Mbank Sa · GPW:MBK
Mbank Sa — Debt Investor Presentation (May 2017)
51 slides from Mbank Sa's debt investor presentation, May 2017
Slide 1: mBank Group: A Leading Bank in One of EU's Strongest Economies
mBank Group A Leading Bank in One of EU’s Strongest Economies Debt Investor Presentation
Slide 2: Disclaimer (1/2)
Disclaimer (1/2) These materials have been prepared by mBank S.A. (the "Bank"). Any person or entity considering making any investment based upon information contained in these materials should ensure that they are properly, independently and professionally advised. These materials were designed for
Slide 3: Disclaimer (2/2)
Disclaimer (2/2) This document is an advertisement and not a prospectus and investors should not subscribe for or purchase any securities referred to in this document except on the basis of information in any prospectus to be published by the Bank. Copies of the updated base prospectus in respect of
Slide 4: Agenda
Agenda Key Investment Highlights mBank Group’s Performance - Financial Results - Balance Sheet - Asset Quality - Funding & Capital Transactions Overview Appendices - Additional Information on the Polish Economy - Additional Information on the Polish Banking Sector - Detailed mBank Group’s Financial
Slide 5: Key Investment Highlights
Key Investment Highlights A leading universal bank in Poland 1 A resilient economy with 2 fundamentals supporting growth prospects A profitable and well-capitalized 3 banking sector Leading market positions, highly efficient platform 4 underpinning strong Prudent risk financial results management an
Slide 6: mBank Group in a snapshot
mBank Group in a snapshot General description Key financial data (PLN M) • Poland’s 4th largest universal banking group in terms of total 2013 2014 2015 2016 assets and customer gross loans and 5th by deposits as at the Net loans 68,210 74,582 78,434 81,763 end of March 2017 Assets 104,283 117,986 1
Slide 7: Poland – one of EU's most resilient economies
Poland – one of EU’s most resilient economies Strengths Contributions to GDP growth mBank’s 6 forecast The largest economy in the CEE with almost 50% of region’s 4.6 5 4.2 4.2 4.2 4.2 gross domestic product1 3.8 4 3.1 3.3 3.4 3.3 3.3 3.6 2.9 3.0 Track record of steady growth despite prolonged tu
Slide 8: Sound fundamentals for the banking business
Sound fundamentals for the banking business Relatively strong labour market Inflation rebounded from historically low levels, as in other CEEs Unemployment rate – 31.03.2017 Harmonised indices of consumer prices (HICP) 7% 9.5% 6% 8.0% 5% 4% 3% 2.7% 5.3% 2.6% 4.3% 2% 1.8% 3.2% 1% 0% -1% -2% Jan-12 Ju
Slide 9: A profitable and well-capitalized banking sector
A profitable and well-capitalized banking sector Banking sector penetration in Poland Capitalisation and Funding – the Polish banking sector % GDP - 2016 2014 – 2016 growth TCR & CET 1 ratio Loan-to-deposit ratio 35.5% 14.6% 17.7% 16.3% 102.0% 102.2% 102.2% 12.0% 12.3% 15.7% 98.9% 14.7% 21.4% 18.6%
Slide 10: Unique story of successful organic growth
Unique story of successful organic growth Brief history Number of retail customers (thou.) mBank CZSK 1986 mBank developed its operations from Retail loans: PLN 48.3 B +99 Retail deposits: PLN 53.8 B Poland corporate banking. Since its establishment 5,447 [as of 31.03.2017] 5,348 in 1986 the bank ha
Slide 11: Highly efficient platform underpinning strong financial results
Highly efficient platform underpinning strong financial results Composition of mBank Group’s profit before income tax – 2016 mBank Group’s key market shares in volumes as of 31.03.2017 9.8% Financial Markets 7.4% and Other 7.1% 6.5% 6.0% 6.2% 62.5% Retail 5.1% Banking Corporates 30.4% and Investment
Slide 12: Prudent risk management and a robust balance sheet
Prudent risk management and a robust balance sheet mBank Group’s NPL ratio below the market level Loan-to-Deposit ratio reflects excess liquidity levels 6.9% 6.4% 110.6% 6.3% 5.7% -1.7 pp 103.0% 5.4% 5.2% 96.7% 92.1% 89.4% 2013 2014 2015 2016 03/17 Sector 2013 2014 2015 2016 03/17 03/17 A well funde
Slide 13: Highlights of mBank Group's 2016-2020 strategy: Empathy, Mobility, Efficiency
Highlights of mBank Group’s 2016-2020 strategy Specific business actions will be based on three strategy pillars 1 2 3 Empathy Mobility Efficiency Be the point of reference in Grow while keeping the FTE Offer the best customer terms of mobile banking base at current level experience i.e. give
Slide 14: Highlights of mBank Group's 2016-2020 strategy
Highlights of mBank Group’s 2016-2020 strategy Financial performance targets – 5 key measures Financial measure Target point 1 Cost efficiency: Top3 in Poland, every year Cost/Income ratio to be one of three most efficient listed banks in Poland 2 Top3 in Poland, every year Owner’s capital profitabi
Slide 15: Agenda
Agenda Key Investment Highlights mBank Group’s Performance - Financial Results - Balance Sheet - Asset Quality - Funding & Capital Transactions Overview Appendices - Additional Information on the Polish Economy - Additional Information on the Polish Banking Sector - Detailed mBank Group’s Financial
Slide 16: mBank Group's historical performance
Historical View Balance Sheet mBank Group’s historical performance Asset Quality Funding & Capital Total income & Net Interest Margin Total costs & C/I ratio (PLN M) (PLN M) One-off regulatory costs 2.2% 2.3% 2.1% 2.3% 2.4% 45.7% 44.9% 50.1% 45.7% 53.4% Trading & other CAGR CAGR NFC +5% +5% NII 4,09
Slide 17: mBank Group's historical performance
Historical View Balance Sheet mBank Group’s historical performance Asset Quality Funding & Capital Total Assets Equity & Total Capital Ratio (PLN B) (PLN M) 19.38% 14.66% 17.25% 20.29% 21.59% CAGR +9% -2% CAGR +8% +2% 123.5 133.7 130.5 118.0 13,051 13,338 104.3 11,073 12,275 10,256 2013 2014 2015 20
Slide 18: Balance Sheet Analysis: Assets & Liabilities
Historical view Balance Sheet Balance Sheet Analysis: Assets & Liabilities Asset Quality Funding & Capital Structure of Assets Structure of Liabilities (PLN B) (PLN B) 133.7 133.7 130.5 130.5 11.9 8.1 6.4 5% 123.5 9.9 8% 123.5 118.0 118.0 8.5 9.1 13.1 13.3 10% 5.9 10.8 104.3 31.4 104.3 12.3 12.7 31.
Slide 19: Balance Sheet Analysis: Currency Structure
Historical view Balance Sheet Balance Sheet Analysis: Currency Structure Asset Quality Funding & Capital Currency Structure of Loans to Customers (net) Currency Structure of Amounts due to Banks and Customers1 (PLN B) (PLN B) 81.8 81.7 103.8 78.4 3.4 3.3 4% 99.8 97.0 6.3 74.6 3.0 1.5 1.2 2% 2.6 6.3
Slide 20: Balance Sheet Analysis: Structure of Loans & Deposits
Historical view Balance Sheet Balance Sheet Analysis: Structure of Loans & Deposits Asset Quality Funding & Capital Structure of mBank Group’s Gross Loans Structure of mBank Group’s Deposits as of 31.03.2017 as of 31.03.2017 Public sector Corporate Public sector Corporate clients clients: loans and
Slide 21: Balance Sheet Analysis: Loan Portfolio Structure
Historical view Balance Sheet Balance Sheet Analysis: Loan Portfolio Structure Asset Quality Funding & Capital mBank Group’s Sector Exposure by Industry as of 31.03.2017 Households Real estate management 11.6% Building industry 1.2% 1.2% Food sector 1.4% 1.4% Transport and logistics 1.6% 1.4% Wholes
Slide 22: mBank's client base resilient to CHF strengthening
Historical view Balance Sheet mBank’s client base resilient to CHF strengthening Asset Quality Funding & Capital Distribution of mBank’s CHF mortgage borrowers by Debt-to-Income (DtI) levels As of 31.12.2014 Assumptions for 31.03.2017: As of 31.03.2017 • CHF LIBOR rate at -0.73% Average DtI for 2007
Slide 23: Quality of mBank Group's Loan Portfolio
Historical view Balance Sheet Quality of mBank Group’s Loan Portfolio Asset Quality Funding & Capital mBank Group’s Impaired Loans Portfolio mBank Group’s NPL Ratio (PLN M) 6.3% 6.4% -3% 5.7% mBank Group applies 4,915 5.4% a conservative client- 4,424 4,631 4,537 5.2% 4,393 oriented approach in its
Slide 24: Loan Loss Provisions & Cost of Risk
Historical view Balance Sheet Loan Loss Provisions & Cost of Risk Asset Quality Funding & Capital Net Impairment Losses on Loans and Advances mBank Group’s Cost of Risk by Segment (PLN M) (bps) 72 515.9 70 477.8 -13% 54 421.2 46 41 212.6 80 79 180.1 365.4 65 67 197.0 80.5 62 57 56 52 297.7 303.3 284
Slide 25: Funding structure details
Historical view Balance Sheet Funding structure details Asset Quality Funding & Capital mBank Group’s funding structure mBank’s ratings Loan to Deposit Ratio as of 31.03.2017 110.6% Fitch Retail +2.6 pp Other 103.0% deposits Long-term Subordinated liabilities 4% 46% rating BBB 96.7% 2% 92.1% EMTN Sh
Slide 26: A stable CHF funding profile
Historical view Balance Sheet A stable CHF funding profile Asset Quality Funding & Capital mBank’s CHF funding composition as of 31.03.2017 4,562 1,500 47.1% direct CHF long-term funding 250 400 1,967 445 CHF portfolio CHF loans CHF Subloans CHF EMTN Long-term cross Short-term market currency swaps
Slide 27: Issuance activity on the Covered Bonds Market
Historical view Balance Sheet Issuance activity on the Covered Bonds Market Asset Quality Funding & Capital Covered Bonds Issuance Summary of Mortgage Covered Bonds issued in 2014-2017 (PLN M, by year) Amount Currency Issue date Maturity date Tenor (years) Coupon Private placement of EUR 70 M and PL
Slide 28: Key regulatory ratios: capitalisation & liquidity
Historical view Balance Sheet Key regulatory ratios: capitalisation & liquidity Asset Quality Funding & Capital mBank Group’s Total Capital Ratio mBank’s NSFR and LCR 21.59% 199% 20.29% 187% 19.38% 2.83% 2.97% 168% 17.25% 17.02% 5.17% 149% 144% 2.96% 14.66% 2.42% 116% 113% 114% 109% 109% Basel III r
Slide 29: Agenda
Agenda Key Investment Highlights mBank Group’s Performance - Financial Results - Balance Sheet - Asset Quality - Funding & Capital Transactions Overview Appendices - Additional Information on the Polish Economy - Additional Information on the Polish Banking Sector - Detailed mBank Group’s Financial
Slide 30: First tranche: 3-year EUR 500 M, Senior Unsecured
First tranche: 3-year EUR 500 M, Senior Unsecured Transaction details Distribution by investor location United Kingdom Issuer BRE Finance France SA Austria 19% 11% Benelux Guarantor mBank S.A. (formerly BRE Bank SA) 9% 9% Switzerland Senior Unsecured Debt Format out of EMTN programme 7% 36% 2% Franc
Slide 31: Second tranche: 5-year CHF 200 M, Senior Unsecured
Second tranche: 5-year CHF 200 M, Senior Unsecured Transaction details Distribution by investor location Issuer BRE Finance France SA Guarantor mBank S.A. (formerly BRE Bank SA) Liechtenstein 6% Switzerland 89% Senior Unsecured Debt 5% Germany Format out of EMTN programme Issue rating A (Fitch) / BB
Slide 32: Third tranche: 5-year EUR 500 M, Senior Unsecured
Third tranche: 5-year EUR 500 M, Senior Unsecured Transaction details Distribution by investor location Issuer mFinance France S.A. Poland United Kingdom 15% 13% Guarantor mBank S.A. CEE (excl. Poland) 11% Senior Unsecured Debt Format 11% Austria & out of EMTN programme 47% 3% Switzerland Germany Ot
Slide 33: Fourth tranche: 7-year EUR 500 M, Senior Unsecured
Fourth tranche: 7-year EUR 500 M, Senior Unsecured Transaction details Distribution by investor location Issuer mFinance France S.A. France United Kingdom 24% 14% Guarantor mBank S.A. Poland 9% Senior Unsecured Debt Format 9% out of EMTN programme Switzerland Germany 4% 40% & Austria Others Issue ra
Slide 34: Fifth tranche: 4-year EUR 500 M, Senior Unsecured
Fifth tranche: 4-year EUR 500 M, Senior Unsecured Transaction details Distribution by investor location Poland Issuer mFinance France S.A. United Kingdom & Ireland 15% Switzerland Guarantor mBank S.A. 16% 10% 9% France Senior Unsecured Debt Format out of EMTN programme 8% Spain & Germany 36% 6% Port
Slide 35: Agenda
Agenda Key Investment Highlights mBank Group’s Performance - Financial Results - Balance Sheet - Asset Quality - Funding & Capital Transactions Overview Appendices - Additional Information on the Polish Economy - Additional Information on the Polish Banking Sector - Detailed mBank Group’s Financial
Slide 36: Developments of Polish zloty and other EM currencies
Developments of Polish zloty and other EM currencies Emerging Markets currencies v. EUR, index 01.01.2011=100 220 210 200 190 180 170 160 150 140 130 120 110 100 90 80 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17
Slide 37: Growth-supporting policies and flexible exchange rate
Growth-supporting policies and flexible exchange rate Growth-oriented policies Cautious monetary policy Historically low interest rates are supporting business lending • Clearly defined monetary policy target (2.5% +/-1 p.p.) and reducing the interest burden faced by households • Lack of asset pur
Slide 38: The economy set to accelerate beyond 4% YoY in 2017
The economy set to accelerate beyond 4% YoY in 2017 Strong growth in investment after a year of drought Consumption is set to remain a key pillar of growth 12% 9% -25 8% 8% 7% -30 6% 4% 5% 0% 4% -35 3% -4% 2% -40 1% -8% 0% -12% -1% -45 2011 2012 2013 2014 2015 2016 2017 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09
Slide 39: Stable rates in 2017 but markets might show more disbelief
Stable rates in 2017 but markets might show more disbelief Waiting for cracks in the rate setters’ consensus Polish assets: after a big rally Inflation averaged -0.6% in 2016 but now it is surging to Polish assets enjoyed a major rally in recent weeks, with 4-year highs (2% in March and April).
Slide 40: Credit growth is low, L/D ratios below 100%
Credit growth is low, L/D ratios below 100% Corporate loans and deposits (% YoY) Household loans and deposits (% YoY) 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% -5% -10% -5% Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 Sep-15 May-16 Jan-17 Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 Se
Slide 41: Asset quality trends in Poland
Asset quality trends in Poland Development of NPL ratios by country Improving risk indicators in Poland – NPL ratios by sector 2013 13% 16.8% 15.6% 2014 12% 2015 12.7% 11% 10% 8.9% 8.1% 9% 7.6% 5.6% 8.7% 8% 5.6% 5.3% 6.4% 6.2% 5.2% 5.6% 5.1% 5.3% 7% 7.0% 6% 6.1% 5% Dec-09 Sep-10 Jun-11 Mar-12 Dec-12
Slide 42: Mortgage penetration and home ownership in Poland
0.9 0.7 2.4 Romania 95.6 1.2 2.8 Bulgaria 79.5 14.6 3.1 9.2 Slovakia 77.9 11.3 1.5 POLAND 72.8 10.9 4.5 11.8 Hungary 67.6 18.7 4.8 8.9 Source: Eurostat (data updated on 25.10.2016). Slovenia 65.4 10.8 4.8 19.0 Greece 61.0 14.1 19.8 5.1 Owner, no outstanding mortgage or housing loan Czech Republic 59
Slide 43: Consolidated Profit and Loss Account under IFRS
Consolidated Profit and Loss Account under IFRS Quarterly results (PLN thou.) 2013 2014 2015 2016 Net interest income 2 225 811 2 490 658 2 511 373 2 832 843 Net fee and commission income 834 738 901 690 897 176 906 445 Dividend income 26 856 19 992 17 540 3 327 Net trading income 342 978 369 156 29
Slide 44: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position Assets (PLN thou.) 2013 2014 2015 2016 Cash and balances with Central Bank 1 650 467 3 054 549 5 938 133 9 164 281 Loans and advances to banks 3 471 241 3 751 415 1 897 334 3 082 855 Trading securities 763 064 1 163 944 557 541 3 800 634 Derivative financ
Slide 45: Development of Total Income and Total Costs
Development of Total Income and Total Costs Development of Total Income Development of Total Costs (PLN M) (PLN M) 45.7% 44.9% 50.1% 45.7% Cost/Income ratio +5% +4% +7% 4,295 +16% -4% 4,093 change change 3,939 556 ‘16/‘15 2,051 1,963 ‘16/‘15 +6% 3,674 685 194 11 547 1,771 151 -18.8% 136 +10.5% 613 1
Slide 46: Net Interest Income & Margin
Net Interest Income & Margin Interest Income Structure Interest Expense Structure (PLN M) (PLN M) 2.21 2.35 2.13 2.30 NIM [%] +6% 1,724.2 3,950.0 3,956.3 77.2 3,872.9 88.6 13.5 138.1 27.2 3,660.5 80.7 64.1 196.8 1,465.6 66.8 192.0 157.5 74.1 77.3 -9% 229.3 1,149.1 13.8 1,040.0 79.0 12.0 2,841.2 2,83
Slide 47: Fee and Commission Income & Trading Income
Fee and Commission Income & Trading Income Fee and Commission Income Structure Net Trading Income Structure (PLN M) (PLN M) +8% 1,550.8 369.2 1,433.9 343.0 1,399.6 218.5 -16% 1,303.8 199.1 60.4 188.9 292.9 136.1 166.8 4.2 168.8 244.6 116.7 149.8 106.6 280.7 255.1 268.6 243.2 111.0 142.0 91.6 123.0 2
Slide 48: Changing funding base towards more diversification
Changing funding base towards more diversification Evolution of mBank Group’s Funding Mix Development of mBank Group’s Own Funds 100% 4% (PLN M) 2% 13,940 11% Other 13,244 80% 7% 11,971 Subordinated debt 11,400 9,751 60% 30% Debt securities in issue Medium & long-term funding1 40% Corporate deposits
Slide 49: mBank's mortgage client domicile in Poland
mBank’s mortgage client domicile in Poland mBank’s portfolio distribution – by province Unemployment rate – by province as of 31.03.2017 Pomorskie Pomorskie 7.0% 10.2% Warmińsko-Mazurskie Warmińsko-Mazurskie Zachodnio- Zachodnio- 14.1% 2.0% Pomorskie Pomorskie 4.4% Podlaskie 10.7% Podlaskie Kujawsko
Slide 50: mBank's Management Team
mBank’s Management Team Cezary Stypułkowski Przemysław Gdański Vice-President of the Management Board President of the Management Board Head of Corporate and Investment Banking Chief Executive Officer • Between 1993 and 2002 in IBP Bank and then ABN AMRO Bank • Since 2002 in BPH, where in 2006 took
Slide 51: Contact details
Contact details Karol Prażmo Direct dial: +48 22 829 17 12 Head of Group Treasury E-mail: [email protected] Ernest Pytlarczyk Direct dial: +48 22 829 14 34 Head of Investor Relations and Group Strategy, E-mail: [email protected] Chief Economist Paweł Lipiński Direct dial: +48 22 829 15