⚠ The Same Bank Underwrote the Swiss Franc MortgagesHigh threat

PKO Bank Polski (PKO) — threat to the moat

The institution with the best credit record in Poland also wrote the worst mortgages in its history.

PKO's credit record is excellent and its own accounts contain the reason to hold that judgment loosely.

Cost of legal risk on convertible-currency mortgages (zl m)4 89920244 3652025685H1 2026Forty percent of 2025 net profit, on a product stopped around 2010
The institution with the best credit record in Poland also wrote the worst mortgages in its history, and is still paying for them fifteen years later.

The Swiss franc mortgage book was underwritten by this institution, using its processes, and was regarded at the time as sound lending — the borrowers were creditworthy and most of them have paid. It has nevertheless cost 4 365 million złoty in 2025 alone1, with a further 685 million added in the first half of 20262.

The lesson is about the kind of risk a credit process is designed to catch. Cost of credit risk measures whether borrowers repay; it does not measure whether the contract they signed will later be held unenforceable. PKO's 0,30%3 says nothing about legal or conduct risk, and it is conduct risk that has cost this bank the most money in the last decade.

The book itself is running off and the annual charge is falling — 4 365 million was 534 million less than 20244, and the first-half addition is far smaller.

The falsifier is not the mortgage book but the next product. The measure to watch is whether any newly written lending attracts regulatory or judicial attention of the same kind, because the credit statistics would show nothing at all until it did.

References
  1. ReportedIt has nevertheless cost 4 365 million złoty in 2025 alone, with a further 685 million added in the first half of 2026.
    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 ↗
  2. ReportedIt has nevertheless cost 4 365 million złoty in 2025 alone, with a further 685 million added in the first half of 2026.
    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 ↗
  3. ReportedPKO's 0,30% says nothing about legal or conduct risk, and it is conduct risk that has cost this bank the most money in the last 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 book itself is running off and the annual charge is falling — 4 365 million was 534 million less than 2024, and the first-half addition is far smaller.
    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 ↗
Sources
Generated September 24, 2026