Slide 1: Results of mBank Group Q2 2018
Results of mBank Group Q2 2018 Strong revenue momentum continued. Accelerating loan and deposit volumes. Management Board of mBank S.A. Investor Presentation July 31, 2018
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by mBank S.A. for information purposes only and is based on the Condensed Consolidated Financial Statements for the first half of 2018, prepared under the International Financial Reporting Standards. For more detailed information on the Bank’s and Group
Slide 3: Agenda
Agenda Summary of Main Trends in Q2/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q2/18 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Quality Capital and Liquidity Ratios Ma
Slide 4: Key highlights of Q2 2018
Key highlights of Q2 2018 Net profit of PLN 287.4 M (+6.6% YoY), quarterly dynamic impacted by a one-off Historically high core income of PLN 1,103.3 M despite lower insurance fees Net interest income at PLN 854.4 M (+11.7% YoY) on increasing volumes and changing asset mix Net fee and commission
Slide 5: Business Development of Retail Banking and Corporate Banking
Summary of Q2/18 in mBank Group Business Development of Retail Banking and Corporate Banking Retail Banking Number of Clients (thou.) Market shares +275 Start of enhancing mBank’s 6.6% 6.5% 6.5% +87 +87 6.4% internet banking through 6.3% iterative changes of its online 5,234 5,421 5,508 transactio
Slide 6: Key Financials: Profit and Loss Account
Summary of Q2/18 in mBank Group Key Financials: Profit and Loss Account PLN million Q2/17 Q1/18 Q2/18 change QoQ change YoY Net interest income 764.8 816.4 854.4 +4.6% +11.7% Net fee and commission income 252.6 268.9 249.0 -7.4% -1.4% 1 Total income 1,080.9 1,380.6 1,208.2 -12.5% +11.8% Total costs
Slide 7: Key Financials: Balance Sheet
Summary of Q2/18 in mBank Group Key Financials: Balance Sheet PLN million Q2/17 Q1/18 Q2/18 change QoQ change YoY Total assets 129,417 133,640 140,018 +4.8% +8.2% Gross loans to customers 86,221 88,528 92,680 +4.7% +7.5% Retail client loans 48,758 48,825 51,134 +4.7% +4.9% Corporate client loans 36,
Slide 8: Agenda
Agenda Summary of Main Trends in Q2/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q2/18 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Quality Capital and Liquidity Ratios Ma
Slide 9: Results of mBank Group: Loans to customers
Results of mBank Group: Loans to customers Upward trend in loans extended in both corporate and retail segment Development of Gross Loans and Advances to Customers Gross Loans to Corporate Entities (PLN M) (PLN M) +12.8% +7.5% +4.7% +11.7% +5.2% +7.2% +3.0% +3.8% 92,680 38,288 38,760 40,756 36,143 3
Slide 10: Results of mBank Group: New lending business
Results of mBank Group: New lending business Record high non-mortgage lending, accelerating origination of housing loans Sales of Mortgage Loans Sales of Non-mortgage Loans (PLN M, by quarter) (PLN M, by quarter) +15% +22% +16% +16% +17% +17% 1,153 2,332 1,002 995 184 16% 2,000 194 8% 1,904 1,770 17
Slide 11: Results of mBank Group: Customer deposits
Results of mBank Group: Customer deposits Continued strong inflows to current accounts driven by transactionality Development of Customer Deposits Deposits from Corporate Entities (PLN M) (PLN M) +8.7% +10.9% +3.7% +4.6% +3.8% +3.4% 97,794 34,725 34,590 34,025 35,592 32,737 94,309 2,300 2% 1,789 440
Slide 12: Results of mBank Group: Total income
Results of mBank Group: Total income Core revenues at record high level thanks to robust growth of net interest income Development of mBank Group’s Total Income (PLN M) +X.X% Excluding one-off gain +11.8% -12.5% +4.1% 1,380.6 QoQ YoY 219.7 1,208.2 1,149.4 1,141.5 1.7 15.5 1,080.9 18.6 18.5 4.3 84.7
Slide 13: Results of mBank Group: Total costs
Results of mBank Group: Total costs Persistent good efficiency, minor increase of recurrent costs Development of mBank Group’s Costs (PLN M) Annual contribution to the Resolution Fund: PLN 116.8 million in Q1/17 PLN 97.1 million in Q1/18 +4.9% +4.2% -15.4% +0.9% +X.X% Excluding contributions to
Slide 14: Results of mBank Group: Cost of risk
Results of mBank Group: Cost of risk Increase of risk costs driven by prudent provisioning of some corporate exposures Net Impairment Losses and Fair Value Change on Loans 1 mBank Group’s Cost of Risk by Segment (PLN M) (bps) +78% 99 217.1 78 66 2.1 58 57 78 59 61 57 49 113 164.4 108.8 140.0 92 88 1
Slide 15: Results of mBank Group: Loan portfolio quality
Results of mBank Group: Loan portfolio quality Good quality of loan portfolio evidenced by resilient risk indicators mBank Group’s Impaired Loans Portfolio mBank Group’s NPL Ratio IFRS 9 (PLN M) +10.0% 5.2% 5.2% 5.1% 5.2% mBank Group applies +5.2% +5.2% 5.0% a conservative client- oriented approach
Slide 16: Results of mBank Group: Key regulatory ratios
Results of mBank Group: Key regulatory ratios Strong capital position well above regulatory requirements mBank Group’s Total Capital Ratio mBank’s NSFR and LCR 21.24% 20.99% 20.93% 165% 20.47% 20.06% 156% 156% 152% 2.77% 2.68% 2.64% 3.06% 144% 2.96% 16.98% 114% 116% 112% 110% 112% Basel III requirem
Slide 17: Agenda
Agenda Summary of Main Trends in Q2/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q2/18 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Quality Capital and Liquidity Ratios Ma
Slide 18: Macroeconomic Update (1/2)
Macroeconomic Update (1/2) Raising macroeconomic forecasts yet again Labour market is in its best shape ever Record-high consumer sentiment is supporting consumption 20% 10% 10 17% 8% 5 6% 0 14% 4% -5 11% 2% -10 8% 0% -15 5% -2% -20 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Q3/05 Q
Slide 19: Macroeconomic Update (2/2)
Macroeconomic Update (2/2) Rebound in credit growth. PLN assets sold off in Q2/18. Corporate loans and deposits (% YoY, FX-adjusted) Household loans and deposits (% YoY, FX-adjusted) 25% 14% 20% 12% 15% 10% 10% 8% 5% 6% 0% 4% -5% 2% -10% 0% Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan
Slide 20: 2018 in forecasts and the impact on mBank Group
2018 in forecasts and the impact on mBank Group Macroeconomic environment and challenges for the banking sector Key economic indicators Outlook for mBank 2016 2017 2018F Net interest income & NIM (Slightly positive) GDP growth (YoY) 3.0% 4.6% 4.8% Continued gradual increase of margin driven by cha
Slide 21: Agenda
Agenda Summary of Main Trends in Q2/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q2/18 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Quality Capital and Liquidity Ratios Ma
Slide 22: Selected Financial Data: Consolidated Profit and Loss Account
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Consolidated Profit and Loss Account Quarterly results (PLN thou.) Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Net interest income 764,779 796,762 825,112 816,424 854,351 Net fee and commission income
Slide 23: Consolidated Statement of Financial Position
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Consolidated Statement of Financial Position Assets (PLN thou.) Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Cash and balances with Central Bank 5,855,425 6,028,470 7,384,869 5,354,319 5,514,886 Loans a
Slide 24: mBank Group's Ratios
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view mBank Group’s Ratios Financial Ratios Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Net Interest Margin (quarterly) 2.43% 2.50% 2.57% 2.59% 2.56% Net Interest Margin YtD 2.42% 2.45% 2.48% 2.59% 2.57% Net
Slide 25: Profit and Loss Account: Net Interest Income
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Profit and Loss Account: Net Interest Income Interest Income Structure Interest Expense Structure (PLN M) (PLN M) +11.3% +4.6% +10.1% +4.6% 1,102.6 1,056.5 1,053.6 248.2 1,022.7 28.4 3% 0
Slide 26: Profit and Loss Account: Net Fee and Commission Income
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Profit and Loss Account: Net Fee and Commission Income Fee and Commission Income Structure Fee and Commission Expense Structure (PLN M) (PLN M) +1.9% -1.5% +7.0% +8.4% 423.0 429.5 423.1 4
Slide 27: Balance Sheet Analysis: Assets & Liabilities
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Balance Sheet Analysis: Assets & Liabilities Structure of Assets Structure of Liabilities and Equity (PLN B) (PLN B) 140.0 140.0 132.5 131.4 133.6 8.6 6% 132.5 133.6 6.3 5% 129.4 129.4 13
Slide 28: Balance Sheet Analysis: Structure of Loans and Deposits
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Balance Sheet Analysis: Structure of Loans and Deposits Structure of mBank Group’s Gross Loans Structure of mBank Group’s Deposits as of 30.06.2018 as of 30.06.2018 Public sector Corporat
Slide 29: Balance Sheet Analysis: Funding Structure and Liquidity Levels
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Balance Sheet Analysis: Funding Structure and Liquidity Levels mBank Group’s Funding Structure mBank’s ratings Loan-to-Deposit Ratio as of 30.06.2018 Fitch +0.8 pp Retail 94.6% 94.3% Long
Slide 30: Balance Sheet Analysis: Detailed Development of Capital Ratios
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Balance Sheet Analysis: Detailed Development of Capital Ratios mBank Group’s Tier 1 Capital Ratio +0.21 -0.05 18.31% -0.50 +0.18 +0.33 -0.24 +0.14 17.87% 17.83% -0.03 -0.70 +0.34 -0.22 -0
Slide 31: Balance Sheet Analysis: Details of Capital Requirements
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Balance Sheet Analysis: Details of Capital Requirements Regulatory capital requirements for mBank Group as of 30.06.2018 Countercyclical Capital Buffer is calculated as the weighted avera
Slide 32: Detailed Results of the Business Lines: Retail Banking
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries Historical view Detailed Results of the Business Lines in Q2/18 Retail Banking Investor Presentation – Q2 2018 |32
Slide 33: Retail Banking: Summary of Q2/18 Financial and Business Results
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view Summary of Q2/18: Financial and Business Results Profit before Tax of the Segment excluding Number of Retail Service Locations (PLN M, by quarter) one-off gain +9% 332 333 336 346 326 +30% 34 33 3
Slide 34: Retail Banking: Summary of Q2/18 Loans and Deposits
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view Summary of Q2/18: Loans and Deposits Gross Loans to Retail Banking Clients1 Deposits from Retail Banking Clients (PLN M) (PLN M) +4.9% +11.3% +4.7% +3.8% 51,134 59,903 57,720 103 48,758 48,949 48,
Slide 35: Loan Portfolio Structure of mBank Group in Poland
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view 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 30.06.2018 7.6% 7.5% 7.5% 7.4% 7.2%
Slide 36: mBank in the Czech Republic and Slovakia
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view 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% +16% +2% 9.4% +6% 16.4% 4,706 4
Slide 37: mBank in the Czech Republic and Slovakia
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view mBank in the Czech Republic and Slovakia Mortgage Loans Non-mortgage Loans Customer deposits (CZK M) (CZK M) (CZK M) +2% +19% +11% Czech 0% +4% +4% Republic 17,163 17,520 17,435 4,414 41,590 4,230
Slide 38: Detailed Results of the Business Lines: Corporates & Financial Markets
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries Historical view Detailed Results of the Business Lines in Q2/18 Corporates & Financial Markets Investor Presentation – Q2 2018 |38
Slide 39: Corporates and Financial Markets: Financial and Business Results
Summary Appendix Profit & Loss Balance Sheet Business Lines Corporates and Financial Markets Subsidiaries Historical view Summary of Q2/18: Financial and Business Results Profit before Tax of the Segment Number of Corporate Service Locations (PLN M, by quarter) 22 29 mBank’s branches, 12 +3% 2 Pomor
Slide 40: Corporates and Financial Markets: Loans and Deposits
Summary Appendix Profit & Loss Balance Sheet Business Lines Corporates and Financial Markets Subsidiaries Historical view Summary of Q2/18: Loans and Deposits Gross Loans to Corporate Entities Resegmentation Deposits from Corporate Customers Resegmentation starting from 2018 starting from 2018 (PLN
Slide 41: Detailed Results of mBank Group's companies: Subsidiaries
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries Historical view Detailed Results of mBank Group’s companies in Q2/18 Subsidiaries Investor Presentation – Q2 2018 |41
Slide 42: mBank Hipoteczny (mBH)
Summary Appendix Profit & Loss Balance Sheet Business Lines mBank Group’s Subsidiaries Subsidiaries Historical view mBank Hipoteczny (mBH) Issuance of Covered Bonds Profit before Income Tax (PLN M, by year) 2,732 (PLN M) established in 1999 Private placement 700 +38% specialised mortgage bank and ac
Slide 43: mBank Hipoteczny: Issuance Activity on the Covered Bonds Market
Summary Appendix Profit & Loss Balance Sheet Business Lines mBank Group’s Subsidiaries Subsidiaries Historical view mBank Hipoteczny (mBH): Issuance Activity on the Covered Bonds Market Summary of Mortgage Covered Bonds issued in 2014-2018 (public issues) Amount Currency Issue date Maturity date Ten
Slide 44: Leasing and Factoring
Summary Appendix Profit & Loss Balance Sheet Business Lines mBank Group’s Subsidiaries Subsidiaries Historical view Leasing and Factoring Leasing contracts Market share & position – H1 2018 Profit before Tax (PLN M) (PLN M) +25% 7.5% -43% established 2,953 33.9 in 1991 2,354 Rank 1,651 17.1 provides
Slide 45: mBank Group's Brokerage Services
Summary Appendix Profit & Loss Balance Sheet Business Lines mBank Group’s Brokerage Services Subsidiaries Historical view mBank Dom Maklerski (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 contracts
Slide 46: Historical performance: Profit and Loss Account
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries mBank Group’s historical performance: Profit and Loss Account Historical view Total Income & Margin NII NFC Trading and other Total Costs & C/I ratio Personnel Material and other BFG (PLN M) (PLN M) 2.2% 2.3% 2.1% 2.3% 2.5% 2.6
Slide 47: Historical performance: Balance Sheet
Summary Appendix Historical Profit & Loss Balance view Profit & Sheet Loss Balance Sheet Business Lines Business Lines Subsidiaries mBank Group’s historical performance: Balance Sheet Subsidiaries Historical view Total Assets Equity & Total Capital Ratio (PLN B) (PLN M) CAGR +6% +7% 19.38% 14.66% 17
Slide 48: mBank's share price performance
mBank’s share price performance Banking stocks declined in 1H’18 due to delaying interest rate hikes mBank’s index membership and weights* mBank’s share performance v. main indices (rebased to 100) – YtD perspective 116 mBank’s share price WIG-30 2.370% 31.12.2017 465.0 112 MIN (28.06.2018) 393.8 WI
Slide 49: mBank's Mobile Banking
mBank’s Mobile Banking Focus on client convenience through well-designed functionalities mBank launched a new mobile application in April 2017 Key functionalities of the app, inspired by users’ opinions and habits, include: Android Pay and Apple Pay (for Visa and MasterCard Mobile authorisation
Slide 50: mBank Group's Strategy for 2016-2020
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 51: mBank Group's Strategy for 2016-2020: Financial performance targets
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 52: Contact details
Contact details mBank’s Investor Relations at your service: E-mail address: investor.relations@mbank.pl Ernest Pytlarczyk Direct dial: +48 22 829 14 34 E-mail: ernest.pytlarczyk@mbank.pl Head of Analysis and Investor Relations, Chief Economist Joanna Filipkowska Direct dial: +48 22 829 04 53 Deputy