mBank Group reports solid operating results in Q3 2023, with its profit before tax from core operations exceeding PLN 1.5 billion.
The bank’s result, however, was largely absorbed by CHF loan provisions. The legal risk costs connected with this portfolio reached nearly PLN 1.1 billion, which reflects the costs of the settlement programme and an update of the expected distribution of court rulings and other parameters used in the model. Added to the existing provisions, they cover more than 85% of active agreements.
Consequently, mBank Group posted a net loss of PLN 83 million in Q3 2023, but managed to stay in the black after nine months of the year.
In Q3 2023 mBank Group’s total income reached a record-high PLN 2.7 billion, driven mostly by an all-time high net interest income of nearly PLN 2.3 billion. This represents a quarter-on-quarter increase by 4% and a 13% rise compared with Q3 2022 (excluding the negative impact of “loan payment holidays”). Net commission income, on the other hand, slipped by 1% quarter on quarter and by 6% year on year.
Excluding compulsory charges, operating costs grew by 2% compared with Q2 2023 and by 19% on 2022. Staff-related expenses climbed due to rising salaries and new hirings. At the same time, mBank’s normalised cost-to-income ratio, which measures efficiency, stood at 28.2% in Q3 2023.
Risk costs rose to 87 basis points. Loss allowances for expected credit losses grew due to higher corporate provisions, with retail provisions remaining stable.
In Q3 we observed two opposing trends in business volumes. Net of the FX effect, loans fell by 1.2% compared with June 2023, whereas deposits went up by 4.8%.
The loan portfolio securitisation which took place in September and disciplined management of risk-weighted assets translated into a solid improvement in capital position and pushed the buffer above the minimum regulatory requirements.
mBank continued its settlement programme for CHF borrowers, which has already resulted in nearly 11,000 settlements signed with clients.