365 million złoty was 534 million lower than 2024, and the first half of 2026 added 685 million. The problem is shrinking, slowly, from a very large number.

The number that tests this moat
Reported
Annual cost of legal risk on convertible-currency mortgages
4 365m zł, 534m zł less than 2024

Tens of thousands of PKO's own mortgage customers became its litigation counterparties. The charge is falling, from a very large number, and the first half of 2026 added another 685m. The settlement programme through the Arbitration Court at the KNF is what determines how fast it ends.

Source: PKO Bank Polski S.A. Group Directors' Report for 2025 ↗
References
  1. ReportedSomewhere in PKO's customer base is a group of Swiss franc mortgage holders whose loans have cost the bank 4 365 million złoty in 2025 and something close to 4 900 million the year before.
    PKO Bank Polski S.A. Group Directors' Report for 2025 - the cost of legal risk on mortgage loans in convertible currencies (4 365m złoty charged in 2025, 534m less than in 2024, and the settlement programme offering mediation through the Arbitration Court at the Polish Financial Supervision Authority) — FY2025 · publ. 12 March 2026 · source ↗
  2. ReportedSomewhere in PKO's customer base is a group of Swiss franc mortgage holders whose loans have cost the bank 4 365 million złoty in 2025 and something close to 4 900 million the year before.
    PKO Bank Polski S.A. Group Directors' Report for 2025 - the cost of legal risk on mortgage loans in convertible currencies (4 365m złoty charged in 2025, 534m less than in 2024, and the settlement programme offering mediation through the Arbitration Court at the Polish Financial Supervision Authority) — FY2025 · publ. 12 March 2026 · source ↗
  3. ReportedPKO's cost of credit risk is 0,30%, and it is silent about the largest loss the bank has taken in a decade.
    PKO Bank Polski S.A. Group Directors' Report for 2025 - the efficiency and quality ratios (return on equity of 19,5%, return on assets of 1,9%, a cost-to-income ratio of 31,1%, net interest margin of 4,76%, cost of credit risk of 0,30% and impaired exposures at 3,34% of the portfolio) — FY2025 · publ. 12 March 2026 · source ↗
  4. ReportedThe bank's response is settlement rather than litigation: it offers mediation through the Arbitration Court at the Polish Financial Supervision Authority and has extended settlements on a large scale.
    PKO Bank Polski S.A. Group consolidated financial statements for 2025 — FY2025 · publ. 12 March 2026 · source ↗
  5. ReportedThe first half of 2026 added 685 million złoty following an update to the legal risk model — far below the annual run rate, which is what a book running off looks like.
    PKO Bank Polski S.A. Group Directors' Report for the six months ended 30 June 2026, published with reviewed financial statements (profit before tax of 8 319m złoty up 19,9%, income tax of 3 029m up 67,4%, net profit of 5 290m up 3,1%, return on equity of 19,3%, cost-to-income of 31,4%, interest margin of 4,47% against 4,91%, cost of risk of 0,29%, total assets past 608 448m, 12,6 million customers, common equity tier 1 of 15,55%, and a further 685m złoty of convertible-currency legal risk) — H1 2026 · publ. 13 August 2026 · source ↗
Sources
Generated September 24, 2026