Pekao Calls the Turn: A Bank Built for Falling Rates Says the Cycle Has Flipped
Q3 2026: margin stops being a one-way bet, fees carry the P&L, and the mortgage and PZU conversations quietly disappear
PEO.WA · Earnings Call · 2026-10-29
The regime change nobody priced
For four straight quarters Pekao's story was a defensive one: how much margin a falling-rate Poland would take away. On the Q3 2026 call the script flips, and not subtly. Chief economist Ernest Pytlarczyk opens the macro section by noting that the world's central banks are tightening again and that the Polish one will follow — “The central banks in the world are raising interest rates. Ours will too. It has once already.” — Ernest Pytlarczyk, Chief Economist · 2026-10-29 — with inflation "going on too long for us to ignore it" and a first hike perhaps not in November but early next year. That is precisely the theme the market's own curated board has been screaming about. The strongest non-company themes in the latest global quarter include Fed rate hike and rising interest rates environments, alongside impact of high rates. Pekao is not riding a proprietary wave here — it is a regional bank confirming a global macro turn, and doing so with unusual confidence. What matters is the second-order effect: a bank that spent 2025 worrying about deposit repricing now expects the reverse.We have a situation where there are two elements that can potentially affect this NIM... we see a significant competitive pressure in the banking market and POLSTR reform is ahead of us... In general, we expect under the existing macroeconomic conditions... the margin should rebound.
"We've changed rhetoric" — and they know it
The most revealing sentence of the call is a self-aware one. The CFO, Dagmara Wojnar, tells analysts plainly that NIM in Q3 came in at 3.89% and that “last quarters, we spoke about vulnerability towards decreasing rates, but we've changed rhetoric. Now we're talking about vulnerability towards changes of interest rates, but it's about 10-15 basis points interest rate net change with 100 basis points of change of interest rates.” — Dagmara Wojnar, CFO · 2026-10-29 In the company's own keyword history this is a measurable pivot: interest rate cuts was Pekao's single top-ranked theme back in 2025, and sensitivity to interest rates sat near the top a quarter later. On the 2025-10-30 call the number was explicit: “our NIM is sensitive by 15, 20 basis points per 100 basis points interest rate cuts. Well, the actual was 15 basis points.” — Unknown Executive, Executive · 2025-10-30 Twelve months on, the same sensitivity is quoted at 10-15bp and the direction is no longer assumed to be down. That is a real improvement in structural positioning — higher share of fixed-rate assets, active deposit management — dressed up as a semantic point. The change of interest rates framing is now genuinely two-sided, and the management team wants credit for having got there.Fees do the heavy lifting
The CEO's opening is a defence of revenue quality, not of margin. Cezary Stypułkowski notes this is roughly “another probably fifth or fourth quarter in a row where we have two-digit growth in revenues from commissions” — Cezary Stypułkowski, CEO · 2026-10-29 — with every fee category growing, driven by loan volumes but also by transaction counts. Loans are up about 10% year-on-year, corporate and SME/MID growing at 14% for a second consecutive quarter, and cash-loan sales hitting a record PLN 2.3bn in the quarter. Against that, costs are rising 7%-plus, and the split is instructive: overheads held, but operating costs plus amortisation up over 11% as the bank pays down what the CEO repeatedly calls historical backlog in digital channels. Cost/income still lands at 34%. He defends the 34%-36% band as the core of the corporate culture — while conceding the bank needs to invest in a way that temporarily worsens it. A further PLN 70-80m restructuring reserve is flagged for Q4 on 500-plus voluntary redundancies.Cost of risk: the quiet flex
Marcin Gadomski delivers the number management is actually proudest of. Cost of risk is 49bp against a strategic assumption of 65-70bp. The exception is the corporate segment, where two specific write-offs pushed the corporate cost of risk above 100bp: “One is from the transport infrastructure, that would be a good statement, and the other is food retail.” — Marcin Gadomski, Unknown · 2026-10-29 He guides to roughly 50bp for coming quarters — a figure reiterated twice, and one that quietly underwrites the dividend. Because capital is the other punchline. Over three percentage points of surplus above requirements, the 50%-75% payout range reaffirmed, and the NPL ratio held below 5% with coverage intact. The dividend is the hinge on which the whole call balances — and the CEO's answer on the expected CIT cut is refreshingly honest: "I'm more inclined to say that I don't know rather than I do."What Pekao stopped saying
Two silences matter more than anything spoken. First, mortgages. In February the CEO gave a genuinely hostile verdict on the Polish mortgage product: “the Polish banking sector has been losing money systematically as a result of lack of regulatory security... from the professional point of view is very difficult to defend.” — Cezary Stypulkowski, CEO · 2026-02-19 Today, in one line, he retires the subject: "I commented on mortgage loans on so many occasions that maybe I will not discuss it." The keyword mortgage loan, a top-ten theme for four quarters, has simply gone. Second, and louder: the PZU/Alior transaction. In February the CEO walked analysts through a developed market scenario, and in October 2025 he offered a Q3 closing window and promised a full airing at the 6 November shareholder meeting. On this call it is absent — replaced only by a procedural note about a 19 November extraordinary general meeting the CEO explicitly says is not "a reason to celebrate." The topic has migrated from strategy to plumbing, and that is a story in itself.That is the CEO on the shareholder resolutions touching board pay — a rare burst of unfiltered frustration, and indirectly a warning that Polish governance friction, not credit, is now the bank's least controllable variable. Alongside Consumer Protection enforcement and POLSTR reform, the regulatory line-item is doing more damage to the P&L than the loan book: regulatory burdens up almost PLN 800 million year-on-year, per the CFO.I think it is a solution that is mechanical and wrong... the tightening effort visible now in Poland and enforced in such a way, has far-reaching outcomes potentially, and make it more difficult to build a good management culture based on performance.