Polish Bank Profits Surge to PLN 48.7B Before Tax Hike

Polish banks concluded 2025 with record profits, reaching nearly 48.7 billion złoty by the end of December, according to the National Bank of Poland (NBP). This represents an increase from 45.1 billion złoty at the end of November and surpasses the 40.1 billion złoty recorded at the end of December 2024. However, the sector now faces headwinds as a significantly higher corporate income tax (CIT) rate takes effect this year.

The surge in profitability was largely driven by interest income, which totaled over 175.4 billion złoty, while interest expense amounted to just over 65.9 billion złoty. Banks also generated over 27 billion złoty in revenue from fees and commissions.

CIT Increase Set to Dampen Bank Earnings

The favorable conditions experienced by Polish banks are unlikely to persist in 2026. A new law, implemented at the beginning of January, has raised the CIT rate for banks to 30%. This marks a substantial increase from the previous rate of 19%. The rate is scheduled to decrease to 26% in 2027 and further to 23% in subsequent years.

The Polish banking sector has voiced concerns about the impact of this tax hike. The Polish Bank Association (ZBP) estimates that the increased CIT will reduce the sector’s net profit by “several billion złoty” in 2026. ZBP projects a financial result of 30.8 billion złoty for the sector in 2026, representing a decline of over 30% year-on-year.

The government’s rationale for the tax increase centers on the substantial profits generated by banks during a period of high interest rates. President Karol Nawrocki, who approved the changes to the CIT law, stated in November that, “In recent years, banks have achieved above-average profits. I therefore considered it appropriate to direct a larger portion of these profits to the state, especially in the face of growing needs, including those related to financing the security of the Republic of Poland and the expansion of our armed forces.”

The move follows a parliamentary approval in October 2025, despite strong criticism from the banking sector, which labeled the measure discriminatory. The finance ministry defended the tax hike as a matter of “social justice,” given the banks’ recent performance. The legislation also includes adjustments to taxes on financial startups and banks’ asset-based taxes.

Specifically, the banking tax, levied on bank assets rather than income, will be reduced from 0.0366% to 0.0329% in 2027 and 0.0293% in 2028. Financial startups with annual revenues below €2 million will see their CIT rate increase from 9% to 20% in 2026, decreasing to 16% in 2027 and 13% in 2028.

The finance ministry anticipates that the overall reform will generate an additional 6.6 billion złoty (€472 million) in revenue in 2026.

However, a key point of contention, as highlighted by Marta Kightley, First Deputy CEO of the NBP, is the permanence of the higher CIT rate. Kightley pointed out in September 2025 that the tax increase is linked to the temporary phenomenon of high bank profits, yet the higher CIT is intended to be permanent. She emphasized the cyclical nature of the banking sector and the influence of economic conditions on bank profitability, noting that profits were relatively low, even zero, in 2020.

Kightley also reminded that banks face constraints on how they can utilize their profits, due to capital regulations and guidelines from the Financial Supervision Authority regarding dividend payouts. She questioned the logic of implementing a permanent regulation based on a temporary situation.

The implementation of the higher CIT rate comes after Polish banks reported record profits in 2025, fueled by higher interest rates. While the government views the tax as a way to redistribute wealth and fund national priorities, the banking sector argues that it will stifle investment and potentially harm the broader economy. The long-term effects of this policy remain to be seen, but it undoubtedly marks a significant shift in the regulatory landscape for Polish banks.