Slide 1: Results of mBank Group Q2 2016
Results of mBank Group Q2 2016 A solid quarter, full-year targets on track Management Board of mBank S.A. Investor Presentation July 28, 2016
Slide 2: Key highlights of Q2 2016
Key highlights of Q2 2016 Core revenues of PLN 894.1 M remained at high levels Total revenues exceeded • NII at PLN 684.4 M (+13.0% YoY), PLN 1.2 B on Visa gains as volume re-pricing continued • NFC at PLN 209.7 M (-9.0% YoY), Profit & Loss on lower business volumes Sound volume development • Gross
Slide 3: Agenda
Agenda mBank Group’s Strategy for 2016-2020 Summary of Q2/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q2/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Stru
Slide 4: To help. Not to annoy. To delight…
mBank Group’s Strategy for 2016-2020 New mission emphasizes focus on being close to clients and taking advantage of the mobile revolution To help. Not to annoy. To delight… Anywhere. Investor Presentation – Q2 2016 |4
Slide 5: Key three trends to focus
mBank Group’s Strategy for 2016-2020 Key three trends to focus 1 2 3 Client era Mobile era Efficiency era Investor Presentation – Q2 2016 |5
Slide 6: Today banks operate in a client era
mBank Group’s Strategy for 2016-2020 Today banks operate in a client area Banks want to be close to clients and mBank will realize customers’ needs satisfy their needs in key moments of truth exactly how and when they want mBank’s approach Retirement Maturity relevant for each stage of the customer
Slide 7: Today banks operate in a mobile era
mBank Group’s Strategy for 2016-2020 Today banks operate in a mobile era mBank will strengthen its advantage Smartphone revolution moves forward in mobile banking Evolution of client-bank interactions in Poland Clients using mobile banking by contact channel as percentage of active clients in 2015 5
Slide 8: Today banks operate in an efficiency era
mBank Group’s Strategy for 2016-2020 Today banks operate in an efficiency era mBank will further build on its light, The golden age for banks is over efficient business model Average 3M WIBOR rate Interchange fee Cost/Income ratio Costs / Average Assets on debit card transaction -5.6 p.p. -0.59 p.p.
Slide 9: Strategy sets the azimuth in a dynamically changing environment
mBank Group’s Strategy for 2016-2020 Strategy sets the azimuth in a dynamically changing environment 1 2 3 Empathy Mobility Efficiency How to satisfy our How to build a How to manage our clients and make dominant position resources efficiently? banking friendly? as a mobile bank? Investor Presentati
Slide 10: Specific business actions will be based on three strategy pillars
mBank Group’s Strategy for 2016-2020 Specific business actions will be based on three strategy pillars 1 2 3 Empathy Mobility Efficiency Be the point of reference in Grow while keeping the FTE Offer the best customer terms of mobile banking base at current level experience i.e. give clients wh
Slide 11: Financial performance targets – 5 key measures
mBank Group’s Strategy for 2016-2020 Financial performance targets – 5 key measures Financial measure Target point 1 Cost efficiency: Top3 in Poland, every year Cost/Income ratio to be one of three most efficient listed banks in Poland 2 Top3 in Poland, every year Owner’s capital profitability: Retu
Slide 12: Agenda
Agenda mBank Group’s Strategy for 2016-2020 Summary of Q2/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q2/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Stru
Slide 13: Key Financials: Profit and Loss Account
Summary of Q2/16 in mBank Group Key Financials: Profit and Loss Account in PLN million Q2/16 Q2/15 Change YoY Q1/16 Net interest income 684.4 605.5 +13.0% 676.4 Net Fee and Commission income 209.7 230.3 -9.0% 211.7 Total income 1,203.0 884.8 +36.0% 1,008.9 Total costs (490.7) (484.4) +1.3% (480.8) L
Slide 14: Key Financials: Balance Sheet
Summary of Q2/16 in mBank Group Key Financials: Balance Sheet in PLN million Q2/16 Q2/15 Change YoY Q1/16 Gross loans to customers 83,862 80,261 +4.5% 80,925 Retail client loans 48,272 45,329 +6.5% 46,511 1 Core corporate client loans 33,805 31,384 +7.7% 32,801 Amounts due to customers 85,302 73,058
Slide 15: Business Development: Client acquisition and Market shares
Summary of Q2/16 in mBank Group Business Development: Client acquisition and Market shares Number of Retail Clients (thou.) Number of Corporate Clients +403 +1,566 +109 +228 5,146 19,086 19,562 19,992 20,220 4,743 4,864 4,947 5,037 18,654 216 234 1,931 1,983 2,152 2,138 121 159 193 1,867 775 809 820
Slide 16: Development of Retail and Corporate business
Summary of Q2/16 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) +37% -26% +28% 1,334 1,305 1,714 272 +6% 133 8% 1,031 309 1,338 99 1,255 1,201 1,207 433 25% 24% 244 72 764 7% 87 121 718 96 102 10
Slide 17: Agenda
Agenda mBank Group’s Strategy for 2016-2020 Summary of Q2/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q2/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Stru
Slide 18: Development of Loans to Customers
Analysis of Q2/16 in mBank Group Development of Loans to Customers Lending growth remains subdued, impacted by margin increases Development of Gross Loans and Advances to Customers (PLN M) +5.3% +4.5% +7.7% +3.4% +2.9% +3.6% +3.1% +1.7% 32,227 34,959 33,447 32,805 33,937 83,862 842 2,654 1,031 4 132
Slide 19: Development of Deposits
Analysis of Q2/16 in mBank Group Development of Deposits Dynamic deposit growth in both retail and corporate segment Development of Amounts due to Customers (PLN M) +18.4% +18.0% +7.7% +16.8% +5.1% +6.5% +16.6% 34,922 34,424 35,119 +4.6% 32,618 85,302 29,661 3,089 1,094 1,287 847 81,141 81,134 731 1
Slide 20: Income of mBank Group
Analysis of Q2/16 in mBank Group Income of mBank Group Stable core income, total revenues boosted by Visa transaction Development of mBank Group’s Income (PLN M) +36.0% +19.2% +7.5% -5.7% QoQ YoY 1,203.0 2.0 1,110.5 979.9 1,008.9 244.8 127.4 884.8 13.4 70.9 3.4 33.2 1.3 9.2 84.1 0.0 84.1 59.5 -29.2%
Slide 21: Costs of mBank Group
Analysis of Q2/16 in mBank Group Costs of mBank Group Stable cost base excl. one-off amortisation charge for IT functionalities Development of mBank Group’s Costs In Q4/15 mBank Group paid a contribution to the Bank Guarantee (PLN M) Fund of PLN 141.7 million to cover the cost of payments to deposit
Slide 22: Loan Loss Provisions and Risk Costs
Analysis of Q2/16 in mBank Group Loan Loss Provisions and Risk Costs Cost of risk rebound reflecting exceptionally low provisioning in Q1/16 Net Impairment Losses on Loans and Advances mBank Group’s Cost of Risk by Segment (PLN M) (bps) +71.8% 57 59 55 54 117.7 111.0 54 55 52 107.7 35 47 102.6 35 42
Slide 23: Loan Portfolio Quality
Analysis of Q2/16 in mBank Group Loan Portfolio Quality Stable risk indicators confirming resilient portfolio quality mBank Group’s Impaired Loans Portfolio mBank Group’s NPL Ratio (PLN M) -0.1% 6.0% mBank Group applies 5.9% 5.8% a conservative client- 5.7% 5.8% +3.9% oriented approach in 4,849 4,85
Slide 24: Funding Structure Details
Analysis of Q2/16 in mBank Group Funding Structure Details A well diversified funding profile and safe liquidity levels mBank Group’s funding structure mBank’s ratings Loan-to-Deposit Ratio as of 30.06.2016 105.7% Fitch Other Retail 4% deposits Long-term 101.1% -1.4 pp Subordinated liabilities 43% B
Slide 25: Key Regulatory Ratios
Analysis of Q2/16 in mBank Group Key Regulatory Ratios Strong capital position and liquidity above regulatory requirements mBank Group’s Total Capital Ratio mBank’s NSFR and LCR 19.01% 150% 18.33% 144% 17.25% 139% 16.99% 2.81% 16.97% 16.38% 2.72% 129% 2.90% 2.96% 2.93% 112% 107% 109% 111% 109% 109%
Slide 26: Agenda
Agenda mBank Group’s Strategy for 2016-2020 Summary of Q2/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q2/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Stru
Slide 27: Macroeconomic Update (1/2)
Macroeconomic Update (1/2) Growth moderated, headwinds from public investment and exports Investment (especially public) remains sluggish Trouble from the global economy? Poor exports figures. 20% 35% YoY, MA3 30% 10% 25% 0% 20% 15% -10% 10% 5% -20% 0% -30% -5% 2008 2009 2010 2011 2012 2013 2014 201
Slide 28: Macroeconomic Update (2/2)
Macroeconomic Update (2/2) Slower growth in corporate loans, cautious borrowing by households Corporate loans and deposits (% YoY) Household loans and deposits (% YoY) 30% 25% 20% 20% 15% 10% 10% 5% 0% 0% -10% -5% Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Ja
Slide 29: 2016 in forecasts and the impact on mBank Group
2016 in forecasts and the impact on mBank Group Macroeconomic environment and challenges for the banking sector Key economic indicators Impact on mBank 2014 2015 2016F Net interest income & NIM (Slightly positive) GDP growth (YoY) 3.3% 3.4% 3.4% MPC decision on reduction of interest rates less lik
Slide 30: Agenda
Agenda mBank Group’s Strategy for 2016-2020 Summary of Q2/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q2/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Stru
Slide 31: Appendix
Appendix Page Page Additional Information: Selected Financial Data No. Detailed Results of the Business Lines No. Consolidated Profit and Loss Account 32 Retail Banking 47-52 Consolidated Statement of Financial Position 33 Summary of Q2/16: Financial Results and Volumes 48-49 mBank Group’s Ratios 34
Slide 32: 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.) Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Net interest income 605,548 641,753 676,633 676,418 684,443 Net fe
Slide 33: 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.) Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Cash and balances with Central Bank 3 187 463 4 630 886 5 938 133 4 0
Slide 34: 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 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Net Interest Margin (quarterly) 2.11% 2.12% 2.22% 2.29% 2.25% Net Interest Margin YtD 2.08% 2.1
Slide 35: 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) CAGR 2.5% 2.4% 2.2% 2.3% 2.1% 2.1% 2.3% +2% CAGR +4% +14% -1% 840 835 902 897 787 2,280 2,226 2,
Slide 36: 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 One-off regulatory costs Operating Costs (additional payments to the BFG Pre-provision Income & C/I ratio (PLN M) and Mortgage Support Fund) (PLN M) CAGR +5% 47.7% 46.5
Slide 37: 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) CAGR +7% 14.96% 18.73% 19.38% 14.66% 17.25% 16.38% 18.33% +6% CAGR +11% +11% +11% 118.0 123.5 120.6 128.7 98.9
Slide 38: 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) 2.11 2.12 2.22 2.29 2.25 NIM -2.4% [%] 283.7 277.3 +0.2% 4.1 269.
Slide 39: 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 382.0 365.5 371.9 365.3 351.9 49.9 55.5 +14.1% +5.0% 51.4 54.0 15% 47.3 42.9 40.6 +12
Slide 40: 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) +69% -29% 84.1 84.1 70.9 12.3 16.3 35.3 59.5 3.4
Slide 41: 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) 128.7 128.7 125.8 123.5 123.3 125.8 123.5 123.
Slide 42: 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 43: 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 30.06.2016 as of 30.06.201
Slide 44: 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 30.06.2016 Households Real estate management 1.2% 10.5% Building i
Slide 45: 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 +0.42 16.20% -0.23 -0.17 +1.42 -0.19 15.61% +0.41 -
Slide 46: 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 (PLN M) Amount Currency Issue date M
Slide 47: Retail Banking
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the Business Lines in Q2/16 Retail Banking Investor Presentation – Q2 2016 |47
Slide 48: Retail Banking Summary of Q2/16: Financial Results
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries Summary of Q2/16: Financial Results Profit before Tax of the Segment Number of Retail Service Locations (PLN M, by quarter) 268 274 278 280 279 +90% +96% 35 36 36 36 36 23 23 23 23 22 392.2 79 83
Slide 49: Retail Banking Summary of Q2/16: Loans and Deposits
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries Summary of Q2/16: Loans and Deposits Gross Loans to Retail Banking Clients1 Deposits from Retail Banking Clients (PLN M) (PLN M) +6.5% +19.4% +3.8% +3.4% 48,272 49,453 46,259 46,511 47,835 54 45,3
Slide 50: 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 30.06.2016 7.6% 7.7% 7.6% 7.7% 7.7%
Slide 51: 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 +29% +23% +7% +7% 8.8% +11% +11% 14.
Slide 52: 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) +21% +19% +17% +4% +8% Czech +5% Republic 16,184 16,795 2,963 32,066 2,835 29,7
Slide 53: Corporates & Financial Markets
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the Business Lines in Q2/16 Corporates & Financial Markets Investor Presentation – Q2 2016 |53
Slide 54: Corporates and Financial Markets Summary: Financial Results
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Financial Markets Business Lines Subsidiaries Summary of Q2/16: Financial Results Profit before Tax of the Segment Number of Corporate Service Locations (PLN M, by quarter) 22 +39% mBank’s branches 12 29 2 Pomorskie Warmińsk
Slide 55: Corporates and Financial Markets Summary: Loans and Deposits
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Financial Markets Business Lines Subsidiaries Summary of Q2/16: Loans and Deposits Gross Loans to Corporate Entities Deposits from Corporate Customers (PLN M) (PLN M) +5.3% +18.4% +7.7% +3.4% 34,959 34,922 34,424 35,119 33,4
Slide 56: 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 30.06.2016 (PLN M) 67,017 15.2% 11.9% 35,145 12,734 12,243 7,
Slide 57: Subsidiaries
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the mBank Group’s companies in Q2/16 Subsidiaries Investor Presentation – Q2 2016 |57
Slide 58: 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. Q2/15 Q2/16 Change YoY H1/15 H1/16 Change YoY mBank Hipoteczny -6,319 1,569 -/+ 8,305 13,388 +61.2% mLeasing 12,130
Slide 59: 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 +35% +61% +9% specialised mortgage bank and 8,498 8.3 13.4 the larges
Slide 60: 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 – H1 2016 Profit before Tax (PLN M) (PLN M) +10% +49% 7.4% established 2,076 41.2 in 1991 1,887 Rank provides 1,066 27.8
Slide 61: 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 62: mBank’s share price performance in H1/16
mBank’s share price performance in H1/16 Sentiment towards Polish banking stocks has remained negative this year mBank’s index membership and weights* mBank’s share performance v. main indices (rebased to 100) 115 WIG-30 2.515% 110 WIG-20 2.603% WIG 1.668% 105 WIG-Banks 6.373% 100 -1.6% WIG-Poland 1
Slide 63: 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