Ruling Czech Soc-Dem call for bank taxes

Regional Overview

Macro, FX&Rates: Ruling Czech Soc-Dem call for bank taxes

(CZ) Macro: Ruling Czech Social Democrats (ČSSD) have unveiled a plan for progressive corporate taxes. They propose a 15% rate on company income up to CZK 5m, 19% on income between CZK 5mn and CZK 100mn, and 24% on income exceeding CZK 100m. Around 600 companies would pay the top rate. In addition, a completely new bank tax of 0.05% would apply to assets up to CZK 50bn, of 0.1% on assets between CZK 50bn and CZK 100bn, of 0.2% on assets between CZK 100bn and CZK 300bn, and of 0.3% on assets exceeding CZK 300bn. They estimate that the progressive corporate tax would increase annual tax receipts by CZK 6bn, while the bank tax would raise CZK 11bn. Meanwhile ČSSD's leader Mr. Zaorálek added that the current tax system is unfair and that banks are earning twice as much here as in other countries. Zaorálek mentioned that the EU average profitability is 5%, while Czech banks have 13%.

In our view – given the recent the drop in CSSD`s poll preferences, we see rather low probability that progressive corporate taxation will be applied. Recall that the latest poll (by STEM agency) indicated that the Social Democrats would receive just 11.4%, while the junior ruling party ANO of former finance minister Babiš has almost 33%.

Equities: Pekao and Alior banks to keep separate brands

(CZ) PZU: Company is most likely to merge the Pekao and Alior but keep separate brands according to Polish press. Three other scenarios proposed by PZU's advisors include: keeping Alior in its role of an aggressive M&A player but remodelling its business so that it does not compete with Pekao; selling Alior; or having Pekao incorporate Alior and create a large, universal, low-cost bank.

The banks are complementary: Pekao has a capital surplus and a strong corporate segment, but an outdated IT system, while Alior has no growth capital, but a new IT system and a strong position in retail.

Daily Preview: NBH will further boost interbank liquidity

(HU) Rates: Today the rate session of the Monetary Council of the NBH will be eyecatcher, while a fresh inflation report will be published which worth to pay attention. In our view all the latest developments confirms our view that NBH may cut further the cap of 3-month deposit in June. We expect that the maximum limit might be moderated to HUF250bn till the end of September from the current level of HUF500bn.

(PL) Macro: There will be a lot of interesting macro figures released in Poland today, including retail sales and industrial output for May. The data will signal how the Polish economy has been doing in the second quarter.

  LAST PREVIOUS CHANGE (%)
EURCZK 26.19 26.19 -0.01
EURHUF 307.5 308.0 -0.14
EURPLN 4.217 4.214 0.07

 

  LAST PREVIOUS CHANGE (bps)
CZGB 10Y 0.946 0.953 -0.7
HUGB 10Y 2.96 2.97 -0.3
PLGB 10Y 3.16 3.16 0.0

 

  LAST PREVIOUS CHANGE (%)
PX 1004.0 1004.0 0.00
BUX 35948 35948 WIG
WIG 61048 61048 0.00

 

This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.