Results of mbank Group Q3 2016

Transcription

1 Results of mbank Group Q Sound income in a challenging market Management Board of mbank S.A. Investor Presentation October 26, 2016

2 Key highlights of Q Core revenues of PLN M at historically high level NII at PLN M (+12.0% YoY), as volume re-pricing continued NFC at PLN M (-0.5% YoY), on customer business growth Solid efficiency maintained Cost/Income ratio at 48.1% Excess deposit funding Loan-to-Deposit ratio at 95.1% Capital ratios well above regulatory requirements CET 1 Ratio at 15.9%/19.0% 2 Total Capital Ratio at 18.6%/22.2% 2 Issue of Eurobonds to support funding diversification Capital & Liquidity Net Profit of PLN M, -27.9% compared to Q3/15 Volumes Business development Strong total revenues exceeding PLN 1.0 B Selective volume growth Gross loans at PLN 84.2 B (+0.5% QoQ, +5.4% YoY) 1 Customer deposits at PLN 85.2 B (-1.0% QoQ, +10.2% YoY) 1 Focus on higher margin lending Mortgage loan sales at PLN 2.2 B in 9M/16 (-32% YoY); non-mortgage loan sales at PLN 4.6 B (+26% YoY) Strengthening the position as mobile and transactional bank Rising number and volume of non-cash card payments Cooperation with strategic partners Accelerating client acquisition 5,250 thou. retail clients (+386 thou. YoY) and 20,695 corporate clients (+1,609 YoY) 1 Volume dynamics presented excl. reverse repo / buy-sell-back transactions and repo transactions, respectively; 2 Stand-alone capital ratios 2

3 Agenda 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 Ratios Macroeconomic Update Appendix Additional Information: Selected Financial Data Detailed Results of 3

4 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 % Net Fee and Commission income % Total income 1, % 1,203.0 Total costs (499.9) (463.3) +7.9% (490.7) Loan Loss Provisions (139.5) (111.0) +25.7% (117.7) Operating profit % Taxes on the Group balance sheet items (89.8) (0.9) (89.0) Profit before income tax % Net profit % Net Interest Margin (NIM) 2.31% 2.12% p.p. 2.25% NIM excl. CHF portfolio 2.65% 2.48% p.p. 2.60% Cost/Income ratio 48.1% 47.3% +0.8 p.p. 40.8% Cost of Risk 0.69% 0.57% p.p. 0.59% Return on Equity (ROE) 7.6% 11.6% -4.0 p.p. 12.8% Return on Assets (ROA) 0.71% 1.00% p.p. 1.23% Note: Q2/16 results include a pre-tax gain on the settlement of Visa transaction of PLN M. 4

5 of Q3/16 in mbank Group Key Financials: in PLN million Q3/16 Q3/15 Change YoY Q2/16 Gross loans to customers 84,199 82, % 83,862 Retail client loans 48,119 45, % 48,272 Core corporate client loans 1 34,466 32, % 33,805 Amounts due to customers 85,188 78, % 85,302 Retail client deposits 50,735 42, % 49,453 Core corporate client deposits 1 31,818 31, % 33,832 Loan to Deposit ratio 95.1% 101.1% -6.0 p.p. 94.7% NPL ratio 5.9% 5.9% 0.0 p.p. 5.8% Coverage ratio 59.5% 57.1% +2.4 p.p. 58.5% Common Equity Tier 1 Ratio 15.9% 14.1% +1.8 p.p. 15.6% Total Capital Ratio 18.6% 17.0% +1.6 p.p. 18.3% 1 Excl. reverse repo / buy-sell-back transactions for loans and repo transactions for deposits 5

6 of Q3/16 in mbank Group Business Development: Client acquisition and Market shares Number of Retail Clients (thou.) Number of Corporate Clients , , , , , , ,086 1,931 5,609 19,562 1,983 5,748 19,992 2,152 5,896 20,220 2,138 5,883 20,695 2,149 5,987 3,896 3,934 3,979 4,046 4,123 11,546 11,831 11,944 12,199 12,559 Retail Banking PL mbank CZSK Orange Finance K1 K2 K3 Market shares in Retail Banking segment Market shares in Corporate Banking segment 6.2% 5.1% 3.5% 6.3% 5.3% 3.6% 6.5% 5.3% 3.7% 6.6% 5.4% 3.8% 6.5% 5.4% 4.0% 6.5% 5.7% 4.1% 6.5% 5.8% 4.1% 6.6% 5.9% 4.2% 6.5% 6.0% 4.3% 8.6% 6.3% 8.8% 6.3% 8.9% 6.3% 9.7% 6.4% 10.1% 6.3% 9.8% 6.3% 9.8% 6.3% 10.0% 6.3% 9.6% 6.2% 09/14 12/14 03/15 06/15 09/14 12/14 03/15 06/15 Loans Loans (excl. FX portfolio) Deposits Loans Deposits Note: Corporate clients split: K1 annual sales over PLN 500 M and non-banking financial institutions; K2 annual sales PLN 30 M to PLN 500 M; K3 annual sales below 30 M. 6

7 of Q3/16 in mbank Group Development of Retail and Corporate business Sales of mortgage loans (PLN M, by quarter) Sales of non-mortgage loans (PLN M, by quarter) 20% 8% 36% 36% 1,334 1,305-48% % % 10% 5% 68% 8% 25% 67% 1, , % 1, , ,148-9% 1, ,041 8% 25% 67% Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 mbank Hipoteczny Individuals Entrepreneurs mbank CZSK Individuals Entrepreneurs mbank CZSK Sales of corporate loans (PLN M, by quarter) New leasing contracts (PLN M, by quarter) 3,009 1,115 1, Q3/15 3,488 1,160 1, Q4/15-24% 1, , Q1/16 +9% 2,100 2, ,163 1, Q2/16 Q3/16 K1 K2 K3 792 Q3/15 1,105 Q4/15 +30% 1,011 Q1/16 1,066 Q2/16-4% 1,027 Q3/16 Note: Corporate clients split: K1 annual sales over PLN 500 M and non-banking financial institutions; K2 annual sales PLN 30 M to PLN 500 M; K3 annual sales below 30 M. 7

8 Agenda 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 Ratios Macroeconomic Update Appendix Additional Information: Selected Financial Data Detailed Results of 8

9 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 3% 82,449 2,108 81,409 1, % +1.1% 80,925 1, % +1.5% 83,862 84,199 1,653 1,552 2% 34,959 2,654 32,305 33,447 1,031 32, % +6.7% 32, , % +2.0% 33,937 34, ,805 34,466 42% 34,959 33,447 32,805 33,937 34,528 41% Core loans to corporates Reverse repo transactions 55% 45,381 46,259 46,511 48,272 48,119 57% 45,381 2,495 9,525 46,259 2,486 9, % +4.6% 46,511 2,507 9, % +0.9% 48,272 48,119 2,532 10,520 11,150 2,345 33,361 34,184 34,107 35,220 34,624 Individual clients Corporate clients Public sector & Other receivables +X.X% Excluding FX effect +X.X% Excluding Reverse repo / buy-sell-back transactions Mortgage loans: to Individuals to Microfirms Non-mortgage loans 9

10 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 2% 78,546 1,166 81, % +10.2% -0.1% -1.0% 85,302 85,188 81, % 34,922 3,089 31,833 34,424 1,094 33, % 0.0% 32, , % -6.0% 35,119 33,829 1,287 2,011 33,832 31,818 44% 34,922 34,424 32,618 35,119 33,829 40% Core corporate deposits Repo transactions +19.5% +2.6% 54% 42,458 46,117 47,835 49,453 50,735 59% 42,458 11,109 46,117 13,605 47,835 14,272 49,453 14,349 50,735 15,237 31,348 32,512 33,563 35,104 35,498 Individual clients Corporate clients +X.X% Excluding Repo transactions Sight deposits Term deposits Public sector 10

11 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 , % 1, % +9.2% 1, , QoQ +25.0% YoY -11.5% +11.8% -0.5% % +12.0% Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Net Interest Income Net Fee and Commission Income Dividend Income Net Trading Income Gains less Losses from Investment Securities 1 Net Other Operating Result +X.X% Excluding one-off gains 1 Including one-off gains on the sale of PZU shares (PLN M) in Q4/15 and gains on the settlement of Visa transaction (PLN M) in Q2/16 11

12 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 % +7.5% In Q4/15 mbank Group paid a contribution to the Bank Guarantee Fund of PLN million to cover the cost of payments to deposit holders of bankrupt Cooperative Bank in Wołomin and contribution for the support fund for distressed mortgage borrowers of PLN 52.1 million QoQ YoY % % +4.9% +15.4% +17.1% % +1.2% Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 +X.X% Excluding contributions to the BFG Personnel Costs Material Costs Other Costs 1 Amortization Contributions to the BFG 45.3% C/I ratio of mbank Group for 9M % 58.6% 47.7% 40.8% 48.1% C/I ratio of mbank Group (quarterly) 1 Including taxes and fees, contributions to the Social Benefits Fund 12

13 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 +25.7% +18.4% mbank Group s Cost of Risk by Segment (bps) Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Retail Banking Corporates and Financial Markets mbank Group s Cost of Risk: quarterly Retail Portfolio Corporate Portfolio YtD 13

14 Analysis of Q3/16 in mbank Group Loan Portfolio Quality Resilient risk indicators confirming good portfolio quality mbank Group s Impaired Loans Portfolio 4,857 4, % 4,663 4, % 4,949 mbank Group s NPL Ratio 5.9% 5.7% 5.8% 5.8% 5.9% mbank Group applies a conservative clientoriented approach in its methodology of NPL recognition. mbank Group s NPL Ratio by segment mbank Group s Coverage Ratio incl. IBNR provisions 62.6% 64.3% 64.0% 63.7% 64.4% 6.5% 6.2% 6.2% 6.4% 6.5% 6.1% 5.7% 5.7% 5.6% 5.7% Corporate Portfolio* Retail Portfolio * excl. Reverse repo / buy-sell-back transactions NPL Ratio of Mortgage Loan Portfolio* 57.1% 58.9% 58.6% 58.5% 59.5% 4.2% 3.8% 3.8% 3.8% 3.8% * to Private Individuals in Poland 14

15 Analysis of Q3/16 in mbank Group Funding Structure Details A well diversified funding profile and safe liquidity levels mbank Group s funding structure as of mbank s ratings Loan-to-Deposit Ratio Subordinated liabilities EMTN Other debt securities in issue Other Due to banks 4% 3% 6% 4% 10% 30% 43% Retail deposits 73% Corporate deposits Long-term rating Fitch Short-term rating BBB F2 Standard & Poor s Long-term credit rating BBB Short-term credit rating A % 96.7% 96.1% +0.4 pp 94.7% 95.1% Maturity of long-term funding instruments in original currencies as of (LC in million) 1,500 of Issues under Euro Medium Term Note (EMTN) Programme Issue size Issue date Maturity date Tenor Coupon EUR 500 M Y 2.750% CHF 200 M Y 2.500% CHF Loans CHF Subloans EUR Loans EUR EMTN CHF EMTN EUR 500 M Y 2.375% EUR 500 M Y 2.000% EUR 500 M Y 1.398% 1 redeemed at maturity 15

16 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 16.99% 2.90% 17.25% 2.96% 19.01% 2.81% 18.33% 2.72% 18.61% 2.73% 16.97% 109% 111% 109% 144% 112% 139% 109% 150% 114% 151% Basel III requirement 100% 14.09% 14.29% 16.20% 15.61% 15.88% 13.04% (PLN B) minimum requirement as of Net Stable Funding Ratio (NSFR) Liquidity Coverage Ratio (LCR) CET 1 capital ratio Tier 2 XX.X Total risk exposure amount Note: On the Polish FSA identified mbank as an other systemically important institution and imposed on the bank an additional buffer at 0.5% of total risk exposure amount. 16

17 Agenda 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 Ratios Macroeconomic Update Appendix Additional Information: Selected Financial Data Detailed Results of 17

18 Macroeconomic Update (1/2) Higher household consumption is mitigating the effects of investment slump Investment remains in a deep downturn 30% 20% 10% 0% -10% -20% -30% Construction output YoY Investment in buildings and structures YoY Deep declines in construction output (20% YoY) herald the overall weakness of investment. Multiple factors are responsible and this slump will continue in H Source: GUS, NBP Consumption is keeping the economy afloat 12% YoY 10% 8% 6% 4% 2% 0% -2% Wage bill Household income Consumption Owing to fast wage and (more generally) household income growth, as well as good sentiment, consumption is growing robustly. It seems the money from 500+ is finally being spent. Source: GUS, NBP GDP forecast (% YoY) 6 mbank s forecast Q1/13 Q3/13 Q1/14 Q3/14 Q1/15 Q3/15 Q1/16 Q3/16 Q1/17 Q3/17 Investment Net exports Consumption Inventories GDP YoY (%) The bank has revised its GDP forecasts downward. Now it expects growth to drop below 3% in H and accelerate in 2017 as EU funds kick in. Risks are to the downside, though. Source: GUS, NBP Record low core inflation, end of deflation is only a statistical one 5% 4% 3% 2% 1% 0% -1% -2% Repo rate CPI inflation Core inflation Repo rate forecast CPI forecast Core CPI forecast Fuel prices are no longer contributing negatively to inflation, but core CPI is at all time lows. What would force the MPC to resume easing? Weaker growth is the only option. Source: GUS 18

19 Macroeconomic Update (2/2) Slower growth in corporate loans, cautious borrowing by households Corporate loans and deposits (% YoY) 30% 20% 10% 0% -10% Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Corporate deposits Corporate loans Corporate investment loans Corporate credit has decelerated materially this year, but not due to investment loans. Corporate deposits are growing more slowly as the impact of weak PLN is fading. Source: NBP Household loans and deposits (% YoY) 25% 20% 15% 10% 5% 0% -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 Jan-16 Jul-16 Household deposits Household loans Mortgage loans With 500+ money being finally spent, household deposit growth is decelerating. Household credit is propelled by consumer loans as mortgage lending remains sluggish. Source: NBP Markets might be too pessimistic on fiscal policy 15.6% 15.2% 14.8% 14.4% 12M sum as % of GDP 14.0% Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14 May-15 Jan-16 Sep-16 Tax revenues With strong growth in tax revenues, the overall fiscal position looks sound budget is feasible, if this trend continues. This suggests that risk premia in Polish bonds might be too high. Source: Bloomberg PLN remains weak Trade-weighted PLN, 2010=100 PLN remains weak. In fact, if averaged over all trade partners, it is close to decade lows. Fundamental reason the need to remain competitive in the face of deflation and rising wages. Source: Bloomberg 19

20 2016 in forecasts and the impact on mbank Group Macroeconomic environment and challenges for the banking sector Key economic indicators F GDP growth (YoY) 3.3% 3.4% 2.8% Domestic demand (YoY) 4.9% 3.4% 2.7% Private consumption (YoY) 2.6% 3.1% 3.6% Investment (YoY) 9.8% 6.1% -4.3% Inflation (eop) -1.0% -0.5% 0.3% MPC rate (eop) CHF/PLN (eop) EUR/PLN (eop) Impact on mbank Net interest income & NIM MPC decision on reduction of interest rates less likely Limited room for deposit re-pricing Net Fee & Commission income (Slightly positive) (Neutral) Constantly rising client transactionality and strong acquisition in both retail and corporate segment Lower volume dynamics due to lending stagnation balancing gains from client acquisitions Total costs (Negative) Banking sector monetary aggregates YoY F Corporate loans 6.3% 8.2% 5.8% Mortgage loans 6.0% 7.0% 3.4% Non-mortgage loans 5.0% 6.2% 6.8% Corporate deposits 9.0% 10.3% 8.4% Retail deposits 10.4% 9.8% 10.2% Introduction of banking tax with the monthly rate of % collected since February 2016 Business-driven costs to remain well-contained Loan Loss Provisions (Neutral) Solid macroeconomic situation and low unemployment Small downside risk due to changing loan book mix Source: mbank s estimates as of

21 Agenda 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 Ratios Macroeconomic Update Appendix Additional Information: Selected Financial Data Detailed Results of 21

22 Additional Information: Selected Financial Data Page No. Detailed Results of the Page No. Consolidated Profit and Loss Account 23 Retail Banking Consolidated Statement of Financial Position 24 of Q3/16: Financial Results and Volumes mbank Group s Ratios 25 Loan Portfolio Structure in Poland 42 mbank Group s Historical Performance mbank in the Czech Republic and Slovakia Net Interest Income & Margin 29 Corporates and Financial Markets Fee and Commission Income 30 of Q3/16: Financial Results and Volumes Trading and Other Income 31 Financial Markets Activity: Market Shares 48 Analysis: Assets & Liabilities 32 mbank Group s Analysis: Currency structure 33 Results of Consolidated Companies 50 Analysis: Structure of loans and deposits 34 mbank Hipoteczny (mbh) 51 Analysis: Loan portfolio structure 35 Leasing and Factoring 52 analysis: Development of Capital Ratios 36 Dom Maklerski mbanku (mdm) 53 mbank s EMTN Programme: Transaction 37 mbank s share price performance 54 Issuance Activity on the Covered Bonds Market 38 Contact Details 55 22

23 Additional Information: Selected Financial Data Consolidated Profit and Loss Account Quarterly results (PLN thou.) Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Net interest income 641, , , , ,712 Net fee and commission income 235, , , , ,363 Dividend income 14, , Net trading income 84,105 70,900 84,087 59,513 74,402 incl. FX result 67,825 75,227 71,817 66,065 82,162 Gains less losses from investment securities (9,372) 127,430 3, ,755 2,350 Net other operating income 1 13,449 (1,886) 33,226 1,992 8,478 Total income 979,863 1,110,483 1,008,903 1,202,992 1,038,747 Total operating costs (463,297) (650,955) (480,772) (490,699) (499,887) Overhead costs (413,084) (597,816) (427,045) (427,329) (447,196) Amortisation (50,213) (53,139) (53,727) (63,370) (52,691) Loan loss provisions (110,956) (102,629) (68,520) (117,743) (139,452) Operating profit 405, , , , ,408 Taxes on the Group balance sheet items (922) (933) (57,302) (89,011) (89,824) Profit before income tax 404, , , , ,584 Net profit attributable to owners of mbank 1 Including the share in the profits (losses) of joint ventures 319, , , , ,479 23

24 Additional Information: Selected Financial Data Consolidated Statement of Financial Position Assets (PLN thou.) Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Cash and balances with Central Bank Loans and advances to banks Trading securities Derivative financial instruments Loans and advances to customers Investment securities Intangible assets Tangible fixed assets Other assets Total assets Liabilities (PLN thou.) Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Amounts due to other banks Derivative financial instruments Amounts due to customers Debt securities in issue Subordinated liabilities Other liabilities Total liabilities Total equity Total liabilities and equity

25 Additional Information: Selected Financial Data 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% 2.13% 2.29% 2.27% 2.28% Net Interest Margin YtD (excl. CHF portfolio) 2.45% 2.48% 2.66% 2.63% 2.64% Cost to Income Ratio (quarterly) 47.3% 58.6% 47.7% 40.8% 48.1% Cost to Income Ratio YtD 46.9% 50.1% 47.7% 43.9% 45.3% Cost of Risk (quarterly) 0.57% 0.52% 0.35% 0.59% 0.69% Cost of Risk YtD 0.55% 0.54% 0.35% 0.47% 0.55% ROE net (quarterly) 11.62% 11.20% 10.08% 12.85% 7.61% ROE net YtD 12.06% 11.84% 10.08% 11.46% 10.18% ROA net (quarterly) 1.00% 0.97% 0.99% 1.23% 0.71% ROA net YtD 1.07% 1.04% 0.99% 1.11% 0.98% Loans to Deposits 101.1% 96.7% 96.1% 94.7% 95.1% Total Capital Ratio 16.99% 17.25% 19.01% 18.33% 18.61% Common Equity Tier 1 Ratio 14.09% 14.29% 16.20% 15.61% 15.88% Equity / Assets 9.5% 9.9% 10.2% 9.9% 10.0% TREA / Assets 56.5% 56.2% 56.1% 55.4% 54.9% NPL ratio 5.9% 5.7% 5.8% 5.8% 5.9% NPL coverage ratio 57.1% 58.9% 58.6% 58.5% 59.5% NPL coverage ratio incl. general provisions 62.6% 64.3% 64.0% 63.7% 64.4% 25

26 mbank Group s historical performance (1/3) Net Interest Income & NIM 2.5% 2.4% 2.2% 2.3% CAGR +4% 2.1% 2.1% 2.3% +13% Net Fee and Commission Income CAGR +2% -1% 2,167 2,280 2,226 2,491 2,511 1,835 2, M/15 9M/ M/15 9M/16 Trading and Other Income CAGR +7% +6% Total Income CAGR +4% +9% ,521 3,571 3,674 3,939 4,093 2,983 3, M/15 9M/ M/15 9M/16 26

27 mbank Group s historical performance (2/3) Operating Costs One-off regulatory costs (additional payments to the BFG and Mortgage Support Fund) CAGR +5% % Pre-provision Income & C/I ratio 47.7% 46.5% 45.7% 44.9% CAGR +3% 50.1% 46.9% 45.3% +12% 1,680 1,661 1,678 1,771 1,857 1,400 1,471 1,841 1,909 1,995 2,169 2,043 1,583 1, M/15 9M/ M/15 9M/16 Loan Loss Provisions & Cost of Risk Net Profit & Return on Equity bps % 14.6% 13.1% 13.1% 11.8% 12.1% 10.2% CAGR +3% +2% CAGR +3% -7% ,135 1,197 1,206 1,287 1, M/15 9M/ M/15 9M/16 27

28 mbank Group s historical performance (3/3) Total Assets (PLN B) Equity & Total Capital Ratio CAGR +6% +3% 14.96% 18.73% 19.38% 14.66% CAGR +11% 17.25% 16.99% 18.61% +9% ,073 9,619 10,256 11,073 12,275 11,923 12, Total Gross Loans (PLN B) CAGR +4% % Total Deposits (PLN B) CAGR +11% % Individual clients Corporate clients Public sector and other Individual clients Corporate clients Public sector 28

29 Additional Information: Selected Financial Data Net Interest Income & Margin Interest Income Structure Interest Expense Structure % NIM [%] 2% 4% % % 7% 23% % % % Q3/ Q4/ Q1/ Q2/ Q3/16 18% 2% 19.2 Q3/ Q4/ Q1/ Q2/ Q3/16 8% Cash and short-term deposits Loans and advances Amounts due to banks Subordinated liabilities Investment securities Derivatives classified into banking book Amounts due to customers Other Debt securities held for trading Other Issue of debt securities 29

30 Additional Information: Selected Financial Data Fee and Commission Income Fee and Commission Income Structure Q3/ Q4/ Q1/ Q2/ Q3/16 15% 10% 17% 9% 23% 4% 1% 21% QoQ YoY +11.2% +20.4% +1.9% -1.9% -0.6% +2.4% +11.1% +24.9% +17.2% +4.1% -2.8% +20.8% +38.8% +21.5% +21.0% +9.8% Credit related fees Portfolio management Guarantees and trade finance Payment card fees Brokerage activity & securities issue Accounts & money transfers Insurance activity Other (incl. custody) 30

31 Additional Information: Selected Financial Data Trading and Other Income Net Trading Income Structure Gains less Losses from Investment Securities -12% +25% Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q3/15 Q4/15 1 Q1/16 Q2/16 2 Q3/16 FX Result Other Trading Income 1 Excl. one-off gain on the sale of PZU shares (PLN M); 2 Excl. gain on the settlement of Visa transaction (PLN M) 31

32 Additional Information: Selected Financial Data Analysis: Assets & Liabilities Structure of Assets (PLN B) Structure of Liabilities and Equity (PLN B) % 24% 2% 3% % 10% 9% % % % % Amounts due from banks Derivative financial instruments Amounts due to other banks Equity Loans and advances to customers Investment securities Amounts due to customers Other Trading securities Other Debt securities in issue 32

33 Additional Information: Selected Financial Data Analysis: Currency Structure Currency Structure of Loans to Customers (net) (PLN B) Currency Structure of Amounts due to Banks and Customers 1 (PLN B) % 2% 18% % 3% 15% % % % % PLN CHF EUR USD Other (mainly CZK) PLN CHF EUR USD Other (mainly CZK) 1 Incl. amounts due to other banks and customers and subordinated liabilities 33

34 Additional Information: Selected Financial Data Analysis: Structure of Loans and Deposits Structure of mbank Group s Gross Loans as of Structure of mbank Group s Deposits as of Public sector loans and other PLN 1.6 B Non-mortgage retail loans PLN 11.1 B Mortgage loans to Microfirms PLN 2.3 B 13% 3% 2% 11% Total: PLN 84.2 B 41% Corporate loans PLN 34.5 B Individual clients: term deposits PLN 15.3 B 59% Public sector clients PLN 0.6 B 18% 1% Total: PLN 85.2 B 28% 12% Corporate clients: current accounts 1 PLN 23.9 B Mortgage PLN loans to Individuals PLN 9.3 B 57% 30% Mortgage FX loans to Individuals PLN 25.4 B Individual clients: current accounts PLN 35.5 B 41% Corporate clients: term deposits PLN 9.9 B 1 incl. repo transactions, loans and advances received, other liabilities 34

35 Additional Information: Selected Financial Data Analysis: Loan Portfolio Structure mbank Group s Sector Exposure by Industry as of % 2.0% 1.3% 1.5% 2.0% 2.3% 2.4% 2.7% 4.1% 1.2% 10.6% 4.4% 7.0% Total: PLN 84.2 B 57.1% Households Real estate management Building industry Wholesale trade Retail trade Transport and logistics Food sector Fuels and chemicals Metals Wood sector Information and communication Power industry and heating services Public administration Other (below 1.15%) A well diversified loan portfolio with granular structure 35

36 Additional Information: Selected Financial Data Analysis: Detailed Development of Capital Ratios mbank Group s Common Equity Tier 1 (CET 1) Ratio % % % 14.29% Q4/15 Change in business FX impact on TREA Net profit retention Other 1 Q1/16 Change in business FX impact on TREA Other Q2/16 Change in business FX impact on TREA Net profit retention Other Q3/16 mbank Group s Total Capital Ratio % % % 17.25% Q4/15 Change in business FX impact on TREA Net profit retention Other 1 Q1/16 Change in FX impact Other Q2/16 Change in FX impact business on TREA business on TREA Net profit retention Other Q3/16 1 due to lower deductions of own funds (mostly decrease of loan loss provisions after 2015 profit retention) 36

37 mbank s Euro Medium Term Note (EMTN) Programme of fifth tranche: 4-year EUR 500 M, Senior Unsecured Transaction details Distribution by investor location Poland Issuer Guarantor mfinance France S.A. mbank S.A. United Kingdom & Ireland 16% 15% 10% Switzerland Format Senior Unsecured Debt out of EMTN programme 9% France Issue rating BBB (Fitch) / BBB (S&P) Issue size EUR 500 M Maturity date 26th September 2020 Germany & Austria 36% 6% 8% Others Spain & Portugal Issue date 26th September 2016 Distribution by investor type Reoffer spread MS+157bps Coupon 1.398% p.a. Banks Listing Bourse de Luxembourg 17% The transaction was of significant interest to investors, with a final order book size of EUR 1.3 billion Investment Funds & Asset Managers 73% 7% 3% Insurance Companies & Pension Funds The book showed high granularity with the participation of 135 investors, representing broad appeal across the European investor community Others 37

38 Issuance Activity on the Covered Bonds Market Residential mortgage loans are rising in cover pool Covered Bonds Issuance Private placement of EUR 70 million +141% % 1, , Target 2016: PLN 1.75 B Plan 300 (17%) 718 (41%) 2016 mbank Hipoteczny issued more than planned PLN 1.5 billion of covered bonds in 2015 and its target for 2016 amounts to PLN 1.75 billion Covered bond issuance to become the dominant long-term financing source for the Group s mortgage lending and a competitive advantage in a tightening regulatory environment of Mortgage Covered Bonds issued in (public issues) Amount Currency Issue date Maturity date Tenor (years) Coupon 7.5 M EUR EURIBOR 6M + 80bps 8.0 M EUR Fixed (3.50%) 15.0 M EUR Fixed (3.50%) 20.0 M EUR Fixed (3.20%) M PLN WIBOR 6M + 93bps M PLN WIBOR 6M + 93bps 20.0 M EUR Fixed (1.115%) 50.0 M EUR EURIBOR 3M + 87bps M PLN WIBOR 6M + 78bps 20.0 M EUR Fixed (1.135%) M PLN WIBOR 6M + 87bps 11.0 M EUR Fixed (1.285%) 50.0 M EUR EURIBOR 3M + 69bps M PLN WIBOR 3M + 110bps M PLN WIBOR 3M + 115bps M PLN WIBOR 3M + 120bps 50.0 M EUR EURIBOR 3M + 87bps 50.0 M PLN Fixed (2.91%) M PLN Fixed (2.91%) 13.0 M EUR Fixed (1.18%) 38

39 Detailed Results of the in Q3/16 Retail Banking 39

40 Retail Banking of Q3/16: Financial Results Profit before Tax of the Segment (PLN M, by quarter) -10% % Number of Retail Service Locations Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Retail Banking PL mbank CZSK Gain on Visa transaction mbank (former MultiBank) Advisory centres Aspiro Light branches mkiosks (incl. Partner Kiosks) mbank CZSK Total Retail Gross Loans 1 47,296 3,552 48,075 3,834 +7% 48,407 4, % 50,538 50,609 4,269 4,199 CZSK PL Total Retail Deposits 1 42,631 6,136 46,264 6, % 47,986 6, % 49,680 51,051 7,328 7,291 43,744 44,241 44,405 46,269 46,410 36,496 39,889 41,370 42,352 43,760 1 Based on management information 40

41 Retail Banking of Q3/16: Loans and Deposits Gross Loans to Retail Banking Clients 1 Deposits from Retail Banking Clients +6.0% -0.3% +19.5% +2.6% 21% 5% 7% 45,381 9,525 2,495 3,069 46,259 9,589 2,486 3,320 46,511 9,897 2,507 3,465 48,272 10,520 2,532 3,690 48,119 11,150 2,345 3,577 23% 5% 8% 1% 26% 42, ,109 46, ,605 47, ,272 49, ,349 50, ,237 30% 50% 22,728 22,685 22,119 22,658 21,775 45% 40% 17,156 17,597 18,284 18,610 18,648 37% 17% 7,564 8,179 8,523 8,872 9,272 19% 33% 13,852 14,871 15,230 16,440 16,785 33% PLN mortgage loans to Individuals Mortgage loans to Microfirms Current accounts Term deposits FX mortgage loans to Individuals granted in PL Non-mortgage loans Saving accounts Other Mortgage loans granted in CZSK 1 Currency and geographical breakdown based on management information 41

42 Retail Banking Loan Portfolio Structure of mbank Group in Poland Market Shares in Household Loans in Poland 7.3% 7.4% 7.6% 7.7% 7.6% 7.7% 4.5% 4.6% 4.7% 4.8% 4.8% 4.7% 7.6% 4.8% 7.6% 4.9% 7.5% 5.0% Product Structure of Retail Banking Loan Portfolio in Poland as of % 6.4% 3.8% 8.0% Mortgage loans Cash loans Credit lines Credit cards 09/14 12/14 03/15 06/ % Other Mortgage loans Non-mortgage loans mbank s Gross CHF Loan Portfolio to Retail Clients (CHF M) Currency Structure of Retail Banking Loan Portfolio in Poland as of CAGR -6% FX PLN 7,213 6,852 6,501 6,129 5,749 5,365 4,994-5% 4, % 56.2% 30.1% 69.9% Total Retail Portfolio Mortgage Loan Portfolio 42

43 Retail Banking mbank in the Czech Republic and Slovakia Gross Loans and Share in Total mbank s retail volume Deposits and Share in Total mbank s retail volume 3, % 3,834 4, % -2% 0% 8.7% 4,269 4,199 7,328 7,291 6,615 1, ,136 6,375 2,078 2,039 1,840 1,884 1, % 2,721 2,907 3,035 3,270 3,238 SK CZ 4,296 4,491 4,690 5,250 5,252 SK CZ Number of clients (thou.) Total revenues % Reduced interchange fee in the Czech Republic since Q1/16 +15% SK CZ 32.8 Q3/ Q4/ Q1/ Q2/ Q3/16 SK CZ Note: Volumes based on management information. 43

44 Retail Banking mbank in the Czech Republic and Slovakia Mortgage Loans (CZK M) +16% Non-mortgage Loans (CZK M) +19% Customer deposits (CZK M) +19% Czech Republic Clients: thou. 14,663 +1% 16,795 16,977 2,593 2,963 +4% 3,077 27,527 +3% 32,066 32,886 9 financial centres & 16 mkiosks Mortgage Loans (EUR M) +12% Non-mortgage Loans (EUR M) +25% Customer deposits (EUR M) +9% Slovakia -2% +3% +1% Clients: thou light branches, 4 financial centres & 5 mkiosks Note: Volumes based on management information. 44

45 Detailed Results of the in Q3/16 Corporates & Financial Markets 45

46 Corporates and Financial Markets of Q3/16: Financial Results Profit before Tax of the Segment (PLN M, by quarter) Q3/ Q4/15-49% Q1/16 Corporate and Investment Banking -14% Q2/16 Financial Markets Q3/16 Number of Corporate Service Locations mbank s branches mbank s offices mleasing mfaktoring mbank Hipoteczny Advisory centres Zachodnio- Pomorskie 2 2 Lubuskie 2 1 Dolnośląskie Pomorskie Wielkopolskie Kujawsko- Pomorskie Łódzkie 3 1 Opolskie Śląskie 1 2 Warmińsko- Mazurskie 4 2 Mazowieckie 1 Świętokrzyskie Małopolskie 1 1 Podlaskie Lubelskie Podkarpackie Loans to enterprises 1 +2% +1% Deposits of enterprises 1 0% -4% 1,342 1,312 1,141 1,060 1,045 19,569 19,442 19,917 20,070 20,364 24,644 25,629 23,572 25,639 24,663 loans classified as securities 1 Corporate loan and deposit volumes according to current NBP rules 46

47 Corporates and Financial Markets of Q3/16: Loans and Deposits Gross Loans to Corporate Entities Deposits from Corporate Customers -1.2% -3.1% +1.7% -3.7% 34,959 3,354 4,872 4,428 2,329 33,447 3,667 4,701 4,720 2,538 32,805 3,655 4,728 4,830 2,427 33,937 4,304 4,870 5,116 2,480 34,528 4,504 5,030 5,146 2,512 34,922 3,875 4,218 9,631 34,424 4,370 4,857 11,281 32,618 4,430 4,465 10,461 35,119 5,146 5,221 10,777 33,829 4,987 5,476 11,214 11,606 11,270 11,981 12,135 12,397 8,370 6,551 5,184 5,032 4,939 17,199 13,915 13,262 13,975 12,152 K1 K2 K3 mleasing mbank Hipoteczny Other K1 K2 K3 Other Note: Corporate clients split: K1 annual sales over PLN 500 M and non-banking financial institutions; K2 annual sales PLN 30 M to PLN 500 M; K3 annual sales below 30 M. 47

48 Corporates and Financial Markets Market Shares mbank s Market Shares in Investment Banking Services 1 mbank in the Market for Non-Treasury Debt 2 as of , % 12.3% 35,658 Treasury Bills and Bonds IRS/FRA 14,484 1,539 Short-term Debt 7,612 Corporate Debt 12,634 Mid-term bank Debt 14.4% #4 #5 #1 10.6% 11.5% 35.4% FX Spot & Forward 1 As of ; mbank calculations based on NBP data 2 Based on Fitch Polska S.A., Rating & Rynek, (excluding BGK road bonds) Market mbank 48

49 Detailed Results of the mbank Group s companies in Q3/16 49

50 mbank Group s 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, % 17,381 21, % mleasing 17,535 20, % 45,291 61, % mfaktoring -19,827 1,426 - / + -17,023 12,588 -/+ mfinanse (p. Aspiro) 1 43,483 40, % 81, , % mlocum 7,535 1, % 18,642 16, % Dom Maklerski mbanku 2 6, N/A 22,476 2,852 N/A mwealth Management 2 6, N/A 19,988 8,976 N/A Other 3-1,696-2, % 3, /- Total 69,431 69, % 191, , % 1 Excluding one-off gain on the sale of shares of BRE Ubezpieczenia TUiR in Q1/15 2 Companies were integrated into the organizational structure of mbank as of Other subsidiaries include mfinance France, mcentrum Operacji, BDH Development, Garbary and Tele-Tech Investment (since Q3/15) 50

51 mbank Group s mbank Hipoteczny (mbh) established in 1999 Gross loans and advances to customers +26% +8% Profit before Tax +25% specialised mortgage bank and the largest issuer of covered bonds in the Polish market Public sector loans and other receivables Housing loans to individual customers (incl. new sales and pooling transactions) Commercial loans 7, ,242 4,872 7, ,627 4,701 7, ,931 4,728 8, ,474 4,870 9, ,001 5, Q3 Q1-Q2 Outstanding amount of Covered Bonds issued (PLN M, nominal value) Issuance of Covered Bonds in original currencies (LC M, by quarter) +22% +4% PLN EUR , ,666 4, ,927 4, ,443 4, ,446 4,765 4, Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q1/15 Q2/15 Q1/16 Q3/16 Public covered bonds Mortgage covered bonds X Number of issues 51

52 mbank Group s Leasing and Factoring Leasing contracts Market share & position 9M 2016 Profit before Tax established in 1991 provides financial and operating leasing of cars, trucks, machinery and real estate 2, , % 3,104 1,027 2, % Rank #3 Source: Polish Leasing Association (PLA) % Q3 Q1-Q2 established in 1995 offers factoring services, incl. domestic and export recourse and non-recourse factoring and import guarantees Factoring contracts 7,505 2,502 5, % 8,476 3,025 5, Market share & position 9M % Rank #8 Source: Polish Factors Association (PFA) Profit before Tax -/ Q3 Q1-Q2 52

53 mbank Group s Brokerage Services Dom Maklerski mbanku (mdm) mdm Equities Trading on WSE and Market Share in Turnover (PLN M, by quarter) mdm Futures Trading on WSE and Market Share in Turnover (thou. of contracts, by quarter) 4.3% 5, % 5, % 3, % 3, % 5, % % % % % Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 mdm Bonds Trading on WSE and Market Share in Turnover (PLN M, by quarter) 10.7% % % % % 70.4 mdm Options Trading on WSE and Market Share in Turnover (thou. of contracts, by quarter) 11.9% % % % % 18.1 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Source: mbank calculations based on WSE data. 53

54 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) WIG % WIG % WIG 1.730% mbank s share price in 9M/ MIN ( ) MAX ( ) WIG-Banks 6.088% WIG-Poland 1.791% % * Share in index as of Listed on the Warsaw Stock Exchange since October 1992 The only share belonging to WIG-20 blue chip index since its inception in April 1994 A strategic shareholder, Germany s Commerzbank, owns 69.5% of shares % -8.0% ISIN PLBRE Bloomberg MBK PW Number of shares issued mbank WIG-Banks Index WIG-20 Index Source: Bloomberg, WSE. 54

55 Contact details mbank s Investor Relations at your service: address: investor.relations@mbank.pl Wojciech Chmielewski Head of Investor Relations and Group Strategy Paweł Lipiński Debt Investors & Ratings Joanna Filipkowska Equity Investors & Analysts Marta Polańska Equity Investors & Analysts Direct dial: wojciech.chmielewski@mbank.pl Direct dial: pawel.lipinski@mbank.pl Direct dial: joanna.filipkowska@mbank.pl Direct dial: marta.polanska@mbank.pl Investor Relations website: mbank Analyzer: analyzer.mbank.pl mbank S.A. Investor Relations and Group Strategy ul. Senatorska Warszawa 55