Slide 1: Results of mBank Group Q1-Q4 2016
Results of mBank Group Q1-Q4 2016 Great finish to a challenging year. Core income highest in history. Management Board of mBank S.A. Investor Presentation February 8, 2017
Slide 2: Key highlights of 2016 in mBank Group
Key highlights of 2016 in mBank Group NII increased by 13% to PLN 2,833 million and NIM improved by 17 bps to 2.30% Net interest Gradual rebound of loan yield thanks to rising share of higher-margin products and declining income & margin FX-denominated mortgage loan volume Falling funding costs
Slide 3: Key highlights of 2016 in mBank Group
Key highlights of 2016 in mBank Group Moderate growth of loans to PLN 84.6 billion, mixed trends within new production Loans & Excluding FX effect and reverse repo transaction gross portfolio expanded by 3.1% YoY new production Record high non-mortgage loan sales at PLN 6.1 billion (+26% YoY), w
Slide 4: Agenda
Agenda mBank Group in 2016 Summary of Q4/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q4/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Cap
Slide 5: Summary of Key Financials: Profit and Loss Account
mBank Group in 2016 Summary of Key Financials: Profit and Loss Account PLN million 2014 2015 2016 Change ’16/’15 Net interest income 2,490.7 2,511.4 2,832.8 +12.8% Net fee & commission income 901.7 897.2 906.4 +1.0% Total income 3,939.2 4,093.3 4,295.4 +4.9% Total costs (1,770.6) (1,856.8) (1,952.3)
Slide 6: Development of Revenues and Costs
mBank Group in 2016 Development of Revenues and Costs Development of Total Income Development of Total Costs (PLN million) (PLN million) 44.9% 50.1% 45.7% Cost/Income ratio +4.9% +3.9% change change +15.8% -4.3% 4,295 ‘16/‘15 +4.9% ‘16/‘15 4,093 +5.1% 3,939 2,051 1,963 556 685 -18.8% 194 11 +10.5% 5
Slide 7: Summary of Key Financials: Balance Sheet
mBank Group in 2016 Summary of Key Financials: Balance Sheet PLN million 2014 2015 2016 Change ’16/’15 Total assets 117,986 123,523 133,744 +8.3% Gross loans to customers 77,373 81,409 84,581 +3.9% Retail client loans 41,560 46,259 48,950 +5.8% 1 Core corporate client loans 29,002 32,416 34,118 +5.3
Slide 8: Development of Loans and Deposits
mBank Group in 2016 Development of Loans and Deposits Development of Gross Loans Development of Deposits (PLN million) (PLN million) +3.1% change +12.2% change +6.3% +3.9% +12.7% ‘16/‘15 ‘16/‘15 +5.2% +16.5% 84,581 +12.0% 91,418 81,409 1,457 540 77,373 1,704 -14.5% 81,141 -10.1% 2,972 600 72,422 34,
Slide 9: Agenda
Agenda mBank Group in 2016 Summary of Q4/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q4/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Cap
Slide 10: Key highlights of Q4 2016
Key highlights of Q4 2016 Historically high level of core revenues of PLN 1,003.9 M Strong total revenues • NII at PLN 753.3 M (+11.3% YoY), exceeding PLN 1.0 B on changing portfolio structure • NFC at PLN 250.6 M (+5.6% YoY), Profit & Loss on rising customer business Mixed volume growth • Gross loa
Slide 11: Key Financials: Profit and Loss Account
Summary of Q4/16 in mBank Group Key Financials: Profit and Loss Account PLN million Q4/16 Q3/16 Change QoQ Q4/15 Net interest income 753.3 718.7 +4.8% 676.6 Net fee & commission income 250.6 234.4 +6.9% 237.4 Total income 1,044.7 1,038.7 +0.6% 1,110.5 Total costs (481.0) (499.9) -3.8% (457.2) 1 One-
Slide 12: Key Financials: Balance Sheet
Summary of Q4/16 in mBank Group Key Financials: Balance Sheet PLN million Q4/16 Q3/16 Change QoQ Q4/15 Total assets 133,744 129,781 +3.1% 123,523 Gross loans to customers 84,581 84,199 +0.5% 81,409 Retail client loans 48,950 48,119 +1.7% 46,259 1 Core corporate client loans 34,118 34,466 -1.0% 32,41
Slide 13: Business Development: Client acquisition and Market shares
Summary of Q4/16 in mBank Group Business Development: Client acquisition and Market shares Number of Retail Clients (thou.) Number of Corporate Clients +401 +1,378 +98 +245 5,348 19,992 20,220 20,695 20,940 4,947 5,037 5,146 5,250 19,562 250 275 1,983 2,152 2,138 2,149 2,123 193 216 234 893 820 842
Slide 14: Development of Retail and Corporate business
Summary of Q4/16 in mBank Group Development of Retail and Corporate business Sales of mortgage loans Sales of non-mortgage loans (PLN M, by quarter) (PLN M, by quarter) +25% 1,305 -46% -3% 24% 309 1,714 +2% 1,557 1,511 6% 72 133 1,338 121 114 8% 718 764 706 1,207 433 694 121 394 399 26% 37% 489 16%
Slide 15: Agenda
Agenda mBank Group in 2016 Summary of Q4/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q4/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Cap
Slide 16: Development of Loans to Customers
Analysis of Q4/16 in mBank Group Development of Loans to Customers Stable loan portfolio, growth focused on higher-margin products Development of Gross Loans and Advances to Customers (PLN M) +2.2% +3.9% +5.3% -1.0% +1.8% +0.5% 33,447 32,805 33,937 34,528 34,174 -1.1% 84,199 84,581 1,031 4 132 62 57
Slide 17: Development of Deposits
Analysis of Q4/16 in mBank Group Development of Deposits Strong deposit inflows in both retail and corporate segment Development of Amounts due to Customers (PLN M) +8.6% +12.7% +7.4% +10.5% +10.5% +12.2% +7.3% +12.5% +8.0% 34,424 35,119 37,383 32,618 33,829 1,600 91,418 1,094 1,287 847 2,011 85,302
Slide 18: Income of mBank Group
Analysis of Q4/16 in mBank Group Income of mBank Group Core revenues at highest level in history Development of mBank Group’s Income (PLN M) +6.0% -5.9% +0.6% QoQ YoY 1,203.0 2.0 1,110.5 1,044.7 1,038.7 1,008.9 244.8 10.8 3.1 127.4 2.4 8.5 0.3 26.6 70.9 3.4 33.2 0.4 74.4 0.0 0.0 84.1 2.6 59.5 -64.2%
Slide 19: Costs of mBank Group
Analysis of Q4/16 in mBank Group Costs of mBank Group Structural cost advantage reflected in best-in-class efficiency Development of mBank Group’s Costs Q4/15 costs include payment to the Bank Guarantee Fund related to (PLN M) the bankruptcy of Cooperative Bank in Wołomin of PLN 141.7 million and
Slide 20: Loan Loss Provisions and Risk Costs
Analysis of Q4/16 in mBank Group Loan Loss Provisions and Risk Costs Lower cost of risk driven by provision releases in corporate segment Net Impairment Losses on Loans and Advances mBank Group’s Cost of Risk by Segment (PLN M) (bps) 69 -61.3% 59 54 46 -71.5% 52 35 55 139.5 47 20 35 76 117.7 66 64 1
Slide 21: Loan Portfolio Quality
Analysis of Q4/16 in mBank Group Loan Portfolio Quality Resilient loan portfolio quality, risk indicators supported by NPLs sale mBank Group’s Impaired Loans Portfolio Sale of non-performing mBank Group’s NPL Ratio (PLN M) loan portfolios -2.0% 5.8% 5.8% 5.9% mBank Group applies 5.7% -8.3% 5.4% a co
Slide 22: Funding Structure Details
Analysis of Q4/16 in mBank Group Funding Structure Details A well diversified funding profile and highly liquid balance sheet mBank Group’s funding structure mBank’s ratings Loan-to-Deposit Ratio as of 31.12.2016 -5.7 pp Fitch 96.7% 96.1% Retail 95.1% Other 94.7% 44% deposits Long-term 4% rating BBB
Slide 23: Key Regulatory Ratios
Analysis of Q4/16 in mBank Group Key Regulatory Ratios Strong capital ratios well above regulatory requirements mBank Group’s Total Capital Ratio mBank’s NSFR and LCR 199% 20.29% 19.01% 18.61% 18.33% 2.97% 17.25% 2.81% 17.00% 2.72% 2.73% 150% 151% 2.96% 144% 139% 112% 114% 114% 109% 109% Basel III r
Slide 24: Agenda
Agenda mBank Group in 2016 Summary of Q4/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q4/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Cap
Slide 25: Macroeconomic Update (1/2)
Macroeconomic Update (1/2) The economy has passed a turning point and will re-accelerate in 2017 Green shoots in investment Outlook for private consumption remains very good 30% 12% YoY 20% 10% 10% 8% 6% 0% 4% -10% 2% -20% 0% YoY -30% -2% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2
Slide 26: Macroeconomic Update (2/2)
Macroeconomic Update (2/2) Loan-to-deposit ratio set to drop below 100% as credit growth remains tepid Corporate loans and deposits (% YoY) Household loans and deposits (% YoY) 30% 25% 20% 20% 15% 10% 10% 5% 0% 0% -10% -5% Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14 May-15 Jan-16 Sep-16
Slide 27: 2017 in forecasts and the impact on mBank Group
2017 in forecasts and the impact on mBank Group Macroeconomic environment and challenges for the banking sector Key economic indicators Outlook for mBank 2015 2016 2017F Net interest income & NIM (Slightly positive) GDP growth (YoY) 3.9% 2.8% 3.4% Continued gradual increase of margin driven by cha
Slide 28: Agenda
Agenda mBank Group in 2016 Summary of Q4/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q4/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Cap
Slide 29: Appendix
Appendix Page Page Additional Information: Selected Financial Data No. Detailed Results of the Business Lines No. Consolidated Profit and Loss Account 30 Retail Banking 45-50 Consolidated Statement of Financial Position 31 Summary of Q4/16: Financial Results and Volumes 46-47 mBank Group’s Ratios 32
Slide 30: Consolidated Profit and Loss Account
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Consolidated Profit and Loss Account Quarterly results (PLN thou.) Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Net interest income 676,633 676,418 684,443 718,712 753,270 Net fe
Slide 31: Consolidated Statement of Financial Position
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Consolidated Statement of Financial Position Assets (PLN thou.) Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Cash and balances with Central Bank 5 938 133 4 042 760 6 433 221 5 8
Slide 32: mBank Group's Ratios
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries mBank Group’s Ratios Financial Ratios Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Net Interest Margin (quarterly) 2.22% 2.29% 2.25% 2.31% 2.35% Net Interest Margin YtD 2.13% 2.2
Slide 33: mBank Group's historical performance (1/3)
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s historical performance (1/3) Business Lines Subsidiaries Net Interest Income & NIM Net Fee and Commission Income (PLN M) (PLN M) 2.5% 2.4% 2.2% 2.3% 2.1% 2.3% +2% CAGR +1% +6% CAGR +13% 840 835 902 897 906 787 2,491 2,511 2,8
Slide 34: mBank Group's historical performance (2/3)
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s historical performance (2/3) Business Lines Subsidiaries Dynamics excl. one-off regulatory costs (additional Operating Costs payment to the BFG and Mortgage Support Fund) Pre-provision Income & C/I ratio (PLN M) (PLN M) +3% +
Slide 35: mBank Group's historical performance (3/3)
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s historical performance (3/3) Business Lines Subsidiaries Total Assets Equity & Total Capital Ratio (PLN B) (PLN M) +6% +8% 14.96% 18.73% 19.38% 14.66% 17.25% 20.29% CAGR +10% +6% CAGR 123.5 133.7 118.0 98.9 102.1 104.3 13,051
Slide 36: Net Interest Income & Margin
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Net Interest Income & Margin Interest Income Structure Interest Expense Structure (PLN M) (PLN M) 2.22 2.29 2.25 2.31 2.35 NIM [%] 283.7 -3.2% +2.7% 4.1 269.1 17.3
Slide 37: Fee and Commission Income
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Fee and Commission Income Fee and Commission Income Structure (PLN M) QoQ YoY 429.2 404.4 382.0 57.2 13% -4.6% +3.1% 365.3 60.0 351.9 55.5 46.6 11% 54.0 +10.9% +14
Slide 38: Trading and Other Income
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Trading and Other Income Net Trading Income Structure Gains less Losses from Investment Securities (PLN M) (PLN M) -62% -64% 84.1 74.4 10.7 70.9 12.3 59.5 26.6 3.4
Slide 39: Balance Sheet Analysis: Assets & Liabilities
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Balance Sheet Analysis: Assets & Liabilities Structure of Assets Structure of Liabilities and Equity (PLN B) (PLN B) 133.7 133.7 128.7 129.8 128.7 129.8 123.5 123.
Slide 40: Balance Sheet Analysis: Currency Structure
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Balance Sheet Analysis: Currency Structure Currency Structure of Loans to Customers (net) Currency Structure of Amounts due to Banks and Customers1 (PLN B) (PLN B)
Slide 41: Balance Sheet Analysis: Structure of Loans and Deposits
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Balance Sheet Analysis: Structure of Loans and Deposits Structure of mBank Group’s Gross Loans Structure of mBank Group’s Deposits as of 31.12.2016 as of 31.12.201
Slide 42: Balance Sheet Analysis: Loan Portfolio Structure
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Balance Sheet Analysis: Loan Portfolio Structure mBank Group’s Sector Exposure by Industry as of 31.12.2016 Households Real estate management 1.1% 9.9% Building in
Slide 43: Detailed Development of Capital Ratios
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Business Lines Subsidiaries Balance Sheet Analysis: Detailed Development of Capital Ratios mBank Group’s Common Equity Tier 1 (CET 1) Ratio 17.32% +0.18 -0.54 +1.66 +0.31 -0.17 +0.27 -0.02 15
Slide 44: Issuance Activity on the Covered Bonds Market
Summary Appendix Historical view Profit & Loss Balance Sheet Issuance Activity on the Covered Bonds Market Business Lines Subsidiaries Residential mortgage loans are rising in cover pool Covered Bonds Issuance Summary of Mortgage Covered Bonds issued in 2014-2016 (public issues) (PLN M) Amount Curre
Slide 45: Retail Banking
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the Business Lines in Q4/16 Retail Banking Investor Presentation – Q1-Q4 2016 |45
Slide 46: Retail Banking Summary of Q4/16: Financial and Business Results
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries Summary of Q4/16: Financial and Business Results Profit before Tax of the Segment Number of Retail Service Locations (PLN M, by quarter) 302 304 303 304 316 +7% 37 36 36 36 36 47 47 46 44 43 392.2
Slide 47: Retail Banking Summary of Q4/16: Loans and Deposits
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries Summary of Q4/16: Loans and Deposits Gross Loans to Retail Banking Clients1 Deposits from Retail Banking Clients (PLN M) (PLN M) +5.8% +16.0% +1.7% +5.4% 48,272 48,119 48,950 53,495 46,259 46,511
Slide 48: Loan Portfolio Structure of mBank Group in Poland
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries Loan Portfolio Structure of mBank Group in Poland Market Shares in Household Loans in Poland Product Structure of Retail Banking Loan Portfolio in Poland as of 31.12.2016 7.4% 7.6% 7.7% 7.6% 7.7%
Slide 49: mBank in the Czech Republic and Slovakia
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries mBank in the Czech Republic and Slovakia Gross Loans (PLN M) and Share in Total mBank’s retail volume Deposits (PLN M) and Share in Total mBank’s retail volume +12% +25% +2% +2% 8.8% +9% +9% 14.8%
Slide 50: mBank in the Czech Republic and Slovakia
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries mBank in the Czech Republic and Slovakia Mortgage Loans Non-mortgage Loans Customer deposits (CZK M) (CZK M) (CZK M) +9% +21% +15% Czech 0% +1% +5% Republic 16,977 16,921 15,507 3,077 3,121 32,886
Slide 51: Corporates & Financial Markets
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the Business Lines in Q4/16 Corporates & Financial Markets Investor Presentation – Q1-Q4 2016 |51
Slide 52: Corporates and Financial Markets: Financial and Business Results
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Financial Markets Business Lines Subsidiaries Summary of Q4/16: Financial and Business Results Profit before Tax of the Segment Number of Corporate Service Locations (PLN M, by quarter) 22 +0.4% 29 mBank’s branches Pomorskie
Slide 53: Corporates and Financial Markets: Loans and Deposits
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Financial Markets Business Lines Subsidiaries Summary of Q4/16: Loans and Deposits Gross Loans to Corporate Entities Deposits from Corporate Customers (PLN M) (PLN M) +2.2% +8.6% -1.0% +10.5% +10.5% 33,937 34,528 34,174 37,3
Slide 54: Corporates and Financial Markets: Market Shares
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Financial Markets Business Lines Subsidiaries Market Shares mBank’s Market Shares in Investment Banking Services1 mBank in the Market for Non-Treasury Debt2 as of 30.11.2016 (PLN M) 67,561 16.2% 11.5% 36,694 14,086 12,394 7,
Slide 55: Subsidiaries
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of mBank Group’s companies in Q4/16 Subsidiaries Investor Presentation – Q1-Q4 2016 |55
Slide 56: Development of Profit before Tax of Consolidated Companies
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s Subsidiaries Business Lines Subsidiaries Development of Profit before Tax of Consolidated Companies PLN thou. Q4/15 Q4/16 Change YoY 2015 2016 Change YoY mBank Hipoteczny 9,416 8,539 -9.3% 26,797 30,180 +12.6% mLeasing 11,930
Slide 57: mBank Hipoteczny (mBH)
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s Subsidiaries Business Lines Subsidiaries mBank Hipoteczny (mBH) Gross loans and advances to customers Profit before Tax (PLN M) (PLN M) established in 1999 +27% +4% +13% specialised mortgage bank and 9,179 9,516 30.2 the larg
Slide 58: Leasing and Factoring
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s Subsidiaries Business Lines Subsidiaries Leasing and Factoring Leasing contracts Market share & position – 2016 Profit before Tax (PLN M) (PLN M) +7% +27% 6.9% established 4,031 72.6 in 1991 3,785 928 57.2 11.1 1,105 Rank pro
Slide 59: Dom Maklerski mBanku (mDM)
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s Brokerage Services Business Lines Subsidiaries Dom Maklerski mBanku (mDM) mDM Equities Trading on WSE and Market Share in Turnover mDM Futures Trading on WSE and Market Share in Turnover (PLN M, by quarter) (thou. of contract
Slide 60: mBank's share price performance in 2016
mBank’s share price performance in 2016 Polish banking stocks remain to be influenced by regulatory and legislative risks mBank’s index membership and weights* mBank’s share performance v. main indices (rebased to 100) 130 mBank’s share price in 2016 WIG-30 2.266% 125 01.01.2016 314.00 MIN (21.01.20
Slide 61: Contact details
Contact details mBank’s Investor Relations at your service: E-mail address: investor.relations@mbank.pl Wojciech Chmielewski Direct dial: +48 22 829 14 34 E-mail: wojciech.chmielewski@mbank.pl Head of Investor Relations and Group Strategy Paweł Lipiński Direct dial: +48 22 829 15 33 E-mail: pawel.li