Slide 1: Results of mBank Group Q2 2017
Results of mBank Group Q2 2017 Core income kept strong, solid fundamentals for further business growth Management Board of mBank S.A. Investor Presentation July 27, 2017
Slide 2: Key highlights of Q2 2017
Key highlights of Q2 2017 Historically high level of core income of PLN 1,017.4 M Strong total revenues • NII at PLN 764.8 M (+11.7% YoY), exceeding PLN 1.08 B on improved margins • NFC at PLN 252.6 M (+20.5% YoY), Profit & Loss on rising customer business Selective volume growth • Gross loans at PL
Slide 3: Agenda
Agenda Summary of Q2/17 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate new business Analysis of Q2/17 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidi
Slide 4: Key Financials: Profit and Loss Account
Summary of Q2/17 in mBank Group Key Financials: Profit and Loss Account PLN million Q2/16 Q1/17 Q2/17 change QoQ change YoY Net interest income 684.4 749.0 764.8 +2.1% +11.7% Net fee and commission income 209.7 249.6 252.6 +1.2% +20.5% 1 Total income 1,203.0 1,081.8 1,080.9 -0.1% -10.2% Total costs
Slide 5: Key Financials: Balance Sheet
Summary of Q2/17 in mBank Group Key Financials: Balance Sheet PLN million Q2/16 Q1/17 Q2/17 change QoQ change YoY Total assets 128,733 130,488 129,417 -0.8% +0.5% Gross loans to customers 83,862 84,538 86,221 +2.0% +2.8% Retail client loans 48,272 48,338 48,758 +0.9% +1.0% Corporate client loans 1 3
Slide 6: Business Development: Client acquisition and Market shares
Summary of Q2/17 in mBank Group Business Development: Client acquisition and Market shares Number of Retail Clients (thou.) Number of Corporate Clients +401 +1,280 +100 +265 5,348 5,447 5,547 20,220 20,695 20,940 21,235 21,500 5,146 5,250 275 296 316 2,138 2,149 2,123 2,103 2,119 234 250 919 866 877
Slide 7: Development of Retail and Corporate new business
Summary of Q2/17 in mBank Group Development of Retail and Corporate new business Sales of mortgage loans Sales of non-mortgage loans (PLN M, by quarter) (PLN M, by quarter) +32% +9% +25% +25% +5% +5% 1,001 1,888 1,725 1,801 798 172 17% 1,560 1,514 156 218 11% 759 702 8% 133 691 111 96 10% 121 114 44
Slide 8: Agenda
Agenda Summary of Q2/17 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate new business Analysis of Q2/17 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidi
Slide 9: Development of Loans to Customers
Analysis of Q2/17 in mBank Group Development of Loans to Customers Gradual lending acceleration, focus on higher-margin products Development of Gross Loans and Advances to Customers (PLN M) +6.5% +2.8% +3.7% +4.9% +2.0% +2.3% 33,937 34,528 34,174 34,841 36,143 84,581 84,538 86,221 83,862 84,199 1,45
Slide 10: Development of Deposits
Analysis of Q2/17 in mBank Group Development of Deposits Outflow of term deposits continued, growth in current accounts Development of Amounts due to Customers (PLN M) -6.8% +3.3% -6.3% -2.4% +3.7% -0.7% 35,119 37,383 -1.2% 91,418 -0.2% 33,829 1,600 33,551 32,737 540 88,744 88,156 1,287 2,011 1,471
Slide 11: Income of mBank Group
Analysis of Q2/17 in mBank Group Income of mBank Group Record high core revenues Development of mBank Group’s Income (PLN M) -10.2% +13.6% 1,203.0 -0.1% QoQ YoY 2.0 1,044.7 1,081.8 1,080.9 1,038.7 244.8 10.8 3.1 1.6 4.5 17.7 2.4 8.5 0.3 26.6 76.9 3.0 61.1 74.4 0.2 59.5 0.4 2.6 250.6 249.6 252.6 -20.
Slide 12: Costs of mBank Group
Analysis of Q2/17 in mBank Group Costs of mBank Group Solid efficiency despite investing in future growth Development of mBank Group’s Costs Q4/16 costs include additional payment to the BFG related to the (PLN M) bankruptcy of Cooperative Bank in Nadarzyn of PLN 10.9 million. Q1/17 costs includ
Slide 13: Loan Loss Provisions and Risk Costs
Analysis of Q2/17 in mBank Group Loan Loss Provisions and Risk Costs Cost of risk at a normalized level Net Impairment Losses on Loans and Advances mBank Group’s Cost of Risk by Segment (PLN M) (bps) 69 59 58 +2.3% 46 139.5 41 +45% 55 47 49 120.4 20 41 117.7 76 65.0 68 40.5 66 64 67 42.1 60 82.9 4.4
Slide 14: Loan Portfolio Quality
Analysis of Q2/17 in mBank Group Loan Portfolio Quality Resilient risk indicators confirming good loan portfolio quality mBank Group’s Impaired Loans Portfolio mBank Group’s NPL Ratio (PLN M) -5.7% 5.8% 5.9% mBank Group applies +4.0% 5.4% 5.2% 5.3% a conservative client- oriented approach in 4,846 4
Slide 15: Funding Structure Details
Analysis of Q2/17 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 30.06.2017 +2.5 pp Fitch Retail 94.7% 95.1% 94.6% Other deposits Long-term 3% 46% BBB 92.1% Subordinated
Slide 16: Key Regulatory Ratios
Analysis of Q2/17 in mBank Group Key Regulatory Ratios Strong capital ratios well above regulatory requirements mBank Group’s Total Capital Ratio mBank’s NSFR and LCR 199% 21.59% 21.24% 20.29% 2.83% 2.77% 168% 18.33% 18.61% 2.97% 158% 17.02% 150% 151% 2.72% 2.73% 114% 114% 116% 112% 109% Basel III r
Slide 17: Agenda
Agenda Summary of Q2/17 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate new business Analysis of Q2/17 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidi
Slide 18: Macroeconomic Update (1/2)
Macroeconomic Update (1/2) The economy set to grow by 4% on average in 2017 and 2018 The economy maintained strong growth in Q2/17 Tighter labour market across the board, supporting consumption 8% 20% 4 3 6% 10% 2 4% 0% 1 2% -10% 0 -1 0% -20% -2 -2% -30% 2003 2004 2005 2006 2007 2008 2009 2010 2011
Slide 19: Macroeconomic Update (2/2)
Macroeconomic Update (2/2) Slight rebound in credit growth. Polish assets are in demand. Corporate loans and deposits (% YoY, FX-adjusted) Household loans and deposits (% YoY, FX-adjusted) 30% 15% 12% 20% 9% 10% 6% 0% 3% -10% 0% Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 J
Slide 20: 2017 in forecasts and the impact on mBank Group
2017 in forecasts and the impact on mBank Group Macroeconomic environment and challenges for the banking sector Key economic indicators Outlook for mBank 2015 2016 2017F Net interest income & NIM (Slightly positive) GDP growth (YoY) 3.8% 2.7% 4.0% Continued gradual increase of margin driven by cha
Slide 21: Agenda
Agenda Summary of Q2/17 in mBank Group Key Financials Client acquisition and Market shares Development of retail and corporate new business Analysis of Q2/17 Results Development of Loans and Deposits Development of Income and Costs Loan Portfolio Quality Funding Structure Details Capital and Liquidi
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 37-42 Consolidated Statement of Financial Position 24 Summary of Q2/17: Financial Results and Volumes 38-39 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.) Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Net interest income 684,443 718,712 753,270 749,007 764,779 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.) Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Cash and balances with Central Bank 6 433 221 5 859 485 9 164 281 7 1
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 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Net Interest Margin (quarterly) 2.25% 2.31% 2.35% 2.42% 2.43% Net Interest Margin YtD 2.27% 2.2
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 2.4% 2.2% 2.3% 2.1% 2.3% 2.3% 2.4% +4% CAGR +6% +19% +11% 835 902 897 906 2,833 787 2,280 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 Operating Costs Pre-provision Income & C/I ratio One-off regulatory costs (PLN M) CAGR (PLN M) +4% 46.5% 45.7% 44.9% 50.1% 45.7% 43.9% 49.1% 194 11 Contributions to the
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) CAGR 18.73% 19.38% 14.66% 17.25% 20.29% 18.33% 21.24% +1% +7% CAGR +7% +7% +8% 123.5 133.7 128.7 129.4 118.0 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) 2.25 2.31 2.35 2.42 2.43 NIM [%] 262.6 258.3 +0.8% -3.4% 2.6 3.0
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 429.2 407.1 415.3 404.4 57.2 +7.0% +21.8% 365.3 60.0 61.5 65.8 16% 46.6 -3.1% +12.0%
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) +3% -21% 74.4 10.7 76.9 0.5 59.5 61.1 3.2 2.4 26
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) 133.7 133.7 128.7 129.8 130.5 129.4 128.7 129.
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 30.06.2017 as of 30.06.201
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 30.06.2017 Households Real estate management 12.4% Building indust
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 +1.17 +0.08 18.76% -0.31 +0.17 -0.17 +0.02 18.47% -
Slide 37: Detailed Results of the Business Lines: Retail Banking
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the Business Lines in Q2/17 Retail Banking Investor Presentation – Q2 2017 |37
Slide 38: Retail Banking: Summary of Q2/17 Financial and Business Results
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries Summary of Q2/17: Financial and Business Results Profit before Tax of the Segment Number of Retail Service Locations (PLN M, by quarter) 316 322 326 +29% 303 304 37 37 35 392.2 36 36 43 excluding
Slide 39: Retail Banking: Summary of Q2/17 Loans and Deposits
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Business Lines Subsidiaries Summary of Q2/17: Loans and Deposits Gross Loans to Retail Banking Clients1 Deposits from Retail Banking Clients (PLN M) (PLN M) +1.0% +8.9% +0.9% 0.0% 48,272 48,950 48,338 48,758 53,495 53,829 53
Slide 40: 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 30.06.2017 7.7% 7.6% 7.7% 7.6% 7.6%
Slide 41: 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 0% +16% +5% 8.8% +7% 15.8% 4,269 4,1
Slide 42: 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) +2% +25% +17% Czech +2% +13% +5% Republic 16,795 16,884 17,163 3,698 35,911 37,
Slide 43: Detailed Results of the Business Lines: Corporates & Financial Markets
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of the Business Lines in Q2/17 Corporates & Financial Markets Investor Presentation – Q2 2017 |43
Slide 44: Corporates and Financial Markets: Summary of Q2/17
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Financial Markets Business Lines Subsidiaries Summary of Q2/17: Financial and Business Results Profit before Tax of the Segment Number of Corporate Service Locations (PLN M, by quarter) 22 +41% 12 29 mBank’s branches, 2 Pomo
Slide 45: 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 31.05.2017 (PLN M) 69,453 10.0% 16.6% 41,742 15,607 13,563 8,
Slide 46: Detailed Results of mBank Group's companies: Subsidiaries
Summary Appendix Historical view Profit & Loss Balance Sheet Business Lines Subsidiaries Detailed Results of mBank Group’s companies in H1/17 Subsidiaries Investor Presentation – Q2 2017 |46
Slide 47: 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. Q2/16 Q2/17 Change YoY H1/16 H1/17 Change YoY mBank Hipoteczny 1,569 5,851 +273% 13,388 16,998 +27.0% mLeasing 20,7
Slide 48: mBank Hipoteczny (mBH)
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s Subsidiaries Business Lines Subsidiaries mBank Hipoteczny (mBH) Issuance of Covered Bonds Profit before Income Tax (PLN M, by year) 1,570 (PLN M) established in 1999 Private placement +27% of EUR 70 million specialised mortga
Slide 49: mBank Hipoteczny: Issuance Activity on the Covered Bonds Market
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s Subsidiaries Business Lines Subsidiaries mBank Hipoteczny (mBH): Issuance Activity on the Covered Bonds Market Summary of Mortgage Covered Bonds issued in 2014-2017 (public issues) Amount Currency Issue date Maturity date Ten
Slide 50: 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 – Q1 2017 Profit before Tax (PLN M) (data for H1 2017 not available) (PLN M) +13% 7.5% -18% established 2,354 41.2 in 19
Slide 51: mBank Dom Maklerski (mDM)
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Group’s Brokerage Services Business Lines Subsidiaries 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 52: mBank's share price performance in H1/17
mBank’s share price performance in H1/17 mBank’s shares have gained this year despite regulatory and legislative risks mBank’s index membership and weights* mBank’s share performance v. main indices (rebased to 100) 145 mBank’s share price in 2017 WIG-30 2.666% 01.01.2017 335.25 140 MIN (01.01.2017)
Slide 53: 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