Thirty Basis PointsNarrow moat

PKO Bank Polski (PKO) — moat facet

Lending 316 billion złoty and losing thirty basis points a year is a hundred and six years of learning who repays.

PKO's cost of credit risk was 0,30% in 2025, against 0,34% in 2024, 0,48% in 2023, 0,59% in 2022 and 0,56% in 20211.

Net write-downs, FY2025 (zl m)4 365Swiss franc legal risk1 494Actual credit losses5 859Total chargeStrip the legacy mortgage charge and the lending loses 1 494m on a 316 000m book
The headline provision line makes PKO look like a mediocre lender. Three quarters of it is a decision taken before 2010.

That is four consecutive years of improvement, and in the first half of 2026 it improved again to 0,29%2, on a book that grew 27,6% over the same period3. On financing of 315 953 million złoty4, each ten basis points is worth roughly 316 million złoty of pre-tax profit, so the move from 0,59% to 0,30% is worth something close to 900 million a year against the 2022 run rate.

Some of that is the cycle. Polish unemployment has been low, wages have risen fast, and borrowers have coped with rates that went from near zero to over 6% without the defaults that might have been expected.

Some of it is not. The gap to the sector is the part that belongs to PKO, and a gap sustained over four years through a period of extreme rate volatility is difficult to attribute to luck.

It is also worth setting against the charge that credit statistics do not capture. In the same year PKO reported the sector's lowest cost of credit risk, it charged 4 365 million złoty for Swiss franc legal risk5 — roughly five times what the entire credit book cost it. The underwriting is excellent; it is not what has cost this bank money.

The measure is the gap rather than the level. The level will rise when Poland next has a recession, at every bank at once. Whether PKO's rises by less is the only question that tests the underwriting, and it has not been asked since 2009.

Moat trajectory: Holding steady

Thirty basis points in 2025 and twenty-nine in the first half of 2026. A number this low moves sideways or up.

The number that tests this moat
Moat Explorer calc
Net write-downs and impairment
5 859m zł, of which 4 365m zł is Swiss franc legal risk

Strip out the legacy mortgage charge and the actual credit losses on a 316 billion złoty book were about 1 494m złoty. The lending is far better than the headline provision line suggests, and the difference between the two numbers is a decision made before 2010.

Source: PKO Bank Polski S.A. Group Directors' Report for 2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
Provisions Can Be Released Faster Than a Book Heals
A cost of risk that low is partly a decision about provisions, and decisions reverse.
References
  1. ReportedPKO's cost of credit risk was 0,30% in 2025, against 0,34% in 2024, 0,48% in 2023, 0,59% in 2022 and 0,56% in 2021.
    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 ↗
  2. ReportedThat is four consecutive years of improvement, and in the first half of 2026 it improved again to 0,29%, on a book that grew 27,6% over the same period.
    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. ReportedThat is four consecutive years of improvement, and in the first half of 2026 it improved again to 0,29%, on a book that grew 27,6% over the same period.
    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 ↗
  4. ReportedOn financing of 315 953 million złoty, each ten basis points is worth roughly 316 million złoty of pre-tax profit, so the move from 0,59% to 0,30% is worth something close to 900 million a year against the 2022 run rate.
    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 ↗
  5. ReportedIn the same year PKO reported the sector's lowest cost of credit risk, it charged 4 365 million złoty for Swiss franc legal risk — roughly five times what the entire credit book cost it.
    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