Slide 1: Results of mBank Group Q3 2016
Results of mBank Group Q3 2016 Sound income in a challenging market Management Board of mBank S.A. Investor Presentation October 26, 2016
Slide 2: Key highlights of Q3 2016
Key highlights of Q3 2016 Core revenues of PLN 953.1 M at historically high level Strong total revenues • NII at PLN 718.7 M (+12.0% YoY), exceeding PLN 1.0 B as volume re-pricing continued • NFC at PLN 234.4 M (-0.5% YoY), Profit & Loss on customer business growth Selective volume growth • Gross lo
Slide 3: Agenda
Agenda Summary of Q3/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q3/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidity R
Slide 4: Key Financials: Profit and Loss Account
Summary of Q3/16 in mBank Group Key Financials: Profit and Loss Account in PLN million Q3/16 Q3/15 Change YoY Q2/16 Net interest income 718.7 641.8 +12.0% 684.4 Net Fee and Commission income 234.4 235.6 -0.5% 209.7 Total income 1,038.7 979.9 +6.0% 1,203.0 Total costs (499.9) (463.3) +7.9% (490.7) Lo
Slide 5: Key Financials: Balance Sheet
Summary of Q3/16 in mBank Group Key Financials: Balance Sheet in PLN million Q3/16 Q3/15 Change YoY Q2/16 Gross loans to customers 84,199 82,449 +2.1% 83,862 Retail client loans 48,119 45,381 +6.0% 48,272 1 Core corporate client loans 34,466 32,305 +6.7% 33,805 Amounts due to customers 85,188 78,546
Slide 6: Business Development: Client acquisition and Market shares
Summary of Q3/16 in mBank Group Business Development: Client acquisition and Market shares Number of Retail Clients (thou.) Number of Corporate Clients +386 +1,609 +104 +475 5,250 19,562 19,992 20,220 20,695 4,864 4,947 5,037 5,146 19,086 234 250 1,983 2,152 2,138 2,149 159 193 216 1,931 809 820 842
Slide 7: Development of Retail and Corporate business
Summary of Q3/16 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) +30% -48% -9% 1,334 1,305 1,714 20% 272 309 1,557 -9% 133 8% 99 72 1,338 121 8% 764 1,201 1,207 433 718 694 8% 121 394 25% 36% 481
Slide 8: Agenda
Agenda Summary of Q3/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q3/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidity R
Slide 9: Development of Loans to Customers
Analysis of Q3/16 in mBank Group Development of Loans to Customers Selective lending growth focused on higher-margin products Development of Gross Loans and Advances to Customers (PLN M) -1.2% +2.1% +6.7% +1.7% +1.1% +0.4% +2.0% 34,959 33,447 32,805 33,937 34,528 +1.5% 83,862 84,199 2,654 1,031 4 13
Slide 10: Development of Deposits
Analysis of Q3/16 in mBank Group Development of Deposits Active management of customer deposits, solid inflows in retail segment Development of Amounts due to Customers (PLN M) -3.1% 0.0% -3.7% +8.5% +10.2% -0.1% -6.0% -1.0% 34,922 34,424 32,618 35,119 33,829 85,302 85,188 3,089 1,094 847 1,287 2,01
Slide 11: Income of mBank Group
Analysis of Q3/16 in mBank Group Income of mBank Group Solid recurrent revenues driven by record high core income Development of mBank Group’s Income (PLN M) +6.0% -13.7% +9.2% QoQ YoY 1,203.0 2.0 1,110.5 1,038.7 979.9 1,008.9 244.8 127.4 2.4 8.5 13.4 70.9 3.4 33.2 0.4 74.4 84.1 0.0 84.1 59.5 +25.0%
Slide 12: Costs of mBank Group
Analysis of Q3/16 in mBank Group Costs of mBank Group High efficiency despite continued investments in future growth 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 holders of
Slide 13: Loan Loss Provisions and Risk Costs
Analysis of Q3/16 in mBank Group Loan Loss Provisions and Risk Costs Stable cost of risk on annual basis, reflecting prudent approach Net Impairment Losses on Loans and Advances mBank Group’s Cost of Risk by Segment (PLN M) (bps) 69 57 59 +25.7% +18.4% 54 55 52 35 55 139.5 47 35 76 117.7 111.0 66 64
Slide 14: Loan Portfolio Quality
Analysis of Q3/16 in mBank Group Loan Portfolio Quality Resilient risk indicators confirming good portfolio quality mBank Group’s Impaired Loans Portfolio mBank Group’s NPL Ratio (PLN M) +1.9% 5.9% 5.9% mBank Group applies 5.7% 5.8% 5.8% +2.1% a conservative client- oriented approach in 4,857 4,846
Slide 15: Funding Structure Details
Analysis of Q3/16 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 30.09.2016 Fitch 101.1% +0.4 pp Other Retail 4% deposits Long-term 96.7% Subordinated liabilities 43% ra
Slide 16: Key Regulatory Ratios
Analysis of Q3/16 in mBank Group Key Regulatory Ratios Strong capital ratios well above regulatory requirements mBank Group’s Total Capital Ratio mBank’s NSFR and LCR 19.01% 18.61% 150% 151% 18.33% 144% 17.25% 139% 16.99% 2.81% 16.97% 2.72% 2.73% 2.90% 2.96% 112% 114% 109% 111% 109% 109% Basel III r
Slide 17: Agenda
Agenda Summary of Q3/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q3/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidity R
Slide 18: Macroeconomic Update (1/2)
Macroeconomic Update (1/2) Higher household consumption is mitigating the effects of investment slump Investment remains in a deep downturn Consumption is keeping the economy afloat 30% 12% YoY 20% 10% 10% 8% 6% 0% 4% -10% 2% -20% 0% -30% -2% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2010 2011 20
Slide 19: 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 20: 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% 2.8% MPC decision on reduction of interest rates less lik
Slide 21: Agenda
Agenda Summary of Q3/16 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate business Analysis of Q3/16 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidity R
Slide 22: Appendix
Appendix Page Page Additional Information: Selected Financial Data No. Detailed Results of the Business Lines No. Consolidated Profit and Loss Account 23 Retail Banking 39-44 Consolidated Statement of Financial Position 24 Summary of Q3/16: Financial Results and Volumes 40-41 mBank Group’s Ratios 25
Slide 23: 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.) Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Net interest income 641,753 676,633 676,418 684,443 718,712 Net fe
Slide 24: 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.) Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Cash and balances with Central Bank 4 630 886 5 938 133 4 042 760 6 4
Slide 25: 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 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Net Interest Margin (quarterly) 2.12% 2.22% 2.29% 2.25% 2.31% Net Interest Margin YtD 2.10% 2.1
Slide 26: 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% +13% -1% 840 835 902 897 787 2,280 2,226 2,
Slide 27: 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 28: 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) +3% 14.96% 18.73% 19.38% 14.66% 17.25% 16.99% 18.61% CAGR +6% CAGR +9% +9% +11% 118.0 123.5 125.8 129.8 98.9 1
Slide 29: 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) 2.12 2.22 2.29 2.25 2.31 NIM -1.6% [%] 283.7 +3.2% 277.3 4.1 269.
Slide 30: 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 404.4 382.0 371.9 365.3 351.9 60.0 15% +11.2% +20.4% 49.9 55.5 54.0 47.3 42.1 10% +1.
Slide 31: 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) -12% +25% 84.1 84.1 74.4 70.9 12.3 16.3 59.5 3.4
Slide 32: 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) 128.7 129.8 128.7 129.8 125.8 123.5 125.8 123.
Slide 33: 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 34: 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 30.09.2016 as of 30.09.201
Slide 35: 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 30.09.2016 Households Real estate management 1.2% 10.6% Building i
Slide 36: 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 +0.27 -0.02 15.88% +1.42 -
Slide 37: mBank's Euro Medium Term Note (EMTN) Programme
Summary Appendix Historical view Profit & Loss Balance Sheet mBank’s Euro Medium Term Note (EMTN) Programme Business Lines Subsidiaries Summary of fifth tranche: 4-year EUR 500 M, Senior Unsecured Transaction details Distribution by investor location Poland Issuer mFinance France S.A. United Kingdom
Slide 38: 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 39: Detailed Results of the Business Lines in Q3/16: Retail Banking
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the Business Lines in Q3/16 Retail Banking Investor Presentation – Q3 2016 |39
Slide 40: Retail Banking: Summary of Q3/16 Financial Results
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries Summary of Q3/16: Financial Results Profit before Tax of the Segment Number of Retail Service Locations (PLN M, by quarter) 274 278 280 279 280 -10% -48% 36 36 36 36 36 23 23 23 22 20 392.2 79 83
Slide 41: Retail Banking: Summary of Q3/16 Loans and Deposits
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries Summary of Q3/16: Loans and Deposits Gross Loans to Retail Banking Clients1 Deposits from Retail Banking Clients (PLN M) (PLN M) +6.0% +19.5% -0.3% +2.6% 48,272 48,119 50,735 46,259 46,511 49,453
Slide 42: 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 30.09.2016 7.6% 7.7% 7.6% 7.7% 7.6%
Slide 43: 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 +18% +19% -2% -2% 8.7% 0% 0% 14.4% 4
Slide 44: 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) +16% +19% +19% +1% +3% Czech +4% Republic 16,795 16,977 3,077 32,066 32,886 14,
Slide 45: Detailed Results of the Business Lines in Q3/16: Corporates & Financial Markets
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the Business Lines in Q3/16 Corporates & Financial Markets Investor Presentation – Q3 2016 |45
Slide 46: Corporates and Financial Markets: Summary of Q3/16 Financial Results
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Financial Markets Business Lines Subsidiaries Summary of Q3/16: Financial Results Profit before Tax of the Segment Number of Corporate Service Locations (PLN M, by quarter) 22 mBank’s branches 12 -49% 29 2 Pomorskie Warmińsk
Slide 47: Corporates and Financial Markets: Loans and Deposits
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Financial Markets Business Lines Subsidiaries Summary of Q3/16: Loans and Deposits Gross Loans to Corporate Entities Deposits from Corporate Customers (PLN M) (PLN M) -1.2% -3.1% +1.7% -3.7% 34,959 34,528 34,922 35,119 33,44
Slide 48: 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 31.08.2016 (PLN M) 66,254 15.9% 12.3% 35,658 14,484 12,634 7,
Slide 49: Detailed Results of the mBank Group's companies in Q3/16: Subsidiaries
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the mBank Group’s companies in Q3/16 Subsidiaries Investor Presentation – Q3 2016 |49
Slide 50: 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. Q3/15 Q3/16 Change YoY 9M/15 9M/16 Change YoY mBank Hipoteczny 9,076 8,235 -9.1% 17,381 21,641 +24.5% mLeasing 17,5
Slide 51: 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 +26% +25% +8% specialised mortgage bank and 9,179 21.6 the largest is
Slide 52: 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 – 9M 2016 Profit before Tax (PLN M) (PLN M) +16% +36% 7.4% established 3,104 61.5 in 1991 2,680 1,027 Rank 45.3 20.3 pro
Slide 53: 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 54: mBank's share price performance in 9M/16
mBank’s share price performance in 9M/16 Polish banking stocks remain to be influenced by FX-related risks mBank’s index membership and weights* mBank’s share performance v. main indices (rebased to 100) 130 mBank’s share price in 9M/16 WIG-30 2.577% 125 01.01.2016 314.00 MIN (21.01.2016) 268.15 WIG
Slide 55: 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