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Polish banking sector may suffer loss in 2021 - c.bank governor

The Polish banking sector may suffer a collective loss next year as lenders make rising provisions for bad loans, central bank governor Adam Glapinski said on Monday, as Poland wrangled with a sharp rebound in coronavirus infections.

WARSAW, Oct 19 (Reuters) - The Polish banking sector may suffer a collective loss next year as lenders make rising provisions for bad loans, central bank governor Adam Glapinski said on Monday, as Poland wrangled with a sharp rebound in coronavirus infections.

Banks' profits fell in the first half of 2020 as Poland entered its first recession in almost three decades, but the biggest lenders, such as PKO BP PKO.WA, Bank Pekao and Santander Bank Polska SPL1.WA, remained in the black.

"In the following quarters, the downward trend in bank profitability will continue. The main reason weighing on banks' results will not be lower interest rates, as is commonly said, but rising provisions for expected credit losses," Glapinski was quoted as saying by state news agency PAP.

"The most difficult year will be 2021, as there is a possibility that the sector as a whole will suffer a loss. This is an pessimistic scenario, but one cannot rule it out."

The Polish banking association said last month that banks' net profit may be wiped out this year as the economic crisis caused by the coronavirus pandemic, ultra-low interest rates, a bank tax, and regulatory burdens hit their results.

Last year the sector's collective net profit totalled 14.7 billion zloty ($3.79 billion).

Poland's economy had looked to be rebounding after a lockdown to curb the coronavirus was lifted in May, but recent data has shown the recovery flattening as concerns mount over the impact of a second wave of the virus.

($1 = 3.8760 zlotys)

(Reporting by Marcin Goclowski; Editing by Jan Harvey)

((marcin.goclowski@thomsonreuters.com;))

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