BNP Paribas' Polish unit posts 18% profit drop on higher taxes

BNP Paribas' Polish subsidiary, Bank Polska, experienced an 18% decline in profit during the second quarter, falling short of market expectations. The decrease was attributed to impairment losses and a significant increase in corporate income tax. The Polish government had recently raised banks' corporate income tax to 30% for 2026, aiming to fund increased defence spending.

BNP Paribas Bank Polska's quarterly net profit dropped to 599.8 million zlotys ($160.8 million) from a year ago, below the analysts' average forecast of 611 million zlotys.

Despite the profit drop, the bank's net interest income remained in line with expectations at 1.46 billion zlotys, though it slightly decreased year-on-year. Polish banks are facing a challenging interest rate environment, as the central bank has cut rates multiple times since May 2025. Nonetheless, net fee and commission income grew by 7.6% to 353 million zlotys, surpassing the market forecast.

The overall gross loan book increased by 9.1% from the previous year, driven by growth in both consumer and mortgage lending. To account for legal risk, Bank Polska set aside 42.8 million zlotys in provisions linked to consumer loans following an EU court ruling. This April ruling by the European Court of Justice barred lenders from charging interest on specific loan costs.