Last year, mBank Group recorded the highest operating result in history. However, its bottom line was hit by provisions for Swiss franc loans.
In 2023, income posted by mBank Group reached its all-time high of PLN 10.8 billion, driven by record-high net interest income of nearly PLN 8.9 billion. Net of the effect of the loan payment holidays, the annual rise in net interest income reached 22%. Net interest margin, up by 0.5 pp compared with 2022, also reached an all-time high. It stood at 4.2% for the whole 2023. Net commission income amounted to PLN 1.9 billion and was lower by almost 10% compared with 2022, mostly due to the rising costs of compliance with regulatory requirements.
Total costs amounted to PLN 3.1 billion, which represents a 7.4% year-on-year decrease because of the 2022 base effect. In 2022 the bank was charged with extraordinary payments to the Institutional Protection System (IPS) and the Borrower Support Fund, as well as higher contributions to the Bank Guarantee Fund. Amid the general inflationary pressure, mBank Group retained excellent efficiency, as evidenced by the cost-to-income ratio of 28.5%.
Higher risk costs in 2023, which reached 93 bps, resulted from the impact of macroeconomic and market factors on the situation of clients and negative one-off effects. At the same time, the overall good quality of mBank Group's assets is confirmed by the NPL ratio, which is clearly below the average for the Polish sector. At the end of 2023, it stood at 4.2%.
mBank Group's high net operating income was almost entirely absorbed by the costs of legal risk associated with the foreign currency mortgage portfolio. As a consequence of creating provisions for these agreements totalling PLN 4.9 billion in 2023, net profit amounted to PLN 24.1 million.
mBank Group's high net operating income was almost entirely absorbed by the costs of legal risk associated with the foreign currency mortgage portfolio. As a consequence of creating provisions for these agreements totalling PLN 4.9 billion in 2023, net profit amounted to PLN 24.1 million.
The bank is currently focused on the settlement programme. As at the end of January 2024, the bank has signed over 14,000 settlements, including an increasing number of settlements signed with clients in an ongoing legal dispute with the bank. These actions, coupled with subsequent decisions to increase provisions, resulted in the provision coverage ratio of the active CHF loans portfolio approaching 100% at the end of 2023.
In 2023, mBank Group continued to report a high disparity between the growth rates of business volumes. Gross loans, net of the FX effect, dropped by 3.1% to PLN 117.2 billion. This mainly resulted from accounting adjustments to the foreign currency mortgage portfolio, which lowered the carrying amount of the mortgages and slowed down new financing.
Conversely, clients’ deposits with mBank increased by 6.5% against December 2022 to PLN 185.5 billion. Our market share in total retail deposits reached 8.4%, while our share in corporate deposits went up only slightly to 11%.
Thanks to measures aimed at limiting risk-weighted assets, including the third securitisation, the surplus above the minimum regulatory requirements increased and at the end of 2023 stood at 5.6 pps for the Tier I Capital Ratio and 5.9 pps for the Total Capital Ratio, thus confirming the bank’s stable and secure situation.n.