⚠ A Mortgage Written in 2008 Still Costs Four Billion a YearHigh threat

PKO Bank Polski (PKO) — threat to the moat

4 365 million złoty of Swiss franc legal risk in 2025 — forty percent of net profit, on loans stopped fifteen years ago.

PKO charged 4 365 million złoty in 2025 for the cost of legal risk on mortgage loans denominated in convertible currencies1 — Swiss franc mortgages, most written before 2010.

What the legacy mortgage charge is worth, FY2025 (zl m)10 682Net profit4 365Swiss franc legal riskForty percent of the profit, charged against loans stopped around 2010
PKO earned 10 682m złoty and set aside 4 365m for mortgages written before the iPad existed. The charge falls, slowly.

The scale is what makes this a root-level threat rather than a footnote. That single charge is 41% of the year's net profit of 10 682 million2, and it was 534 million lower than 2024's3, which means the 2024 charge was close to 4 900 million. PKO has been absorbing something of this order every year while still earning a 19,5% return on equity4.

The mechanism is legal rather than credit. Polish and European courts have progressively found the currency-conversion clauses in these contracts unenforceable, so borrowers who have paid as agreed can nonetheless have the loan restructured or voided. Ordinary credit statistics show nothing: cost of credit risk was 0,30%5.

The bank is managing it down. It runs a settlement programme offering mediation through the Arbitration Court at the Polish Financial Supervision Authority6, and the first half of 2026 added only 685 million złoty, following an update of the legal risk model parameters7.

The number that tests this threat is the annual charge. It fell by 534 million in 2025 and the first-half addition is far smaller, which points to a book running off. A quarter in which the model is updated upward instead would show that the courts, not the bank, still set the size of this liability.

References
  1. ReportedPKO charged 4 365 million złoty in 2025 for the cost of legal risk on mortgage loans denominated in convertible currencies — Swiss franc mortgages, most written before 2010.
    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. Moat Explorer calcThat single charge is 41% of the year's net profit of 10 682 million, and it was 534 million lower than 2024's, which means the 2024 charge was close to 4 900 million.
    Moat Explorer calculation - arithmetic on figures PKO reports: the Swiss franc charge as a share of net profit (4 365 over 10 682), financing per employee (315 953 over 26 252 against 247 572 over 25 657), current accounts as a share of customers (9 764 over 12 460), deposits less financing (460 722 less 315 953), and the levy against fee income (1 349 over 5 243), credit losses excluding legal risk (5 859 less 4 365 = 1 494), the income mix (24 223 and 5 243 over 30 370 = 79,8% and 17,3%), net profit growth (10 682 against 9 304 = 14,8%), financing per employee (315 953 over 26 252 = 12,0m), and customers against Poland's population (12,46m of 37,33m) — FY2021-FY2025 · publ. September 2026 · source ↗
  3. Moat Explorer calcThat single charge is 41% of the year's net profit of 10 682 million, and it was 534 million lower than 2024's, which means the 2024 charge was close to 4 900 million.
    Moat Explorer calculation - arithmetic on figures PKO reports: the Swiss franc charge as a share of net profit (4 365 over 10 682), financing per employee (315 953 over 26 252 against 247 572 over 25 657), current accounts as a share of customers (9 764 over 12 460), deposits less financing (460 722 less 315 953), and the levy against fee income (1 349 over 5 243), credit losses excluding legal risk (5 859 less 4 365 = 1 494), the income mix (24 223 and 5 243 over 30 370 = 79,8% and 17,3%), net profit growth (10 682 against 9 304 = 14,8%), financing per employee (315 953 over 26 252 = 12,0m), and customers against Poland's population (12,46m of 37,33m) — FY2021-FY2025 · publ. September 2026 · source ↗
  4. ReportedPKO has been absorbing something of this order every year while still earning a 19,5% return on equity.
    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. ReportedOrdinary credit statistics show nothing: cost of credit risk was 0,30%.
    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 ↗
  6. ReportedIt runs a settlement programme offering mediation through the Arbitration Court at the Polish Financial Supervision Authority, and the first half of 2026 added only 685 million złoty, following an update of the legal risk model parameters.
    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 ↗
  7. ReportedIt runs a settlement programme offering mediation through the Arbitration Court at the Polish Financial Supervision Authority, and the first half of 2026 added only 685 million złoty, following an update of the legal risk model parameters.
    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