⚠ Provisions Can Be Released Faster Than a Book HealsModerate threat

PKO Bank Polski (PKO) — threat to the moat

A cost of risk that low is partly a decision about provisions, and decisions reverse.

Cost of risk is a charge management determines using models management calibrates, and 0,30%1 is a judgment as well as a fact.

What thirty basis points depends onJudgement about future lossesmanagement estimateA Polish economy with no recession since 1991three decades of tailwindA portfolio that grew 27,6% in one yeara quarter of it untestedThe observed loss on loans already madethe only hard partWhat a release does to the ratioimproves it instantlyA cost of risk this low is partly an accounting judgement, and judgements reverse
The number is excellent and it is not entirely an observation. Watch the newest vintages, not the blended figure.

That is not an accusation — every bank works this way and auditors review it — but it is a reason to read the number alongside something harder. The harder number here is impaired exposures at 3,34%, which fell alongside the charge rather than against it2, and that consistency is what makes PKO's credit record credible.

The mechanism to watch for is the divergence: a cost-of-risk line falling while impaired exposures rise means provisions are being released faster than the loans are recovering, and it can continue for several quarters before anything visible breaks.

PKO's own disclosure shows the opposite pattern over five years, with both improving3, and in the first half of 2026 the charge fell again to 0,29%4.

There is a second reason to read the charge carefully. Of the 5 859 million złoty of net write-downs PKO booked in 2025, 4 365 million was legal risk on convertible-currency mortgages rather than credit loss5 - so the line most investors treat as the provision line is three-quarters a legacy legal matter, and the actual credit cost sits underneath it at about 1 494 million.

Watch the two series together. They have moved in the same direction since 2021; the first year they do not is the first year the 30 basis points needs explaining.

References
  1. ReportedCost of risk is a charge management determines using models management calibrates, and 0,30% is a judgment as well as a fact.
    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 ↗
  2. ReportedThe harder number here is impaired exposures at 3,34%, which fell alongside the charge rather than against it, and that consistency is what makes PKO's credit record credible.
    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 ↗
  3. ReportedPKO's own disclosure shows the opposite pattern over five years, with both improving, and in the first half of 2026 the charge fell again to 0,29%.
    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 ↗
  4. ReportedPKO's own disclosure shows the opposite pattern over five years, with both improving, and in the first half of 2026 the charge fell again to 0,29%.
    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 ↗
  5. Moat Explorer calcOf the 5 859 million złoty of net write-downs PKO booked in 2025, 4 365 million was legal risk on convertible-currency mortgages rather than credit loss - so the line most investors treat as the provision line is three-quarters a legacy...
    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 ↗
Sources
Generated September 24, 2026