Results of mBank Group Q2 2018 Strong revenue momentum continued. - PowerPoint PPT Presentation

Results of mBank Group Q2 2018 Strong revenue momentum continued. Accelerating loan and deposit volumes. Management Board of mBank S.A. Investor Presentation July 31, 2018

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 first half of 2018, prepared under the International Financial Reporting Standards. For more detailed information on the Bank’s and Group’s results, please refer to the respective financial statements and data. Estimates presented in this document rely on historical experience and other factors, including expectations concerning future events, which seem justified under the given circumstances. 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 the Bank and its subsidiaries. This presentation has been completed as of the date indicated at the beginning and will not be updated. Investor Presentation – Q2 2018 |2

Agenda Summary of Main Trends in Q2/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q2/18 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 – Q2 2018 |3

Key highlights of Q2 2018 Net profit of PLN 287.4 M (+6.6% YoY), quarterly dynamic impacted by a one-off Historically high core income of PLN 1,103.3 M despite lower insurance fees  Net interest income at PLN 854.4 M (+11.7% YoY) on increasing volumes and changing asset mix  Net fee and commission income at PLN 249.0 M (-1.4% YoY), with continuously rising client activity Total revenues growing to PLN 1.2 B (+11.8% YoY) , costs under control (+4.9% YoY)  Normalized Cost/Income ratio at 44.1% confirming high efficiency, anchored in optimal platform Positive trends in volumes, dynamic growth in core products  Gross loans at PLN 92.7 B (+4.7% QoQ, +7.5% YoY), acceleration in corporate and retail segment  Customer deposits at PLN 97.8 B (+3.7% QoQ, +10.9% YoY), strong inflows to retail current accounts Focus on higher margin lending reflected in changing asset mix  New production of non-mortgage loans reached a record level of PLN 2.33 B (+22% YoY)  Rising sales of housing loans at PLN 1.15 B (+15% YoY); faster reduction of CHF portfolio (-9.2% YoY) Capital ratios well above regulatory requirements and sound liquidity level  Consolidated Tier 1 Capital Ratio at 17.10% and Total Capital Ratio at 20.06% 1 Good asset quality supported by conservative risk management approach  Cost of risk at 99 bps on higher provisioning in the corporate segment after particularly low Q1/18  Stable NPL ratio at 5.2% and improved coverage ratio at 60.4% confirming loan portfolio resilience Attractively-priced issuance of CHF-denominated bonds under EMTN programme 1 Stand-alone capital ratios were Tier 1 Capital Ratio of 20.21% and Total Capital Ratio of 23.65% Investor Presentation – Q2 2018 |4

Summary of Q2/18 in mBank Group Business Development of Retail Banking and Corporate Banking Retail Banking Number of Clients (thou.) Market shares +275  Start of enhancing mBank’s 6.6% 6.5% 6.5% +87 +87 6.4% internet banking through 6.3% iterative changes of its online 5,508 5,421 5,234 364 368 transactional platform 319 916 910 895 6.1% 6.1%  Apple Pay mobile payments 6.0% 5.9% 5.9% 4,228 4,020 4,142 available to mBank’s clients, who can add their Visa or MasterCard credit or debit 06/17 03/18 06/18 06/16 12/16 06/17 12/17 06/18 cards to the Wallet app mBank PL mBank CZSK Orange Finance Loans Deposits Corporate Banking Resegmentation Number of Clients Market shares starting from 2018 +1,434  New, redesigned credit process 10.1% 10.0% 9.6% 9.6% 9.5% for K3 segment (total exposure +618 up to PLN 2 M) based on more 22,934 22,316 21,500 automated assessment (incl. 2,148 2,156 2,119 standardized documentation, 7,551 6.5% 7,465 6.4% 6,835 6.3% 6.3% 6.1% simplified catalogue of 13,235 12,546 12,695 collaterals, risk criteria)  Offer of liquidity products 06/17 03/18 06/18 06/16 12/16 06/17 12/17 06/18 following the launch of VAT K1 K2 K3 Loans Deposits split payment 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 – Q2 2018 |5

Summary of Q2/18 in mBank Group Key Financials: Profit and Loss Account Q2/17 Q1/18 Q2/18 PLN million change QoQ change YoY Net interest income 764.8 816.4 854.4 +4.6% +11.7% 252.6 268.9 249.0 Net fee and commission income -7.4% -1.4% 1 1,080.9 1,380.6 1,208.2 Total income -12.5% +11.8% -468.2 -483.7 -487.9 Total costs (excl. BFG) +0.9% +4.2% 2 -16.9 -117.3 -20.8 Contributions to the BFG -82.3% +23.0% 3 -120.4 -121.8 -217.1 Loan loss provisions and fair value change +78.3% +80.3% 475.4 657.8 482.5 Operating profit -26.7% +1.5% Taxes on the Group balance sheet items -93.0 -98.5 -98.3 -0.2% +5.7% Profit before income tax 382.4 559.6 384.5 -31.3% +0.6% Net profit 269.7 411.0 287.4 -30.1% +6.6% 2.43% 2.59% 2.56% Net Interest Margin -0.03 p.p. +0.13 p.p. Cost/Income ratio 44.9% 43.5% 42.1% -1.4 p.p. -2.8 p.p. Cost of Risk 0.58% 0.57% 0.99% +0.42 p.p. +0.41 p.p. Return on Equity (ROE) 8.2% 11.9% 8.3% -3.6 p.p. +0.1 p.p. 0.83% 1.26% 0.83% Return on Assets (ROA) -0.43 p.p. 0.00 p.p. 1 In Q1/18 mBank Group sold an organised part of the enterprise of mFinanse and booked a one-off gain of PLN 219.7 million (pre-tax) 2 Including annual contributions to the Resolution Fund of PLN 97.1 million in Q1/18 3 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’ Investor Presentation – Q2 2018 |6

Summary of Q2/18 in mBank Group Key Financials: Balance Sheet PLN million Q2/17 Q1/18 Q2/18 change QoQ change YoY 129,417 133,640 140,018 Total assets +4.8% +8.2% 86,221 88,528 92,680 Gross loans to customers +4.7% +7.5% 48,758 48,825 51,134 Retail client loans +4.7% +4.9% Corporate client loans 36,143 38,760 40,756 +5.2% +12.8% 88,156 94,309 97,794 Customer deposits +3.7% +10.9% 53,835 57,720 59,903 Retail client deposits +3.8% +11.3% Corporate client deposits 1 31,702 33,183 34,454 +3.8% +8.7% 13,680 14,486 14,521 Total equity +0.2% +6.1% 90.8% Loan to Deposit ratio 94.6% 91.6% +0.8 p.p. -3.0 p.p. 5.0% 5.1% 5.2% NPL ratio +0.1 p.p. +0.2 p.p. 60.2% 57.7% 60.4% Coverage ratio +2.7 p.p. +0.2 p.p. 18.5% 17.9% 17.1% Tier 1 Capital Ratio -0.8 p.p. -1.4 p.p. 21.2% 20.9% 20.1% Total Capital Ratio -0.8 p.p. -1.1 p.p. 1 Excluding repo / sell-buy-back transactions Investor Presentation – Q2 2018 |7

Agenda Summary of Main Trends in Q2/18 Business Development of Retail and Corporate Segment Key Financials Analysis of the Results after Q2/18 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 – Q2 2018 |8

Results of mBank Group: Loans to customers Upward trend in loans extended in both corporate and retail segment Development of Gross Loans and Advances to Customers Gross Loans to Corporate Entities (PLN M) (PLN M) +12.8% +7.5% +5.2% +11.7 % +4.7% +7.2% +3.8% +3.0% 40,756 38,760 92,680 38,288 37,942 36,143 88,484 88,528 790 1% 87,388 86,221 1,248 943 1,303 1,321 1% 44% 40,756 38,288 38,760 36,143 37,942 42% 06/17 09/17 12/17 03/18 06/18 Gross Loans to Retail Customers (PLN M) +4.9% +5.1% +4.7% 51,134 55% 48,949 57% 48,758 48,143 48,825 +2.7% 51,134 48,758 48,949 48,825 48,143 14,882 12,432 12,944 13,843 13,277 2,321 2,312 2,288 2,272 2,245 34,005 33,963 33,693 32,593 32,737 06/17 09/17 12/17 03/18 06/18 Individual clients 06/17 09/17 12/17 03/18 06/18 +X.X% Excluding FX effect Corporate clients Mortgage loans: to Individuals to Microfirms Non-mortgage loans Public sector & Other receivables Investor Presentation – Q2 2018 |9