Poland's PKO BP would like to close 'Swiss franc saga' in 2025

GDANSK (Reuters) -Poland's largest bank PKO BP would like to end the "Swiss franc saga" this year, a senior bank official said on Thursday, referring to years of provisions to cover possible compensation payments for customers who took out costly mortgages in the currency.

In 2024, the bank took out 4.9 billion zlotys in provisions to cover any court cases in favour of people forced to pay back much larger instalments than expected after the Swiss franc soared and Switzerland raised interest rates.

"We hope that this so-called Swiss franc saga has been addressed in its basic form," Krzysztof Dresler, the bank's vice president in charge of finance, said on a conference call, adding that there would be further actions this year but that the bank hoped to enter 2026 with a "clean slate".

"We would like to close this saga this year," he said.

Hundreds of thousands of Poles took out mortgages in foreign currencies, mainly in Swiss francs, in the early to mid-2000s, attracted by lower interest rates.

PKO BP concluded 2,453 in-court settlements with clients regarding the Swiss franc mortgages in the fourth quarter compared to 1,853 settlements concluded in the third quarter.

At 1115 GMT PKO BP shares were up 3.7%.

The bank posted a 259% year-on-year rise in fourth-quarter net profit to 2.45 billion zlotys ($635.95 million), due to improving income from core activities. The result beat market expectations of 2.24 billion zlotys in a bank-compiled consensus.

PKO said it meets the requirements of the recommendation to pay dividends of up to 75% of profit.

The company's quarterly net interest income rose 21.7% to 6.18 billion zlotys. Net fee and commission income came in at 1.26 billion zlotys, up 2.2% on the year.

Net interest margin was at 5.18% in the fourth quarter compared to 4.55% a year ago and 4.89% in the third quarter of 2024.

($1 = 3.8525 zlotys)

(Reporting by Adrianna Ebert; additional reporting by Julia Kotowska; Editing by Christopher Cushing and Mrigank Dhaniwala)