Banks in Poland relaxed their lending standards in the second quarter of 2025, driven by heightened competition and interest rate reductions, which boosted loan demand, according to a quarterly bank survey released by the central bank on Monday.

The National Bank of Poland’s survey indicated that in the second quarter, banks loosened lending criteria for businesses due to increased competition and a decline in non-performing loans in their portfolios.

The report highlighted that demand for credit rose as companies faced higher capital requirements to fund mergers and acquisitions, build up inventories, and support working capital needs.

This increase reflects businesses’ growing investment and operational financing activities during the period.

In addition, intensified competition among banks prompted a relaxation of lending standards for mortgage loans, making it easier for consumers to qualify. As a result, demand for mortgage financing also saw a notable increase, driven by more accessible borrowing conditions and competitive offers in the housing market.

Another contributing factor was the reduction in interest rates, loan costs dropped by 50 basis points in May 2025, marking the first cut since October 2023, followed by an additional 25 basis point decrease in July, Reuters news agency reports.

The central bank noted that these rate cuts, combined with improvements in households’ economic conditions, helped drive an increase in demand for consumer loans.

“In the third quarter of 2025, banks intend to maintain their current lending criteria for businesses and continue easing the requirements for households. They expect demand to increase for all types of loans, except short-term loans for large enterprises,” the report stated.

The National Bank of Poland’s early July survey included 23 banks, which together represent 89% of the banking sector’s total portfolio of receivables from businesses and households.