In the previous quarter, mBank improved its operating results again, with its total income reaching a record high. The key component of total income, net interest income, was historically high at PLN 2.2 billion, up by 29% year on year. At the same time, the bank created further allowances for legal risk, thanks to which it is well-hedged against the risk related to CHF loans.
mBank’s Q2 2023 operating results were solid, with its profit before tax from core operations exceeding PLN 1.6 billion. At the same time, its final result was dented by the costs of legal risk connected with the CHF loan portfolio at over PLN 1.5 billion, which mainly reflected the impact of the CJEU ruling made in June and the costs of the settlement programme. After the increase in allowances, the bank’s total provisions as at the end of June 2023 covered 75% of the value of active CHF agreements, which means that the bank is well-hedged.
In consequence, in Q2 2023, mBank Group incurred a loss of PLN 15.5 million against a net profit of PLN 143 million in the previous quarter. In total, this allowed the Group to post a positive result for H1 2023.
In Q2 2023, the bank achieved record-high income again, this time exceeding PLN 2.7 billion. Its key component, net interest income, was historically high at PLN 2.2 billion, up by 29% year on year. Net commission income, on the other hand, slipped by nearly 3% to PLN 488 million quarter on quarter.
Excluding compulsory charges, operating costs grew by 5% compared with Q1 2023 and by 12% on 2022, driven by both staff-related and material expenses. mBank’s normalised cost-to-income ratio, which measures efficiency, was 27.8% in Q2 2023. Risk costs stood at 64 basis points. The quality of the credit portfolio remained good, with NPL at 4.1% at the end of June 2023.
In Q2 2023, mBank reported a drop in the volumes of loans and deposits. Net of the FX effect, the carrying value of loans fell by 1.2% compared with March 2023, largely due to adjustments resulting from high legal risk provisions set up by the bank, continuing relatively low mortgage sales and a selective approach to corporate exposures. Disciplined management of risk-weighted assets translated into a solid improvement in capital ratios and pushed the buffer above regulatory requirements. Core deposits shrank by 2.4% quarter on quarter amid exceptionally strong liquidity.
mBank continued its settlement programme for CHF borrowers, which has already resulted in more than 8,100 settlements signed with clients.
At the end of Q2 2023, mBank had more than 5.6 million retail clients, including over 1 million in Czechia and Slovakia. The bank’s mobile app had nearly 3.5 million active users. At the same time, the number of corporate clients exceeded 33,500.