Slide 1: Results of mBank Group Q1-Q4 2019
Results of mBank Group Q1-Q4 2019 Best operational performance in history. Legacy portfolio hampering results. Management Board of mBank S.A. Investor Presentation February 6, 2020
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by mBank S.A. for information purposes only and is based on the non-audited financial data of mBank Group for the fourth quarter of 2019, prepared under the International Financial Reporting Standards. For more detailed information on mBank S.A. and mBa
Slide 3: Agenda
Agenda Key Highlights of 2019 in mBank Group Summary of Main Trends in Q4/19 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q4/19 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Q
Slide 4: Key highlights of 2019 in mBank Group
Key highlights of 2019 in mBank Group Revenues Total income from the current business at record-high level of PLN 5,524 M NII up by 14.5% YoY to 4,003 M, a further improvement of NIM by 11 bps Net interest Continued upward trend of loan yield fuelled by changing asset mix, with growing share of hi
Slide 5: Key highlights of 2019 in mBank Group
Key highlights of 2019 in mBank Group Vibrant growth of loans to PLN 108.5 B, focus on higher-margin products Gross portfolio expanded by 11.0% YoY, driven by record-high sales of retail mortgage and Loans consumer loans (at PLN 18.4 B, +36% YoY) and lending acceleration in corporate segment Mar
Slide 6: Key product and offer innovations in 2019
Key product and offer innovations in 2019 At mBank, we are permanently working to provide the best customer experience We are constantly developing …taking into account social ...and supplementing the product our offer and platform… responsibility principles... palette with related services Introduc
Slide 7: Key Financials: Profit and Loss Account
Summary of 2019 in mBank Group Key Financials: Profit and Loss Account PLN million 2017 2018 2019 change YoY Net interest income 3,135.7 3,496.5 4,002.8 +14.5% Net fee and commission income 992.2 975.9 964.6 -1.2% 1 Trading and other income 325.7 607.2 557.1 -8.3% Total income 4,453.6 5,079.5 5,524.
Slide 8: Key Financials: Balance Sheet
Summary of 2019 in mBank Group Key Financials: Balance Sheet PLN million 2017 2018 2019 change YoY Total assets 131,424 145,781 158,721 +8.9% Gross loans to customers 87,388 97,808 108,538 +11.0% Retail client loans 48,143 52,925 60,361 +14.0% Corporate client loans 37,942 44,233 47,786 +8.0% Custom
Slide 9: Core income kept on growth trajectory, improved efficiency
Summary of 2019 in mBank Group Core income kept on growth trajectory, continued improvement of underlying efficiency Development of mBank Group’s Total Income Development of mBank Group’s Total Costs (PLN M) (PLN M) Cost/Income ratio, 2.48% 2.58% 2.69% Net Interest Margin 45.9% 44.5% 42.2% excl. one
Slide 10: Agenda
Agenda Key Highlights of 2019 in mBank Group Summary of Main Trends in Q4/19 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q4/19 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Q
Slide 11: Key highlights of Q4 2019
Key highlights of Q4 2019 Core income of PLN 1,272 M affected by the corrections applied post the CJEU verdict Net interest income at PLN 1,010.5 M (+9.4% YoY) on increasing volumes and changing asset mix Net fee and commission income at PLN 261.5 M (+19.3% YoY), a rebound helped by client trans
Slide 12: Business Development of Retail Banking and Corporate Banking
Summary of Q4/19 in mBank Group Business Development of Retail Banking and Corporate Banking Number of Retail Clients (thou.) Market shares - Households Innovations and new products 1 7.0% -81 New desktop in retail Internet Retail Banking +65 +65 6.7% 6.5% 7.0% banking system which allows 6.4% 5,6
Slide 13: Key Financials: Profit and Loss Account
Summary of Q4/19 in mBank Group Key Financials: Profit and Loss Account PLN million Q4/18 Q3/19 Q4/19 change QoQ change YoY Net interest income 923.3 1,064.2 1,010.5 -5.0% +9.4% Net fee and commission income 219.2 248.5 261.5 +5.2% +19.3% Trading and other income 104.6 184.1 137.3 -25.4% +31.3% Tota
Slide 14: Key Financials: Balance Sheet
Summary of Q4/19 in mBank Group Key Financials: Balance Sheet PLN million Q4/18 Q3/19 Q4/19 change QoQ change YoY Total assets 145,781 158,774 158,721 0.0% +8.9% Gross loans to customers 97,808 108,124 108,538 +0.4% +11.0% Retail client loans 52,925 58,983 60,361 +2.3% +14.0% Corporate client loans
Slide 15: Agenda
Agenda Key Highlights of 2019 in mBank Group Summary of Main Trends in Q4/19 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q4/19 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Q
Slide 16: Results of mBank Group: Loans to customers
Results of mBank Group: Loans to customers Upward trend in retail loans continued, year-end repayments in corporate segment Development of Gross Loans and Advances to Customers Gross Loans to Corporate Entities (PLN M) (PLN M) +8.0% +11.0% +8.3% -1.8% +10.7% +0.4% -0.9% +1.3% 46,182 47,047 48,647 47
Slide 17: Results of mBank Group: New lending business
Results of mBank Group: New lending business High loan origination across the board, market share in new housing loans above 10% Sales of Mortgage Loans Sales of Non-mortgage Loans (PLN M, by quarter) (PLN M, by quarter) +70% +17% -5% +11% +11% 2,221 2,292 2,174 2,662 2,575 2,621 221 186 2,272 2,402
Slide 18: Results of mBank Group: Customer deposits
Results of mBank Group: Customer deposits Strong inflows to current accounts, intentional reduction of corporate term deposits Development of Customer Deposits Deposits from Corporate Entities (PLN M) (PLN M) +7.9% +14.4% +9.6% -9.9% +0.6% +15.0% -9.2% +0.9% 42,313 115,966 116,661 37,664 38,127 501
Slide 19: Results of mBank Group: Total income
Results of mBank Group: Total income Lower net interest income due to corrections post CJEU verdict, strong net fees Development of mBank Group’s Total Income Q3/19 was positively impacted by: (PLN M) valuation adjustment of PSP (operator of BLIK) due to transaction with Mastercard Inc. of PLN 45.
Slide 20: Results of mBank Group: Total costs
Results of mBank Group: Total costs Good cost management confirmed by best-in-class efficiency Development of mBank Group’s Costs Annual contribution to the Resolution Fund: (PLN M) PLN 116.8 million in Q1/17 +3.5% PLN 97.1 million in Q1/18 PLN 197.3 million in Q1/19 +2.1% 715.8 +X.X% Excludin
Slide 21: Results of mBank Group: Cost of risk
Results of mBank Group: Cost of risk Lower cost of risk in the final quarter, full-year level in line with the guidance Net Impairment Losses and Fair Value Change on Loans 1 mBank Group’s Cost of Risk by Segment (PLN M) (bps) -30% 97 90 249.4 78 79 4.5 223.9 61 83 73 76 67 71.6 61 124 96.8 174.9 17
Slide 22: Results of mBank Group: Loan portfolio quality
Results of mBank Group: Loan portfolio quality Robust quality of loan portfolio evidenced by resilient risk indicators mBank Group’s Impaired Loans Portfolio mBank Group’s NPL Ratio (PLN M) According to 4.8% 4.8% 4.8% EBA definition, +3.0% 4.7% consolidated -4.0% NPL ratio was: 4.5% 4.03% < 5% 4,842
Slide 23: Results of mBank Group: Key regulatory ratios
Results of mBank Group: Key regulatory ratios Strong capital and liquidity position allowing for further business expansion mBank Group’s Total Capital Ratio mBank’s NSFR and LCR 190% 183% 20.69% 20.65% 173% 19.66% 19.79% 171% 169% 19.46% 3.22% 3.10% 2.98% 2.97% 2.95% 17.25% 127% 118% 120% 120% 121%
Slide 24: Agenda
Agenda Key Highlights of 2019 in mBank Group Summary of Main Trends in Q4/19 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q4/19 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Q
Slide 25: Macroeconomic Update (1/2)
Macroeconomic Update (1/2) Polish economy set to slow down visibly in 2020 Consumption growth to slow down this year as stimulus fades Public investment going into reverse 12% 100% YoY YoY 10% 75% 8% 50% 6% 25% 4% 0% 2% -25% 0% -50% -2% -75% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 201
Slide 26: Macroeconomic Update (2/2)
Macroeconomic Update (2/2) Robust credit growth, deposit dynamics slowing down somewhat Corporate loans and deposits (% YoY, FX-adjusted) Household loans and deposits (% YoY, FX-adjusted) 20% 12% 15% 10% 10% 8% 5% 6% 0% 4% -5% 2% -10% 0% Jan-13 Sep-13 May-14 Jan-15 Sep-15 May-16 Jan-17 Sep-17 May-18
Slide 27: Economic forecasts and impact on mBank Group
Economic forecasts and impact on mBank Group Macroeconomic environment and challenges for the banking sector Key economic indicators Short-term outlook for mBank 2018 2019 2020F Net interest income & NIM (Slightly positive) GDP growth (YoY) 5.1% 4.0% 2.8% Continued gradual increase of margin drive
Slide 28: Agenda
Agenda Key Highlights of 2019 in mBank Group Summary of Main Trends in Q4/19 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q4/19 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Q
Slide 29: Selected Financial Data: Consolidated Profit and Loss Account
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data: Consolidated Profit and Loss Account Subsidiaries Historical view Quarterly results (PLN thou.) Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Net interest income 923,329 930,253 997,780 1,064,238 1,010,501 Net fee and commission in
Slide 30: Selected Financial Data: Consolidated Statement of Financial Position
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data: Consolidated Statement of Financial Position Subsidiaries Historical view Assets (PLN thou.) Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Cash and balances with Central Bank 9,199,264 5,553,368 6,689,767 8,454,457 7,897,010 Loans
Slide 31: Selected Financial Data: mBank Group's Ratios
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data: mBank Group’s Ratios Subsidiaries Historical view Financial Ratios Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Net Interest Margin (quarterly) 2.60% 2.60% 2.75% 2.81% 2.60% Net Interest Margin YtD 2.58% 2.60% 2.68% 2.72% 2.69% Ne
Slide 32: 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) +7.0% -1.6% -4.1% -0.4% 1,331.1 1,263.6 33.5 1,276.1 269.8 270.6 265.8 26
Slide 33: 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) +14.6% +5.8% +9.0% +6.5% 458.3 433.3 196.8
Slide 34: 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) 158.8 158.7 158.8 158.7 150.8 152.4 150.8 152.4 12.5 12.0 7% 16.1 16.2
Slide 35: 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 and advances to customers Structure of mBank Group’s amounts due to customers as of 31.12.20
Slide 36: Balance Sheet Analysis: Loan Portfolio Structure
Summary Appendix Profit & Loss Balance Sheet Business Lines Selected Financial Data Subsidiaries Historical view Balance Sheet Analysis: Loan Portfolio Structure mBank Group’s Sector Exposure by Industry as of 31.12.2019 Households Real estate management 13.4% Building industry 1.3% 1.1% Food sector
Slide 37: 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 31.12.2019 Fitch Other 92.9% 0.0 pp Retail Long-
Slide 38: 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 17.55% -0.63 +0.04 0.00 -0.28 +0.17 16.82% -0.06 +0.09 0.00 -0.34 16.68% -0.19 +0.29 -0.1
Slide 39: 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 31.12.2019 Countercyclical Capital Buffer (CCyB) is calculated as the weighte
Slide 40: Detailed Results of the Business Lines in Q4/19: Retail Banking
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries Historical view Detailed Results of the Business Lines in Q4/19 Retail Banking Investor Presentation – Q1-Q4 2019 |40
Slide 41: Retail Banking: Summary of Q4/19 Financial and Business Results
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view Summary of Q4/19: Financial and Business Results Profit before Tax of the Segment Presented without provisions for legal Number of Retail Service Locations (PLN M, by quarter) risk related to FX m
Slide 42: Retail Banking: Summary of Q4/19 Loans and Deposits
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view Summary of Q4/19: Loans and Deposits Gross Loans to Retail Banking Clients1 Deposits from Retail Banking Clients (PLN M) (PLN M) +14.0% +17.8% +2.3% +7.7% 60,361 77,664 58,983 139 56,049 72,127 70
Slide 43: 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 31.12.2019 7.3% 7.3% 6.9% 6.9% 6.9%
Slide 44: mBank's Mobile Application: Functionalities and Users
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view mBank’s Mobile Application: Functionalities and Users Focus on client convenience through well-designed functionalities Active Users of mBank’s Mobile Application (thou.) Google Pay and Apple Pa
Slide 45: 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 +7% +5% +2% 8.5% +1% 13.7% 4,876 5,0
Slide 46: 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) +1% +14% +2% Czech +2% +5% +2% Republic 17,632 17,424 17,799 5,314 43,070 43,83
Slide 47: Detailed Results of the Business Lines in Q4/19: Corporates & Financial Markets
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries Historical view Detailed Results of the Business Lines in Q4/19 Corporates & Financial Markets Investor Presentation – Q1-Q4 2019 |47
Slide 48: 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 Q4/19: Financial and Business Results Profit before Tax of the Segment Number of Corporate Service Locations (PLN M, by quarter) +16% 22 12 +7% +7% 2 Pomorskie Warmińs
Slide 49: Corporates and Financial Markets: Loans and Deposits
Summary Appendix Profit & Loss Balance Sheet Business Lines Corporates and Financial Markets Subsidiaries Historical view Summary of Q4/19: Loans and Deposits Gross Loans to Corporate Entities Deposits from Corporate Customers (PLN M) (PLN M) +8.0% +7.9% -1.8% -9.9% 48,647 47,786 42,313 46,182 47,04
Slide 50: Detailed Results of mBank Group's major companies in Q4/19: Subsidiaries
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries Historical view Detailed Results of mBank Group’s major companies in Q4/19 Subsidiaries Investor Presentation – Q1-Q4 2019 |50
Slide 51: 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) 2 issues: established in 1999 Private placement PLN 100 M +1% 700 specialised m
Slide 52: mBH: 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 2014-2019 (public issues) Amount Currency Issue date Maturity date Ten
Slide 53: 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 – 2019 Profit before Tax (PLN M) (PLN M) -13% 6.8% +47% established 6,090 96.1 in 1991 5,294 1,830 Rank 29.6 provides 1,
Slide 54: mBank Group's 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) 2.3% 2.1% 2.3% 2.5% 2.6% 2.7
Slide 55: mBank Group's 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) CAGR (PLN M) +6% 14.66% 17.25% 20.29%
Slide 56: mBank's share price performance
mBank’s share price performance mBank’s stock price regained after the announcement of its potential sale mBank’s index membership and weights* mBank’s share performance v. main indices (rebased to 100) – last 12 months 112 110 WIG-30 2.299% 108 106 WIG-20 2.479% 104 102 WIG 1.780% 100 98 96 WIG-Ban
Slide 57: Strategy of mBank Group for 2020-2023
Strategy of mBank Group for 2020-2023 Growth fuelled by our clients Summary of strategic pillars and financial targets Investor Presentation – Q1-Q4 2019 |57
Slide 58: mBank Group's Strategy for 2020-2023
mBank Group’s Strategy for 2020-2023 What will mBank be like in the horizon of the strategy for 2020-2023? … continue mBank’s organic growth, based on the acquisition of young clients and dynamic companies from prospective industries. … accompany our clients throughout their lifecycle and developmen
Slide 59: Strategy for 2020-2023: 4 areas
mBank Group’s Strategy for 2020-2023 In the strategy for 2020-2023, mBank Group focuses on 4 areas Client Platform Acquisition & Ecosystem & long-term relations user experience Four pillars of the strategy for 2020-2023 correspond to the key components of mBank’s business model Employees Efficiency
Slide 60: Strategy: Client
mBank Group’s Strategy for 2020-2023 Client (acquisition and development of long-term relationships) We will… grow organically through the continuous acquisition of new customers. We will strengthen our position in the most profitable age group of 30-45. focus on: young people, mid-sized cities, f
Slide 61: Strategy: Platform
mBank Group’s Strategy for 2020-2023 Platform (ecosystem & user experience) We will… continuously improve remote bank access channels using the digital first (mobile first) approach. leading role of mobile application, with the same scope of functionality as the Internet banking service, while con
Slide 62: Strategy: Efficiency
mBank Group’s Strategy for 2020-2023 Efficiency (operational advantage) We will… maintain our technological advantage in the financial sector. We will optimise our IT architecture using leading solutions. interdisciplinary teams delivering end-to-end solution, agile approach, migration of key appl
Slide 63: Strategy: Employees and organisation culture
mBank Group’s Strategy for 2020-2023 Employees and organisation culture We will… People coach smart managers who know how to inspire development, bring out value from diversity and encourage to care about clients through strategic thinking, innovation and willingness to take up challenges. encou
Slide 64: Corporate Social Responsibility and Sustainable Development Strategy
mBank Group’s Strategy for 2020-2023 Corporate Social Responsibility and Sustainable Development Strategy of mBank Be among top three leaders of social Top aim responsibility in the banking sector Direction Sustainable Development Goals guidelines (SDGs) set by the United Nations mBank cares about t
Slide 65: Financial targets of mBank Group for 2020-2023
mBank Group’s Strategy for 2020-2023 Financial targets of mBank Group for 2020-2023 Measure Target level Current level Profitability in 2023 2019 (recurrent) Net interest margin (NIM) ~3.0% 2.7% Cost/Income ratio (C/I) ~40% 42.2% Return on equity (ROE net) ~10.5% 9.2% Stability every year 31.12.2019
Slide 66: 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