Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- mBank SA (FRA:BRU, Financial) reported a strong net profit of PLN 422 million for Q2 2024, marking the highest net operating result in the bank's history when excluding certain impacts.
- The bank's net interest income (NII) adjusted for credit holidays grew by 3.5%, supported by both loans and deposits.
- mBank SA (FRA:BRU) achieved an extraordinary cost/income ratio of 27%, well below its long-term strategic target of below 40%.
- The bank's Tier 1 and total capital ratios are at comfortable levels, with buffers above KNF minimum requirements exceeding 4%.
- The bank's core business demonstrated strong performance with an ROE of 40% and a gross profit of PLN 2.7 billion, indicating resilience against FX mortgage-related burdens.
Negative Points
- mBank SA (FRA:BRU) faced high legal costs related to FX mortgage loans, impacting its financial results.
- The bank's decision not to pay dividends in 2024 aims to strengthen its equity base, reflecting challenges in capital management.
- The cost of legal risk related to loans indexed to foreign currencies reached PLN 1.03 billion in Q2 2024, indicating ongoing financial strain.
- The bank's cost of risk increased in Q2, particularly in the Corporate & Investment Banking segment, suggesting potential credit quality concerns.
- The Swiss franc mortgage portfolio remains a significant issue, with 74% of active contracts currently in court, posing ongoing legal and financial challenges.
Q & A Highlights
Q: What is the approximate level of long-term funding ratios?
A: Pascal Ruhland, Chief Financial Officer, stated that mBank is one of the most frequent issuers in the market, maintaining a strong long-term funding ratio beyond 50%, which is the highest among the top eight banks by the end of 2023.
Q: What is the share of fixed-rate mortgage loans as a percent of the total mortgage volume?
A: Pascal Ruhland mentioned that the fixed-rate mortgage loans currently make up a bit more than 30% of the total mortgage book in Polish zloty, with new sales exceeding 50%.
Q: Does the bank meet the [soft] NII requirement?
A: Pascal Ruhland confirmed that mBank comfortably meets the NII requirements, similar to the long-term funding ratio, and it is not a concern for the bank.
Q: Should we consider a 50% dividend payout from 2025 earnings?
A: Pascal Ruhland stated that while the dividend assumption for 2024 was changed to strengthen capital, the aim remains to pay 50% of the dividend from 2025 onwards.
Q: Are you planning to book more Swiss franc provisions this year?
A: Pascal Ruhland indicated that while the impact is expected to be lower in the second half of the year compared to the first half, it will remain significant.
Q: What are your expectations for lending growth in 2024 and 2025?
A: Marek Lusztyn, Chief Risk Officer, stated that the bank aims to increase market shares, with growth expectations between 4% and 5.8% in 2025, considering these figures as the floor for their ambition.
Q: Could you elaborate more on the KUKE one-off booked this quarter?
A: Marek Lusztyn explained that the KUKE one-off is a positive impact of PLN164 million recovered from receivables due to a favorable court judgment related to a case from 2008.
Q: What is the sensitivity of NII to a 100 bps drop in market interest rates?
A: Pascal Ruhland noted that the sensitivity is PLN665 million, with 60% related to the Polish zloty, representing less than 10% of the total NII contribution.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
