Slide 1: Results of mBank Group Q3 2018
Results of mBank Group Q3 2018 Robust core income on strong business flows Management Board of mBank S.A. Investor Presentation October 30, 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 third quarter of 2018, prepared under the International Financial Reporting Standards. For more detailed information on the Bank’s and Gr
Slide 3: Agenda
Agenda Summary of Main Trends in Q3/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q3/18 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 Q3 2018
Key highlights of Q3 2018 Net profit of PLN 285.3 M, close to Q2/18 Historically high core income of PLN 1,141.1 M fuelled by rising net interest income Net interest income at PLN 902.4 M (+13.3% YoY) on increasing volumes and changing asset mix Net fee and commission income at PLN 238.8 M (-6.9
Slide 5: Business Development of Retail Banking and Corporate Banking
Summary of Q3/18 in mBank Group Business Development of Retail Banking and Corporate Banking Retail Banking Number of Clients (thou.) Market shares +344 Bank account opening via a 6.5% 6.5% 6.4% +95 6.4% video chat available now for +95 6.3% both iOS and Android users 5,259 5,508 5,603 343 364 351
Slide 6: Key Financials: Profit and Loss Account
Summary of Q3/18 in mBank Group Key Financials: Profit and Loss Account PLN million Q3/17 Q2/18 Q3/18 change QoQ change YoY Net interest income 796.8 854.4 902.4 +5.6% +13.3% Net fee and commission income 256.5 249.0 238.8 -4.1% -6.9% Total income 1,149.4 1,208.2 1,210.0 +0.1% +5.3% Total costs (exc
Slide 7: Key Financials: Balance Sheet
Summary of Q3/18 in mBank Group Key Financials: Balance Sheet PLN million Q3/17 Q2/18 Q3/18 change QoQ change YoY Total assets 132,478 140,018 146,656 +4.7% +10.7% Gross loans to customers 88,484 92,680 94,528 +2.0% +6.8% Retail client loans 48,949 51,134 51,821 +1.3% +5.9% Corporate client loans 38
Slide 8: Agenda
Agenda Summary of Main Trends in Q3/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q3/18 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 both corporate and retail loans, continuous change in asset mix Development of Gross Loans and Advances to Customers Gross Loans to Corporate Entities (PLN M) (PLN M) +9.6% +6.8% +9.9% +3.0% +6.9% +2.0% +3.7% +2.5% 41,972 94,528 38,288 38,76
Slide 10: Results of mBank Group: New lending business
Results of mBank Group: New lending business Non-mortgage lending kept at record high level, rising origination of housing loans Sales of Mortgage Loans Sales of Non-mortgage Loans (PLN M, by quarter) (PLN M, by quarter) +45% +3% +3% +41% 0%0% 1,153 1,190 2,332 2,322 995 202 17% 2,000 194 178 8% 184
Slide 11: Results of mBank Group: Customer deposits
Results of mBank Group: Customer deposits Continued increase of deposit base driven by strong inflows to current accounts Development of Customer Deposits Deposits from Corporate Entities (PLN M) (PLN M) +11.2% +13.0% +12.1% +8.5% +13.3% +4.7% +7.2% +4.2% 35,592 38,611 102,425 34,725 34,590 34,025 1
Slide 12: Results of mBank Group: Total income
Results of mBank Group: Total income Core revenues at historically high level thanks to dynamic growth of net interest income Development of mBank Group’s Total Income (PLN M) +5.3% 1,380.6 +0.1% QoQ YoY 219.7 1,208.2 1,210.0 1,149.4 1,141.5 1.7 15.5 2.0 4.3 72.3 18.6 18.5 84.5 84.7 0.2 83.1 73.0 0.
Slide 13: Results of mBank Group: Total costs
Results of mBank Group: Total costs Costs base reflecting investments in future growth 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 +8.5% +9.4% +4.6% +X.X% Excluding contributions to the BFG 601.0 +4.5
Slide 14: Results of mBank Group: Cost of risk
Results of mBank Group: Cost of risk Lower cost of risk, no sector-specific factors detected Net Impairment Losses and Fair Value Change on Loans 1 mBank Group’s Cost of Risk by Segment (PLN M) (bps) 99 -15% 78 82 217.1 66 2.1 57 78 80 59 61 57 185.1 5.7 113 164.4 108.8 101 53.8 92 140.0 88 121.8 80
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 (PLN M) +7.0% 5.2% 5.2% mBank Group applies 5.2% 5.1% 5.1% +2.7% a conservative client- IFRS 9 oriented approach in 4,58
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 Increase mostly driven 220% by funding activities, in 20.99% 20.93% preparation for wholesale 20.47% 20.06% 20.21% funding maturities in lat
Slide 17: Agenda
Agenda Summary of Main Trends in Q3/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q3/18 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) GDP growth peaked and will normalize in the coming quarters. Monthly measures of economic activity have decelerated recently Fiscal situation remains very favourable and will continue to do so 10% 0% YoY, MA3 8% % of GDP 6% -2% 4% -4% 2% 0% -6% -2% -4% -8% Jan-13 Sep-13 Ma
Slide 19: Macroeconomic Update (2/2)
Macroeconomic Update (2/2) Rebound in credit growth. PLN assets stable in Q3/18. 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 Sep-12 May-13 Jan-14 Sep-14 May-15 Jan-16 Sep-16 May-1
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% 4.8% 5.0% Continued gradual increase of margin driven by cha
Slide 21: Agenda
Agenda Summary of Main Trends in Q3/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q3/18 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: 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.) Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Net interest income 796,762 825,112 816,424 854,351 902,370 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.) Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Cash and balances with Central Bank 6,028,470 7,384,869 5,354,319 5,514,886 9,643,274 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 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Net Interest Margin (quarterly) 2.50% 2.57% 2.59% 2.56% 2.56% Net Interest Margin YtD 2.45% 2.48% 2.59% 2.57% 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) +14.3% +6.0% +17.9% +7.3% 1,168.8 1,102.6 35.3 3% 266.5 1,056.5 1,053.6 4
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) -2.3% -2.3% +4.9% +0.3% 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) 146.7 146.7 140.0 140.0 6.5 4% 133.6 13.2 9% 133.6 132.5 131.4 8.6 132
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 30.09.2018 as of 30.09.2018 Public sector Corporat
Slide 29: 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 30.09.2018 Households Real estate management 12.9% Building industry 1.2% Food sector 1.1%
Slide 30: 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 30.09.2018 Fitch -2.5 pp 94.3% Retail Long-term
Slide 31: 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 18.31% -0.50 +0.33 -0.24 -0.03 17.87% -0.70 +0.34 -0.22 +0.14 17.32% -0.19 17.10% -0.46 +
Slide 32: 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 30.09.2018 Countercyclical Capital Buffer is calculated as the weighted avera
Slide 33: Retail Banking
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries Historical view Detailed Results of the Business Lines in Q3/18 Retail Banking Investor Presentation – Q3 2018 |33
Slide 34: Retail Banking: Summary of Q3/18 Financial and Business Results
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view Summary of Q3/18: Financial and Business Results Profit before Tax of the Segment Number of Retail Service Locations (PLN M, by quarter) -7% 336 346 354 332 333 34 34 -9% -9% 34 33 34 41 excluding
Slide 35: Retail Banking: Summary of Q3/18 Loans and Deposits
Summary Appendix Profit & Loss Balance Sheet Business Lines Retail Banking Subsidiaries Historical view Summary of Q3/18: Loans and Deposits Gross Loans to Retail Banking Clients1 Deposits from Retail Banking Clients (PLN M) (PLN M) +5.9% +14.2% +1.3% +3.0% 51,821 61,693 51,134 59,903 48,949 48,825
Slide 36: 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 30.09.2018 7.5% 7.5% 7.4% 7.2% 7.1%
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 Gross Loans (PLN M) and Share in Total mBank’s retail volume Deposits (PLN M) and Share in Total mBank’s retail volume +6% +12% -1% 9.2% 0% 16.0% 4,706 4,8
Slide 38: 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% +16% +11% Czech 0% +4% +1% Republic 17,416 17,435 17,508 4,595 41,590 42,11
Slide 39: Corporates & Financial Markets
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries Historical view Detailed Results of the Business Lines in Q3/18 Corporates & Financial Markets Investor Presentation – Q3 2018 |39
Slide 40: 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 Q3/18: Financial and Business Results Profit before Tax of the Segment Number of Corporate Service Locations (PLN M, by quarter) 22 +12% 29 mBank’s branches, Pomorskie
Slide 41: Corporates and Financial Markets: Loans and Deposits
Summary Appendix Profit & Loss Balance Sheet Business Lines Corporates and Financial Markets Subsidiaries Historical view Summary of Q3/18: Loans and Deposits Gross Loans to Corporate Entities Resegmentation Deposits from Corporate Customers Resegmentation starting from 2018 starting from 2018 (PLN
Slide 42: Subsidiaries
Summary Appendix Profit & Loss Balance Sheet Business Lines Subsidiaries Historical view Detailed Results of mBank Group’s companies in Q3/18 Subsidiaries Investor Presentation – Q3 2018 |42
Slide 43: 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 +62% 700 specialised mortgage bank and ac
Slide 44: 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 2014-2018 (public issues) Amount Currency Issue date Maturity date Ten
Slide 45: 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 – 9M 2018 Profit before Tax (PLN M) (PLN M) +20% 7.3% -13% established 4,260 46.6 in 1991 40.4 3,546 Rank 12.7 1,307 pro
Slide 46: mBank Dom Maklerski (mDM)
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 47: 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 48: 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% +12% 19.38% 14.66% 1
Slide 49: 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 2.597% 31.12.2017 465.0 112 MIN (20.08.2018) 385.0 WI
Slide 50: 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 51: 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 52: 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 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