Mbank Sa · GPW:MBK
Mbank Sa — Debt Investor Presentation (2016)
58 slides from Mbank Sa's debt investor presentation, 2016
Slide 1: A Leading Bank in One of EU's Strongest Economies
mBank Group A Leading Bank in One of EU’s Strongest Economies Debt Investor Presentation
Slide 2: Disclaimer (1/2)
Disclaimer (1/2) These materials have been prepared by mBank S.A. (the "Bank"). Any person or entity considering making any investment based upon information contained in these materials should ensure that they are properly, independently and professionally advised. These materials were designed for
Slide 3: Disclaimer (2/2)
Disclaimer (2/2) This document is an advertisement and not a prospectus and investors should not subscribe for or purchase any securities referred to in this document except on the basis of information in any prospectus to be published by the Bank. Copies of the updated base prospectus in respect of
Slide 4: Agenda
Agenda Key Investment Highlights mBank Group’s Performance - Financial Results - Asset Quality - Funding & Capital Transaction Overview Appendices - Additional Information on the Polish Economy - Additional Information on the Polish Banking Sector - Detailed mBank Group’s Financial Information - Exc
Slide 5: Key Investment Highlights
Key Investment Highlights A leading universal bank in Poland 1 A resilient economy with 2 fundamentals supporting growth prospects An attractive and healthy 3 banking sector Leading market positions, highly efficient platform 4 underpinning strong Prudent risk financial results management and 5 a ro
Slide 6: mBank Group in a snapshot
mBank Group in a snapshot General description Key financial data (PLN M) • Poland’s 4th largest universal banking group in terms of total 2012 2013 2014 2015 assets and customer gross loans and 5th by deposits as at the Net loans 66,947 68,210 74,582 78,434 end of June 2016 Assets 102,145 104,283 11
Slide 7: Poland – one of EU's most resilient economies
Poland – one of EU’s most resilient economies Strengths Contributions to GDP growth 6 mBank’s forecast The largest economy in the CEE with almost 50% of region’s 5 4.3 gross domestic product1 3.6 3.4 3.4 3.5 4 3.3 3.3 3.3 3.3 3.3 3.1 3.0 3.2 Track record of steady growth despite prolonged turmoi
Slide 8: Sound fundamentals for the banking business
Sound fundamentals for the banking business Relatively strong labour market Inflation remains historically low, as in other CEEs Unemployment rate – 30.06.2016 Harmonised indices of consumer prices (HICP) 7% 7 10.1% 6% 6 8.6% 5% 5 4% 4 6.2% 3% 3 5.2% 2% 2 4.1% 1% 1 -0.1% 0% 0 -0.1% -1% -1 -0.4% -2%
Slide 9: An attractive and healthy banking sector
An attractive and healthy banking sector Banking sector penetration in Poland Capitalisation and Funding – the Polish banking sector % GDP - 2015 2013 – 2015 growth TCR & CET 1 ratio Gross loans / Deposits 34.9% 17.3% 15.7% 16.3% 115.1% 112.0% 14.7% 14.7% 108.1% 107.1% 13.0% 13.2% 21.1% 18.2% 14.1%
Slide 10: Unique story of successful organic growth
Unique story of successful organic growth Number of retail customers (thou.) A unique retail customer base CAGR Retail loans: PLN 48.3 B +6% 5,146 mBank’s mortgage clients are: 4,947 Retail deposits: PLN 49.5 B 4,551 234 193 [as of 30.06.2016] • Younger: 4,134 4,229 33 820 866 3,925 762 83% under 45
Slide 11: Highly efficient platform underpinning strong financial results
Highly efficient platform underpinning strong financial results mBank Group’s revenue composition – 2015 mBank Group’s key market shares as of 30.06.2016 10.9% 10.0% Financial Markets and Other 7.7% 7% 58% 6.6% 6.3% Retail 5.9% Banking Corporates and 35% Investment Banking Retail Mortgage Retail Cor
Slide 12: Prudent risk management and a robust balance sheet
Prudent risk management and a robust balance sheet mBank Group’s NPL ratio below the market level Net loan to deposit ratio ahead of strategic target level In Q4/13 the modified methodology of NPL 2013 125.1% recognition in retail area was implemented 7.3% 115.5% Target in mBank Group. 6.3% 6.4% 5.7
Slide 13: Highlights of mBank Group's 2016-2020 strategy
Highlights of mBank Group’s 2016-2020 strategy 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
Slide 14: Highlights of mBank Group's 2016-2020 strategy
Highlights of mBank Group’s 2016-2020 strategy 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 profitabi
Slide 15: Agenda
Agenda Key Investment Highlights mBank Group’s Performance - Financial Results - Asset Quality - Funding & Capital Transaction Overview Appendices - Additional Information on the Polish Economy - Additional Information on the Polish Banking Sector - Detailed mBank Group’s Financial Information - Exc
Slide 16: mBank Group's historical performance
Historical View Balance Sheet mBank Group’s historical performance Asset Quality Funding & Capital One-off regulatory costs (additional payments Total income & Net Interest Margin Total costs & C/I ratio to the BFG and Mortgage Support Fund) in 2015 (PLN M) (PLN M) 2.5% 2.4% 2.2% 2.3% 2.1% 2.1% 2.3%
Slide 17: mBank Group's historical performance
Historical View Balance Sheet mBank Group’s historical performance Asset Quality Funding & Capital Total Assets Equity & CAR (PLN B) (PLN M) +7% 14.96% 18.73% 19.38% 14.66% 17.25% 16.38% 18.33% CAGR +6% +11% +11% CAGR +11% 118.0 123.5 120.6 128.7 98.9 102.1 104.3 12,275 11,548 12,797 10,256 11,073 9
Slide 18: Balance Sheet Analysis: Assets & Liabilities
Historical view Balance Sheet Balance Sheet Analysis: Assets & Liabilities Asset Quality Funding & Capital Structure of Assets Structure of Liabilities (PLN B) (PLN B) 128.7 128.7 125.8 123.5 125.8 123.5 123.3 123.3 120.6 9.0 7% 120.6 8.4 7% 7.3 9.3 5.8 8.5 7.0 9.1 8.9 9.3 12.8 10% 11.9 12.3 12.6 30
Slide 19: Balance Sheet Analysis: Currency Structure
Historical view Balance Sheet Balance Sheet Analysis: Currency Structure Asset Quality Funding & Capital Currency Structure of Loans to Customers (net) Currency Structure of Amounts due to Banks and Customers1 (PLN B) (PLN B) 80.8 101.3 79.4 78.4 77.2 77.9 3.4 4% 97.1 97.0 95.9 2.8 5.8 6% 2.7 1.6 3.
Slide 20: Balance Sheet Analysis: Structure of Loans & Deposits
Historical view Balance Sheet Balance Sheet Analysis: Structure of Loans & Deposits Asset Quality Funding & Capital Structure of mBank Group’s Gross Loans Structure of mBank Group’s Deposits as of 30.06.2016 as of 30.06.2016 Public sector Corporate Corporate clients clients: Public sector PLN 0.7 B
Slide 21: Quality of mBank Group's Loan Portfolio
Historical view Balance Sheet Quality of mBank Group’s Loan Portfolio Asset Quality Funding & Capital mBank Group’s Impaired Loans Portfolio mBank Group’s NPL Ratio (PLN M) -0.1% 6.0% 5.9% 5.7% 5.8% 5.8% mBank Group applies +3.9% a conservative client- oriented approach in 4,849 4,857 4,631 4,663 4,
Slide 22: Loan Loss Provisions & Cost of Risk
Historical view Balance Sheet Loan Loss Provisions & Cost of Risk Asset Quality Funding & Capital 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 42.1 43.5 66 62 62 51.3 58 58 54.3 68.5 53 3.
Slide 23: Broad sector diversification
Historical view Balance Sheet Broad sector diversification Asset Quality Funding & Capital mBank Group’s Sector Exposure by Industry as of 30.06.2016 Households Real estate management 1.2% 10.5% Building industry 1.4% Wholesale trade 1.8% 1.2% 1.6% Retail trade 2.1% 2.2% Transport and logistics 2.2%
Slide 24: Loan portfolio structure of mBank Group in Poland
Historical view Balance Sheet Loan portfolio structure of mBank Group in Poland Asset Quality Funding & Capital 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% 7.7% 7.3% 7.3% 7.4% 1.3% 6.1% 7.6% 3.6% Mo
Slide 25: Limited impact of CHF appreciation on the borrowers
Historical view Balance Sheet Limited impact of CHF appreciation on the borrowers Asset Quality Funding & Capital Distribution of mBank’s borrowers by the percentage change of their Development of CHF/PLN exchange rate and 3-month CHF LIBOR instalment compared to December 2014 rate since the end of
Slide 26: mBank's client base resilient to CHF strengthening
Historical view Balance Sheet mBank’s client base resilient to CHF strengthening Asset Quality Funding & Capital Distribution of mBank’s CHF mortgage borrowers by Debt-to-Income (DtI) levels As of 31.12.2014 Assumptions for 30.06.2016: As of 30.06.2016 • CHF LIBOR rate at -0.78% Average DtI for 2007
Slide 27: A stable CHF funding profile
Historical view Balance Sheet A stable CHF funding profile Asset Quality Funding & Capital mBank’s CHF funding composition as of 30.06.2016 4,817 2,300 65.4% direct CHF long-term funding 650 200 1,344 323 CHF portfolio CHF loans CHF Subloans CHF EMTN Long term cross Short-term market currency swaps
Slide 28: Funding structure details
Historical view Balance Sheet Funding structure details Asset Quality Funding & Capital 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% BBB rating 3% 96.7% EMTN 96.1% 5%
Slide 29: Changing funding base towards more diversification
Historical view Balance Sheet Changing funding base towards more diversification Asset Quality Funding & Capital Evolution of Funding Mix Development of Gross Loans by type 100% (31.03.2010=100) 450 Other 400 80% Subordinated debt 350 60% 300 Debt securities in issue 250 Medium & long-term funding1
Slide 30: Issuance activity on the Covered Bonds Market
Historical view Balance Sheet Issuance activity on the Covered Bonds Market Asset Quality Funding & Capital Covered Bonds Issuance Summary of Mortgage Covered Bonds issued in 2014-2016 (PLN M) Target 2016: Amount Currency Issue date Maturity date Tenor (years) Coupon PLN 1.75 B 7.5 M EUR 17-02-2014
Slide 31: Key regulatory ratios: Capitalisation & Liquidity
Historical view Balance Sheet Key regulatory ratios: Capitalisation & Liquidity Asset Quality Funding & Capital mBank Group’s Total Capital Ratio mBank’s NSFR and LCR 19.01% 150% 18.33% 144% 139% 16.99% 17.25% 2.81% 16.97% 16.38% 2.72% 129% 2.90% 2.96% 2.93% 112% 107% 109% 111% 109% 109% Basel III r
Slide 32: Detailed development of capital ratios
Historical view Balance Sheet Detailed development of capital ratios Asset Quality Funding & Capital 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 -0.05 -0.16 14.29% +0.05 +0.02 14.09% Q3/15 Change in FX impact Other Q4/15 Change in FX impact Net
Slide 33: Agenda
Agenda Key Investment Highlights mBank Group’s Performance - Financial Results - Asset Quality - Funding & Capital Transaction Overview Appendices - Additional Information on the Polish Economy - Additional Information on the Polish Banking Sector - Detailed mBank Group’s Financial Information - Exc
Slide 34: First tranche: 3-year EUR 500 M, Senior Unsecured
First tranche: 3-year EUR 500 M, Senior Unsecured Transaction details Distribution by investor location United Kingdom Issuer BRE Finance France SA Austria 19% 11% Benelux Guarantor mBank S.A. (formerly BRE Bank SA) 9% Senior Unsecured Debt Format 9% Switzerland out of EMTN programme 7% Issue rating
Slide 35: Second tranche: 5-year CHF 200 M, Senior Unsecured
Second tranche: 5-year CHF 200 M, Senior Unsecured Transaction details Distribution by investor location Issuer BRE Finance France SA Guarantor mBank S.A. (formerly BRE Bank SA) Senior Unsecured Debt Liechtenstein Format 6% out of EMTN programme Switzerland 89% 5% Germany Issue rating A (Fitch) / BB
Slide 36: Third tranche: 5-year EUR 500 M, Senior Unsecured
Third tranche: 5-year EUR 500 M, Senior Unsecured Transaction details Distribution by investor location Issuer mFinance France S.A. Poland United Kingdom Guarantor mBank S.A. 15% 13% CEE (excl. Poland) Senior Unsecured Debt 11% Format out of EMTN programme 11% Austria & Issue rating A (Fitch) / BBB+
Slide 37: Fourth tranche: 7-year EUR 500 M, Senior Unsecured
Fourth tranche: 7-year EUR 500 M, Senior Unsecured Transaction details Distribution by investor location Issuer mFinance France S.A. United Kingdom France Guarantor mBank S.A. 24% 14% Poland Senior Unsecured Debt 9% Format out of EMTN programme 9% Switzerland Issue rating A (Fitch) / BBB+ (S&P) Germ
Slide 38: Agenda
Agenda Key Investment Highlights mBank Group’s Performance - Financial Results - Asset Quality - Funding & Capital Transaction Overview Appendices - Additional Information on the Polish Economy - Additional Information on the Polish Banking Sector - Detailed mBank Group’s Financial Information - Exc
Slide 39: Stability of Polish zloty proves solidity of Poland's economic fundamentals
Stability of Polish zloty (PLN) proves solidity of Poland’s economic fundamentals Emerging Markets currencies v. EUR, index 01.01.2011=100 220 210 200 190 180 170 160 150 140 130 120 110 100 90 80 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-1
Slide 40: Growth-supporting policies and flexible exchange rate
Growth-supporting policies and flexible exchange rate Growth-oriented policies Cautious monetary policy Historically low interest rates are supporting business lending • Clearly defined monetary policy target (2.5% +/-1 p.p.) and reducing the interest burden faced by households • Lack of asset pur
Slide 41: Despite short-term gyrations, the recovery is on-going
Despite short-term gyrations, the recovery is on-going Industry: same old story, IP growth right close to post-crisis average … but sentiment indicators have been quite robust 40% 0 6 -5 4 30% -10 2 20% -15 0 10% -20 -2 -25 -4 0% -30 -6 -10% -35 -8 -20% -40 -10 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct
Slide 42: 2016 is all about a shift from investment to consumption
2016 is all about a shift from investment to consumption Consumers still upbeat about the future While investment remains in doldrums 9% -25 50% YoY 8% 40% 7% -30 30% 6% 5% 20% 4% -35 10% 3% 0% 2% -40 -10% 1% 0% -20% -1% -45 -30% Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Q1/14 Q1/15 Q1/1
Slide 43: Rate cuts still possible in 2016
Rate cuts still possible in 2016 „Opportunistic” rate cuts Polish assets: low valuations, local risks have diminished • CPI remains stubbornly low. Despite strong base effects at the • Polish assets (equities, long-term bonds and currency) have turn of the year (fuels), it is uncertain when inflatio
Slide 44: Credit growth is low
Credit growth is low Corporate loans and deposits (% YoY) Household loans and deposits (% YoY) 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% -5% -10% -5% Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-13 Jul-14 Apr-15 Jan-16 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-13 Jul-14 Apr-15 Jan-16 Corporate deposits
Slide 45: Asset quality trends in Poland
Asset quality trends in Poland Development of NPL ratios by country Improving risk indicators in Poland – NPL ratios by sector 2013 13% 16.8% 15.6% 2014 12% 2015 12.7% 11% 10% 8.9% 8.1% 9% 9.6% 7.6% 5.6% 8% 5.6% 5.3% 6.4% 6.2% 5.2% 5.6% 5.1% 5.3% 7% 7.3% 6% 6.2% 5% Dec-09 Sep-10 Jun-11 Mar-12 Dec-12
Slide 46: Consolidated Profit and Loss Account under IFRS
Consolidated Profit and Loss Account under IFRS 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 fee and commission income 230,336 235,583 237,400 211,745 209,703 Dividend income 3,158 14,345 6 0 2,586 Net trading income 35,3
Slide 47: Consolidated Statement of Financial Position
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 4 042 760 6 433 221 Loans and advances to banks 2 071 953 2 793 756 1 897 334 1 120 253 1 680 830 Trading securities 2 597 284 2 561 125 557
Slide 48: mBank Group's Financial Ratios
mBank Group’s Financial 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% 2.10% 2.13% 2.29% 2.27% Net Interest Margin YtD (excl. CHF portfolio) 2.43% 2.45% 2.48% 2.66% 2.63% Cost to Income Ratio (quarterl
Slide 49: mBank's subordinated securities outstanding
mBank’s subordinated securities outstanding Type Nominal value Currency Maturity date Tier II eligible Bond 400 M CHF 08-03-2017 . No Bond 170 M CHF perpetual √ Yes (partly) Bond 80 M CHF perpetual √ Yes (partly) Bond 500 M PLN 20-12-2023 √ Yes Bond 750 M PLN 17-01-2025 √ Yes Data as of 30.06.2016
Slide 50: Net Interest Income & Margin
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 [%] +0.2% -2.4% 960.3 945.5 947.1 283.7 277.3 919.1 18.9 4.1 269.1 16.9 21.1 2% 263.3 4.5 262.6 868.9 17.9 61.7 59.1 47.6 5% 17.3 2.4 43.1 2.8 17.1 16.7 2.6 1% 22.8 17.3 19.
Slide 51: Fee and Commission Income & Trading Income
Fee and Commission Income & Trading Income Fee and Commission Income Structure Net Trading Income Structure (PLN M) (PLN M) 0% +69% +4% -29% 382.0 365.5 371.9 365.3 84.1 84.1 351.9 49.9 55.5 70.9 51.4 54.0 15% 16.3 12.3 47.3 35.3 59.5 42.9 40.6 40.7 36.8 41.3 11% 67.8 67.6 67.5 68.6 69.8 19% 76.2 71
Slide 52: Total Costs & C/I ratio
Total Costs & C/I ratio Development of mBank Group’s Costs (incl. Amortisation) 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 holders of bankrupt Cooperative Bank in Wołomin and contribution for the support f
Slide 53: Home ownership rates among the highest in Europe
0.7 0.7 3.2 Romania 95.4 0.7 2.7 Bulgaria 81.5 13.2 2.6 7.9 Slovakia 79.4 10.9 1.8 POLAND 72.7 10.8 4.3 12.3 3.4 Hungary 70.8 18.4 7.5 Source: Eurostat (data updated on 30.10.2015). Slovenia 66.5 10.3 5.9 17.4 Czech Republic 60.7 18.2 16.6 4.5 Owner, no outstanding mortgage or housing loan Greece 60
Slide 54: mBank's mortgage client analysis: favourable client domicile across the country
mBank’s mortgage client analysis: favourable client domicile across the country mBank’s portfolio distribution – by province Unemployment rate – by province as of 30.06.2016 Pomorskie Pomorskie 7.8% 10.2% Warmińsko-Mazurskie Warmińsko-Mazurskie Zachodnio- Zachodnio- 14.3% 2.0% Pomorskie Pomorskie 4.
Slide 55: mBank's mortgage clients analysis: age and place of residence
mBank’s mortgage clients analysis: age and place of residence Structure of clients by age Structure of clients by place of residence 83% 7.8% 10.7% 70% 59% 33% 22.2% Clients < 45 years No. of inhabitants 36.1% Clients < 45 years 28.7% > 100 thou. 24.1% 11.1% 24.4% 23.2% 30.5% 34.2% 10.7% 17.3% 15.8%
Slide 56: mBank's mortgage clients analysis: source and level of income
mBank’s mortgage clients analysis: source and level of income Participation in providing for client’s household Monthly client’s individual net income (in PLN) mBank 19.0% 42.6% 19.1% 19.2% 1.5% 16.6% 1.1% Market* 73.8% 17.5% 7.7% 8.6% 55.1% below 3,000 6,001-9,000 (mBank) / 10,000 (Market) 3,001-6,
Slide 57: mBank's Management Team
mBank’s Management Team Cezary Stypułkowski Przemysław Gdański Vice-President of the Management Board President of the Management Board Head of Corporate and Investment Banking Chief Executive Officer • Between 1993 and 2002 in IBP Bank and then ABN AMRO Bank • Since 2002 in BPH, where in 2006 took
Slide 58: Contact details
Contact details Karol Prażmo Direct dial: +48 22 829 17 12 Head of Treasury E-mail: karol.prazmo@mbank.pl Wojciech Chmielewski Direct dial: +48 22 829 14 34 Head of Investor Relations and Group Strategy E-mail: wojciech.chmielewski@mbank.pl Paweł Lipiński Direct dial: +48 22 829 15 33 Investor Relat