In Q3 2022, mBank’s income hit a record high, which was coupled by rising market shares and strong client acquisition. However, the financial performance was adversely affected by a number of one-off factors, in particular the so-called credit holiday and costs of legal risk posed by foreign currency mortgages. The bank’s capital ratios remained at safe levels above the required minimum.
mBank’s net loss for Q3 2022 stood at PLN 2.3 billion. Excluding one-off factors, mBank Group would have posted a pre-tax profit as high as PLN 1.5 billion in the analysed period.
Pre-tax profit from core business (understood as mBank Group excluding the FX mortgage segment), adjusted for the credit holiday effect, reached PLN 1,299.5 million in Q3 2022.
mBank Group’s capital ratios dropped in Q3 2020 compared with June 2022. At the end of September 2022, the Total Capital Ratio and Common Equity Tier 1 ratio stood at 14.7% and 12.1%, respectively. This means that the ratios remained at safe levels above the required minimum. This guarantees the security of clients and their deposits entrusted to the bank.
The main determinants of the financial performance in Q3 2022 were as follows:
· Increase in total income (excluding the credit holiday effect), which amounted to PLN 2,420.4 million (+12.3% quarter on quarter), driven by rising net interest income.
· Lower operating expenses (including depreciation and amortisation) compared with the previous quarter, at PLN 824.8 million.
· Decrease in risk costs to PLN 183.0 million, i.e. 58 basis points compared with 62 basis points in the previous quarter.
· Costs of legal risk related to FX loans, which stood at PLN 2,314.3 million in Q3 2022 due to a major revision of the methodology applied to their calculation. It should be added that in Q4, the bank launched the settlement programme for its clients repaying CHF loans.
· Increase in tax on the Group’s balance sheet items to PLN 176.9 million compared with Q2 2022.
The effect of government-imposed burdens and one-off regulatory factors on the financial performance was as follows:
· total effect of the so-called credit holiday: PLN 1,345.8 million,
· contribution to the Borrowers Support Fund: PLN 184.1 million,
· payment to the Institutional Protection Scheme: PLN 37.2 million (PLN 390.8 million in Q2 2022)
· provisions for future liabilities linked to bridge insurance returns: PLN 84.0 million.
In Q3 2022, the bank continued to grow organically and expand its business. It reported a hike in the number of both retail clients (to 5,645.3 thousand, up by 58.7 thousand clients compared with the end of June 2022) and corporate clients (to 33,014 clients, up by 350 companies compared with the previous quarter).
In pursuance of its ESG strategy, mBank joined the Science Based Targets initiative (SBTi). The bank undertook to provide its short-term targets in carbon footprint reduction to the SBTi within two years. As a global leader in helping companies set ambitious decarbonisation targets, SBTi will check whether the bank’s decarbonisation pathway is in line with scientific evidence regarding global warming.