## Republic of Poland: Technical Note on Impaired Loans

_IMF Staff Country Reports, December 20, 2013_

## Source details

**Canonical URL:** [Republic of Poland: Technical Note on Impaired Loans](https://www.imf.org/en/publications/cr/issues/2016/12/31/republic-of-poland-technical-note-on-impaired-loans-41164)

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## Bibliographic details
- Published: December 20, 2013
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484324486.002

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### Overview
- This Technical Note analyzes impaired loans in Poland.
- Asset quality has moved up the Polish supervisor’s agenda to address persistent impaired loans and cyclical deterioration in credit quality.
- Deterioration has been mainly observed in the quality of the consumer loan portfolio, while the foreign exchange mortgage loan portfolio also presents vulnerabilities related to exposure to foreign exchange risk.
- Recent loosening of underwriting standards for retail loans could contribute to rising inflows into impaired loans.

### Key findings
- Persistent impaired loans and cyclical deterioration in credit quality are significant supervisory concerns.
- Consumer loan portfolio shows the primary deterioration in asset quality.
- Foreign exchange mortgage loan portfolio vulnerabilities stem from exposure to foreign exchange risk.
- Tax disincentives, interest income accrual practices, underdeveloped securitization markets, and impediments in out-of-court restructurings impede rapid progress in cleaning up bank balance sheets.
- A recent loosening of underwriting standards for retail loans is a potential source of increased future inflows into impaired loans.

### Vulnerabilities and impediments to balance-sheet cleanup
- Tax disincentives that slow resolution of impaired exposures.
- Interest income accrual practices that affect recognition and provisioning for impaired loans.
- Underdeveloped securitization markets limiting banks’ options for transferring or restructuring credit risk.
- Impediments in out-of-court restructurings that hinder efficient workout of distressed loans.
- Foreign exchange exposure in mortgage portfolios creating additional risk channels.

### Subject areas and keywords
- Subjects: Banking; Credit; Distressed assets; Financial institutions; Financial sector policy and analysis; Loans; Money; Mortgages; National accounts; Personal income.
- Keywords: bank enforcement title; CR; Credit; credit risk management practice; Distressed assets; FX loan; impaired loan; ISCR; loan classification system; loan contract; loan portfolio; Loans; loss provision; Mortgages; Personal income; provision amount; restructured loan; restructuring practice.

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/republic-of-poland-technical-note-on-impaired-loans-41164_