Results of mBank Group Q3 2019 Strong business performance - PowerPoint PPT Presentation

Results of mBank Group Q3 2019 Strong business performance continues Management Board of mBank S.A. Investor Presentation October 31, 2019

Disclaimer This presentation has been prepared by mBank S.A. for information purposes only and is based on the Condensed Consolidated Financial Statements for the third quarter of 2019, prepared under the International Financial Reporting Standards. For more detailed information on mBank S.A. and mBank Group results, please refer to the respective financial statements and data. This presentation contains certain estimates and projections regarding potential future trends. Estimates and projections presented in this presentation rely on historical information and other factors and assumptions which reflect mBank S.A. current position about potential future trends which seem justified under the given circumstances. Estimates and projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the projections, and the variations may be material. Statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. No statement in this presentation is intended to be a profit forecast. While this information has been prepared in good faith, no representation or warranty, expressed or implied, is or will be made and no responsibility or liability is or will be accepted by mBank S.A. or any subsidiaries or affiliates of mBank S.A. or by any of their respective officers, employees or agents in relation to the accuracy or completeness of these materials. The presentation should not be treated as a recommendation to purchase securities, an offer, invitation or a solicitation of an offer to purchase, invest or conclude any transaction on securities, in particular with respect to securities of mBank and its subsidiaries. This presentation has been completed as of the date indicated at the beginning. mBank S.A. does not undertake any obligation to update or revise this presentation, including any forward-looking estimates and projections, whether as a result of new information, future events or otherwise. Investor Presentation – Q3 2019 |2

Agenda Summary of Main Trends in Q3/19 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q3/19 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Quality Capital and Liquidity Ratios Macroeconomic Update and Outlook Appendix Selected Financial Data Detailed Results of Business Lines Investor Presentation – Q3 2019 |3

Key highlights of Q3 2019 Historically high core income of PLN 1,313 M, fuelled by rising net interest margin  Net interest income at PLN 1,064 M (+17.9% YoY) on increasing volumes and changing asset mix  Net fee and commission income at PLN 248 M (+4.1% YoY), a rebound helped by client transactionality Efficient management evidenced by normalized Cost/Income ratio of 41.4% 1  Continued upward trend of total revenues (+17.5% YoY), costs kept under control (+3.4% YoY, excl. BFG) Net profit up by 22% YoY to PLN 354 M, despite negative impact of high banking tax Dynamic growth in business volumes, driven by positive trends in core products  Gross loans at PLN 108.1 B (+4.3% QoQ, +14.4% YoY), expansion of both retail and corporate portfolio  Customer deposits at PLN 116.0 B (+5.1% QoQ, +13.2% YoY), strong inflows to current accounts Focus on higher margin lending reflected in changing asset mix  New production of non-mortgage loans close to a record level at PLN 2.40 B (+3% YoY)  Rising sales of housing loans at PLN 2.29 B (+93% YoY); constant reduction of CHF portfolio (-8.7% YoY) Capital ratios well above regulatory requirements and sound liquidity level  Consolidated Tier 1 Capital Ratio at 16.82% and Total Capital Ratio at 19.79% 2  Loan-to-Deposit ratio at 90.3% allowing for comfortable growth; the most diversified funding structure Good asset quality supported by conservative risk management approach  Cost of risk at 97 bps, affected by additional retail provisions resulting from model recalibration  Lower NPL ratio at 4.7% and improved coverage ratio at 62.5% confirming loan portfolio resilience 1 Including ¼ of contribution to the Resolution Fund booked in Q1/19; 2 Stand-alone capital ratios were Tier 1 Capital Ratio of 19.80% and Total Capital Ratio of 23.26% Investor Presentation – Q3 2019 |4

Summary of Q3/19 in mBank Group Business Development of Retail Banking and Corporate Banking Innovations and new products Number of Retail Clients (thou.) Market shares - Households 1 6.9% -64 Retail Banking  Introduction of savings goals -13 6.6% -14 for young clients aged 13-17; 6.4% 6.4% 5,603 5,552 5,539 6.3% 6.6% a specified amount is automa- 73 3 351 6.5% 938 945 921 tically sent to a special purpose 6.2% 6.0% account after every transaction 4,541 4,590 4,331 5.9%  Designed for convenient usage on mobile devices, new eMakler 09/18 06/19 09/19 09/17 03/18 09/18 03/19 09/19 stock trading platform was mBank PL mBank CZSK Kompakt Loans Deposits Finanse made available for the users  Investment offer for private Number of Corporate Clients Market shares - Enterprises Corporate Banking banking clients was extended +2,563 11.3% by adding ESG Sustainable 10.3% +888 +888 9.6% 9.6% Strategy comprising stocks and 9.4% 25,890 bonds of environmentally and 25,002 23,327 2,331 2,277 7.4% 2,138 socially responsible companies 8,077 7,777 6.7% 6.5% 7,389 6.6% 6.4%  mBank doubled a pool of funds 14,948 15,482 13,800 for renewable energy projects to PLN 1 billion as the previous 09/18 06/19 09/19 09/17 03/18 09/18 03/19 09/19 limit has already been used K1 K2 K3 Loans Deposits 1 A drop in the number of customers due to the cessation of the activity of Kompakt Finanse Note: Corporate clients split: K1 – annual sales over PLN 1 B and non-banking financial institutions; K2 – annual sales of PLN 50 M to PLN 1 B; K3 – annual sales below 50 M and full accounting. Investor Presentation – Q3 2019 |5

Summary of Q3/19 in mBank Group Key Financials: Profit and Loss Account Q3/18 Q2/19 Q3/19 PLN million change QoQ change YoY Net interest income 902.4 997.8 1,064.2 +6.7% +17.9% 238.8 225.8 248.5 Net fee and commission income +10.0% +4.1% 1,217.3 1,329.2 1,430.3 Total income +7.6% +17.5% -510.6 -522.6 -527.8 Total costs (excl. BFG) +1.0% +3.4% 1 -21.0 -14.5 -14.7 Contributions to the BFG +1.4% -29.8% 2 -185.3 -223.9 -249.4 Loan loss provisions and fair value change +11.4% +34.6% Operating profit 500.5 568.1 638.4 +12.4% +27.6% Taxes on the Group balance sheet items -103.4 -149.7 -123.0 -17.9% +19.0% Profit before income tax 397.4 418.4 515.4 +23.2% +29.7% Net profit 291.1 331.6 353.9 +6.7% +21.6% 2.56% 2.75% 2.81% Net Interest Margin +0.06 p.p. +0.25 p.p. Cost/Income ratio 43.7% 40.4% 37.9% -2.5 p.p. -5.8 p.p. Cost of Risk 0.82% 0.90% 0.97% +0.07 p.p. +0.15 p.p. Return on Equity (ROE) 8.4% 8.8% 9.2% +0.4 p.p. +0.8 p.p. 0.80% 0.88% 0.90% Return on Assets (ROA) +0.02 p.p. +0.10 p.p. 1 Including annual contributions to the Resolution Fund of PLN 97.1 million and PLN 197.3 million in Q1/18 and Q1/19, respectively 2 Sum of ‘ Impairment on financial assets not measured at fair value through profit or loss’ and ‘Gains or losses on non -trading financial assets mandatorily at fair value through profit or loss’ (related to loans) Investor Presentation – Q3 2019 |6

Summary of Q3/19 in mBank Group Key Financials: Balance Sheet PLN million Q3/18 Q2/19 Q3/19 change QoQ change YoY 146,656 152,433 158,774 Total assets +4.2% +8.3% 94,545 103,651 108,124 Gross loans to customers +4.3% +14.4% 51,795 56,049 58,983 Retail client loans +5.2% +13.9% Corporate client loans 42,015 47,047 48,647 +3.4% +15.8% Customer deposits 102,425 110,341 115,966 +5.1% +13.2% 61,693 70,241 72,127 Retail client deposits +2.7% +16.9% Corporate client deposits 1 36,926 36,909 41,812 +13.3% +13.2% 14,803 15,681 16,091 Total equity +2.6% +8.7% Loan to Deposit ratio 89.2% 91.0% 90.3% -0.7 p.p. +1.1 p.p. 5.2% 4.8% 4.7% NPL ratio -0.1 p.p. -0.5 p.p. 62.1% 61.3% 62.5% Coverage ratio +1.2 p.p. +0.4 p.p. 17.3% 16.7% 16.8% Tier 1 Capital Ratio +0.1 p.p. -0.5 p.p. 20.2% 19.7% 19.8% Total Capital Ratio +0.1 p.p. -0.4 p.p. 1 Excluding repo / sell-buy-back transactions Investor Presentation – Q3 2019 |7

Agenda Summary of Main Trends in Q3/19 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q3/19 Loans and Deposits Total Income and its Main Components Total Costs and Efficiency Loan Loss Provisions and Portfolio Quality Capital and Liquidity Ratios Macroeconomic Update and Outlook Appendix Selected Financial Data Detailed Results of Business Lines Investor Presentation – Q3 2019 |8