Polish non-banking sector

In 2018 the situation on the investment funds market was shaped by the bear market on the Warsaw Stock Exchange (WSE), the drop in returns on Polish Treasury bonds and low interest rates on bank deposits. Investors’ decisions on the investment fund market were shaped by an increase in risk aversion determined by the drop trend in annual rates of return in the main market segments, which lasted since the beginning of 2018. Controversies related to the operation of certain investment fund companies (TFI) could also have an impact on the perception of the investment fund market by investors.

In 2018 total assets managed by TFIs dropped by PLN -22.8 billion to (-8.1%) to PLN 256.8 billion, which was determined by a decrease in investment fund assets of institutional entities of PLN -17.7 billion (-14.3%); investment fund assets of individuals dropped by PLN -5.1 billion (-3.2%). The net inflow of funds from individuals dropped to PLN 0.6 billion from PLN 17.1 billion in 2017.

In 2018 assets of Open Pension Funds (OFE) continued to decrease and dropped by -12.4% (PLN -22.2 billion) to PLN 157.3 billion. At the same time the number of OFE participants continued to drop (-201 thousand, to 15.9 million).

The OFE market remained under the influence of: an improvement in the labour market conditions and deteriorating conditions on the WSE, and uncertainty as to the future terms and conditions of their operation.

Shares continued to dominate OFE assets (a stable share of approx. 85%).

In 2018 the lease market continued to develop dynamically. The lease industry financed assets with a value of PLN 82.4 billion (+21.5% y/y). The segment of light vehicles (passenger cars and trucks up to 3.5 tonnes) had the biggest positive influence on the development of the lease market. The value of leases in that segment increased to PLN 39.9 billion (+30.7% y/y), which constituted over 48% of total financing granted by lease companies. The dynamic increase in leases of light vehicles was caused among other things by amendments to tax regulations binding as of 1 January 2019.

A two-digit increase (+17.1% y/y) was also noted in leases of plant and machinery, with the total value of new contracts at PLN 20.6 billion, which was accompanied by good conditions in the construction industry. Leases of heavy transport vehicles also increased (+11.4% y/y, with the value of leased assets at a level of PLN 19.5 billion).

In the first three quarters of 2018 insurance companies earned net profit of PLN 5.7 billion (+17.3% y/y), which was the result of an increase in y/y net profit in the other personal and property insurance segment (+24.6% to PLN 3.8 billion) and an increase in net profit in the life insurance segment (+5.6% to 2.0 billion).

The y/y increase in gross written premium[1] to PLN 46.3 billion (+0.3%), with a simultaneous increase in claims to PLN 30.4 billion (+6.4%) had an impact on the financial results of insurance companies as a whole. Costs of insurance activities were +3.8% higher y/y (to PLN 10.4 billion).

In the life insurance segment, gross written premium dropped by -11.5% y/y (to PLN 16.3 billion), with an increase in claims of 4.3% y/y (to PLN 15.8 billion). Costs of insurance activities in the life insurance segment dropped by -3.5% to PLN 3.8 billion.

The segment of other personal and property insurance noted a y/y increase in gross written premium of +7.3% (to PLN 29.9 billion), with an increase in claims of 8.8% (to PLN 14.6 billion). Costs of insurance activities in the other personal and property insurance segment increased by +8.6% (to PLN 6.6 billion).

During the three quarters of 2018 total assets, and total liabilities and equity of insurance companies dropped to PLN 195.8 billion (-0.9%), in effect of a y/y drop in assets in the life insurance segment (-6.9%), with their simultaneous increase in the other personal and property insurance segment (+6.1%).

In 2018 a high demand for factoring services prevailed. Sales of firms associated in the Polish Factors Association increased at a two-digit pace (approx. 26.7% y/y compared with approx. 17% y/y in 2017) and reached PLN 242.8 billion.

Over 17 thousand business entities used the services of factoring firms.

The largest demand was for factoring without recourse, whose share in sales of factoring firms was approx. 51%.

The share of the second largest market segment, i.e. recourse factoring, was 33%. Manufacturing and distribution companies remained the entities that most often used factoring services.

*Gross written premium – premium obtained by an insurance company in the reporting period (including the portion of the premium transferred to reinsurers for reinsurance cover). In respect of life insurance gross written premium covers all premiums receivable in the reporting period. In respect of property insurance gross written premium covers amounts due throughout the period of liability for the contracts underwritten in the reporting period.