I have a confession to make: banks are my comfort zone.
While the rest of the financial Twitter circus debates whether Nvidia is going to 300 or 30, whether Bitcoin is digital gold or digital tulips, whether the AI capex cycle is a revolution or a bubble — I’ve been quietly, patiently, boringly buying banks.
For over a decade. Banks are, to me, the most investable sector in public markets. And I mean that in the Peter Lynch sense: you can actually understand what’s going on. A bank takes deposits at one rate, lends them at another, and keeps the spread. Strip away the jargon — net interest margin, CET1 ratio, cost of risk, non-performing loans — and what you have is a 700-year-old business model that monks in 14th-century Florence would recognize.
There’s no “platform risk.” No “will the CEO get distracted by a rocket company.” No “is the moat still a moat in 5 years.” A bank in Warsaw in 2026 does roughly the same thing a bank in Venice did in 1450, just with fewer quills and more SQL databases.
And here’s the thing most growth investors miss: banks are astonishingly forecastable. You can read a 10-K, build a simple spread model, watch the rate curve, track cost of risk, and have a pretty good idea where earnings are going two to three years out. You don’t need to predict consumer taste, viral moments, or technological disruption. You need to understand credit, capital, and macro.
That’s it.
So for years, my bank book has looked like what you’d expect: a core of U.S. money-centers bought during the 2020 panic, selected European names picked up when the ECB was at -0.5%, some Japanese megabanks I’ve been nibbling on since Kuroda started losing the plot, and a few emerging-market lenders scattered here and there for spice.
Safe. Boring. Compounding.
Then, about 14 months ago, I started looking east — because the numbers were screaming at me.
What I Saw in Polish Banks That I Couldn’t Unsee
I’ve been living in Warsaw for a while now. And when you live somewhere, you start noticing things in the local financial press that don’t quite cross over into English-speaking finance media. One of those things was a growing chorus of Polish equity analysts saying, in so many words: “Something is breaking open in our banking sector, and Western investors are not paying attention.”
I dug in. Here’s what I found — the five catalysts that convinced me to put real money to work.
1. A record year of sector profits
Over the first eleven months of 2025, the Polish banking sector earned 45.11 billion zloty — roughly €9.9 billion — which was 7.4% more than the entire full year 2024. Think about that for a second: the sector had already beaten the prior full year before Christmas. Meanwhile, an index of Warsaw-listed lenders jumped 68% in dollar terms in 2025 — three times more than a gauge of emerging-market banking peers.
When a sector beats its own prior-year earnings in eleven months and the stocks only triple the EM peer index, you’re either looking at a mania or a re-rating. I don’t think this is a mania.
2. The Swiss franc nightmare is ending (this is the big one)
This is the catalyst that doesn’t exist anywhere else in European banking, and that most foreign investors still don’t understand.
For over a decade, Polish banks carried a massive, ugly overhang: mortgages denominated in Swiss francs, originated pre-2008, when CHF looked like free money. When the franc exploded higher and the CJEU ruled in favor of borrowers in 2019, Polish banks were buried under an avalanche of lawsuits and forced to book billions in provisions year after year.
That story is now ending.
At mBank, provisions after the first three quarters of 2025 stood at 1.66 billion zloty — down 50.7% year-over-year. And here’s the tell: mBank received less than half as many new lawsuits in Q3 as it did the prior year. The legal pipeline is drying up.
This is not a marginal improvement. This is a structural balance-sheet detox that’s been poisoning reported earnings for a decade — and it’s flipping from headwind to tailwind in real time. mBank was the most exposed name to the CHF problem, which is why it’s also the biggest winner on the way out. Simple cause and effect.
3. Margins that refuse to die
Here’s where it gets really interesting for anyone who’s spent time modeling Western European banks.
The National Bank of Poland cut rates five times in 2025 (from 5.75% to 4.25%), and then again to 3.75% in March 2026 — the lowest level since March 2022. In any normal banking sector, that kind of aggressive easing cycle would crush net interest margins.
In Poland? The sector’s net interest margin fell by only 0.19 percentage points over ten months, to 3.61%.
A French bank operates on a NIM of roughly 1.0–1.5%. Polish banks are printing 2x to 3x more on every euro of interest-earning assets. Even if NIMs compress further as the rate cycle plays out, there’s a massive cushion before they reach the anemic levels their Western European peers live with.
4. A macro that’s embarrassing Western Europe
While Germany flirts with recession and France wrestles with political dysfunction, look at Poland’s scoreboard:
GDP grew 4.0% in Q4 2025. Inflation at 2.2% in January 2026, comfortably inside the NBP target band. Unemployment around 3% — one of the lowest in the entire EU. And €65 billion of EU recovery funds allocated for 2021–2027, a big chunk of which is still being deployed into infrastructure, energy transition, and SME financing.
That last point matters enormously. EU recovery money flows through the banking system. Projects need bridge financing, co-financing, working capital lines. The banks are the toll booths.
Poland is growing at nearly 4x France’s rate, with lower inflation, lower unemployment, and a massive fiscal tailwind from Brussels. That’s not an emerging market. That’s a frontier of the EU growing into its own.
5. The dividend spigot is finally open
For most of the last decade, the Polish regulator (KNF) kept banks on a tight leash on dividends — partly because of the CHF mess, partly because of Covid, partly because regulators are regulators. That era is over.
Pekao is now running a dividend payout ratio between 50% and 75%. PKO BP is currently offering a dividend yield of 6.33%. These are not distressed-asset yields — these are cash distributions from banks growing loans at 8% and reporting record profits.
When a high-growth, high-ROE, investment-grade EU banking sector starts yielding 6%+ on dividend alone, rational capital will find its way there eventually. The question is whether you’re ahead of that wave or behind it.
Three Names, One Year Later
So I did what I do. I built positions. Three names, roughly equal weight, bought between late March and early April 2025.
Here’s what the past twelve months have looked like:
🇵🇱 mBank (WSE: MBK)
Entry : ~680 PLN
Today : ~1,000 PLN
Total return : ~ +55% (incl. dividend)
Thesis : Pure CHF-release play. Heaviest legacy
overhang = biggest earnings snap-back.
The "spring uncoiling" trade.🇵🇱 PKO Bank Polski (WSE: PKO)
Entry : ~62 PLN
Today : ~86 PLN
Total return : ~ +41% (incl. ~6% dividend)
Thesis : The national champion. State-affiliated,
tied to EU recovery fund disbursement.
Less explosive, infinitely more boring.
Boring is a feature.🇵🇱 Bank Pekao (WSE: PEO)
Entry : ~155 PLN
Today : ~215 PLN
Total return : ~ +40% (incl. dividend)
Thesis : Corporate Poland exposure.
Record 7 billion zloty net profit in 2025,
8% loan growth, 4% deposit growth.
SME lending = where EU money lands.An average position return of ~45% in twelve months. On a bank book. With dividend yields above 5% across the board. In a year when the S&P 500 did fine, but nothing spectacular.
This is what I mean when I say banks are my favorite sector. The thesis was legible. The catalysts were identifiable. The data was public. The valuation was reasonable. And the market took a year to price in what any analyst reading the KNF’s quarterly reports could have seen coming.
So Where Do We Go From Here?
The obvious question: is the Polish bank trade over?
Not quite. But it is getting more interesting — and more dangerous. The consensus view among Polish advisory firms is that 2026 will be a good year for the sector, but a repeat of record profits is unlikely. Margin compression will finally start biting. Corporate income tax is going up. The easy CHF-release gains are largely behind us.
What that means, practically: the sector re-rating phase is likely done. The next phase is stock picking within the sector. Some names will keep compounding. Others will stall. A few will get caught out when the rate cycle turns.
This is where discipline matters. This is where a framework matters.
🔒 In the Premium Section Below
For paying Macro Notes members, I’m going to walk through the entire thing:
My complete 7-variable bank investing framework — the checklist I run on every banking stock before I commit capital
My current bank positioning across 6 countries, with exact tickers, entry zones, and what I’d pay up to today
Which of the three Polish names I’m trimming, holding, and adding to right now — and why
The three “next-Poland” banking markets on my radar for 2026 — one in Central Europe, one in Asia, one in Latin America, each with a specific catalyst nobody’s pricing yet
My watchlist of Western European banks showing early-stage setups similar to Polish banks 18 months ago
The one bank stock I’m actively shorting as a pair trade against my long book
This is the framework that’s been quietly compounding my bank book at double-digit annualized returns for over a decade — with a fraction of the drawdowns you’d get in tech or growth. It’s not sexy. It’s not narrative-driven. It’s just a consistent process for turning macroeconomic signals into concentrated banking positions.
If you’re serious about building a durable core holding in financials — or if you just want to see exactly where a long-time bank investor is putting capital in 2026 — this is the piece to read.
👉 Upgrade to Macro Notes Premium to access the full framework and positions.
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