mBank Group after Q1 2016: solid results in challenging times

mBank Group after Q1 2016: solid results in challenging times

mBank posts a net profit of PLN 308 million in Q1 2016 driven by high net interest income and low provisions as well as a focus on organic growth for which the bank is well-known.

In the first three months of the year mBank Group continued to face challenging market conditions such as record-low interest rates and significantly reduced interchange fees for card transactions. Its financial results were adversely affected by the tax on balance sheet items (the so-called bank tax) payable since February 2016. Despite these headwinds, mBank’s net profit remained virtually unchanged compared with Q4 2015 at PLN 307.8 million (which represents a decrease by 0.6% quarter on quarter).Income in Q1 2016 exceeded PLN 1 billion and was by 9.1% lower compared with the previous quarter, which was helped by a one-off sale of PZU shares. Net interest income was almost as high as in Q4 2015 (PLN 676.4 million) and net fee and commission income slipped by 10.8% quarter on quarter to PLN 211.7 million. Net trading income amounted to PLN 84.1 million, which represents a rise by PLN 13.2 million against Q4 2015.

Costs dropped by 26.1% to PLN 408.8 million compared with the previous quarter as there were no negative one-off events. Net impairment losses on loans and advances fell to PLN 68.5 million, mainly thanks to the release of provisions in corporate banking. Consequently, the cost of risk reached 35 basis points in Q1 2016, compared with 52 basis points a quarter earlier.

The first three months of 2016 were also marked by continued organic growth and business expansion of mBank. Compared with the end of 2015, the number of individual clients grew by 90 thousand to 5.04 million and the number of corporate clients rose by 430 to nearly 20 thousand.Net loans and advances at the end of March 2016 amounted to PLN 77.9 billion, down by PLN 493 million compared to the level reported at the end of last year. Excluding reverse repo/buy-sell-back transactions and the FX effect, the value of net loans and advances went up by 0.9%. Compared with the previous quarter, deposits remained practically unchanged at PLN 81.1 billion. As a result, the loan to deposit ratio of mBank Group reached 96.1%, which is the lowest level reported in mBank’s history.

Capital ratios of mBank Group increased considerably after the 2015 profit was used to strengthen own funds. At the end of March 2016, total capital ratio and Common Equity Tier 1 ratio stood at 19.0% and 16.2%, respectively.