Non-banking sector
We present the developments in the Polish non-banking sector - the investments funds and open pension funds markets, lease and factoring, and the insurance market in 2019.
2019
In the second half of 2019, the investment funds market recorded an upward trend in respect of average annual rates of return in the main segments of funds for individuals, and a downward trend in respect of average interest rates on deposits. As at the end of the analysed period, the average annual rates of return from safe funds with high exposure on the Polish debt market were considerably higher than the average interest rates on new term deposits of households.
The improvement in return rates had an impact on individuals’ demand for investment fund units. The balance of payments and redemptions by individuals on the investment funds market increased from PLN 0.6 billion in 2018 to PLN 2.5 billion in 2019, of which PLN 0.06 billion accounted for net inflows to the PPK target date funds. Total net assets of TFI in 2019 increased by PLN 10.8 billion (+4.2%) to PLN 268.1 billion, of which: assets of individuals’ investment funds increased by PLN 8.2 billion (+5.4%) to PLN 159.8 billion, and assets of institutional entities’ investment funds by PLN 2.7 billion (+2.5%).
In 2019 assets of Open Pension Funds (OFE) decreased by 1.6% (PLN -2.5 billion) to PLN 154.8 billion. At the same time the number of OFE participants dropped (by -232 thousand, to 15.7 million). Shares continued to dominate OFE assets (approx. 82%).
The OFE market remained under the influence of: an improvement in the labour market conditions, supported by an increase in wages and salaries and a drop in unemployment, social welfare programmes, stable conditions on the WSE (increase in the WIG index of 0.2%), and uncertainty as to the future regulations governing operations (Government project recommending the transfer of funds accumulated in OFE to Individual Pension Accounts (IKE) or the Social Insurance Office (ZUS)).
In 2019 the lease market recorded a decrease compared with the previous year. The lease industry financed assets worth PLN 77.8 billion (-5.8% y/y). The largest drop was in leases of light vehicles (cars and trucks up to 3.5 tonnes), which was related to tax changes that came into effect as of 1 January 2019. The value of assets financed in this segment amounted to PLN 35.3 billion (-11.7% y/y), which was approx. 45% of the total financing granted by lease companies (a decrease of 3 p.p. y/y). The slight fall was registered also for heavy vehicles (-4.6% y/y), with the value of leased assets of PLN 18.6 billion.
There was increase in the lease of machinery and equipment by 3.5% y/y, with total value of new contracts of PLN 21.5 billion. The highest growth was recorded for lease of forklift trucks (37.4% y/y).
In 2019 a high demand for factoring services prevailed. Sales of companies associated in the Polish Factors Association increased by approx. 16% reaching PLN 282 billion. The number of business entities using the services of factoring firms increased to 18 thousand.
The largest demand on the part of enterprises 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 31%. Manufacturing and distribution companies remained the entities that most often used factoring services.
In 2019, insurance companies earned net profit of PLN 7.2 billion (+8.0% y/y), which was the result of an increase in y/y net profit in the other personal and property insurance segment (+9.3% to PLN 4.6 billion) and an increase in net profit in the life insurance segment (+5.7% to 2.6 billion). The y/y increase in gross written premium to PLN 63.8 billion (+2.7%), with a simultaneous decrease in claims to PLN 40.9 billion (-1.9%) had an impact on the financial results of insurance companies as a whole. Costs of insurance activities were +5.6% higher y/y (PLN 15.1 billion).
In the life insurance segment, gross written premium dropped by 2% y/y (to PLN 21.3 billion), related to the capital fund – UFK Insurance Capital Funds, which has not been offset by increases in premiums in the group of sickness and accident insurance, as well as in the group of life insurance. Claims paid out in the life insurance segment dropped by 13.6% y/y. Costs of insurance activities in the life insurance segment decreased slightly by 0.5%.
The segment of other personal and property insurance noted a y/y increase in gross written premium of 5.2% (to PLN 42.6 billion), with an increase in claims of 10.4% (to PLN 22.3 billion). Costs of insurance activities in the other personal and property insurance segment increased by +9% (to PLN 10.0 billion).