Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- mBank SA (FRA:BRU, Financial) achieved record quarterly revenues exceeding PLN3 billion, marking a significant milestone.
- The Swiss franc settlement program is progressing well, with a decline in new and pending court cases.
- Loan growth is evident with a 5% year-on-year increase, and mortgage loan sales exceeded PLN3.3 billion.
- The bank's personal financial management functionalities have expanded, leading to nearly 1.9 million users.
- The successful launch of a PLN500 million senior preferred green bond was almost 6 times oversubscribed, indicating strong investor confidence.
Negative Points
- The cost of risk is expected to increase in Q4 due to seasonality of corporate write-offs.
- Legal provisions related to Swiss franc mortgages increased by PLN971 million, remaining a significant financial burden.
- The net interest margin slightly decreased from 4.4% to 4.3%, indicating pressure on profitability.
- Deposit costs increased, particularly in the corporate sector, impacting the net interest margin.
- The bank anticipates a slight decrease in net interest income in 2025 due to expected interest rate cuts.
Q & A Highlights
Q: Will mBank decrease interest on deposits if the central bank stops paying interest on mandatory reserves?
A: Pascal Ruhland, CFO, explained that while a change in mandatory reserve interest rates would impact the banking sector's profitability, it would not directly translate to deposit pricing changes. Other factors would also be considered.
Q: Given regulatory changes in risk-weighted assets and expected growth, where do you see risk-weighted assets at the end of 2025, and what is your comfortable CET1 and Tier 1 ratio post-AT1 issue?
A: Pascal Ruhland stated that despite regulatory changes affecting RWA, mBank aims to maintain a Tier 1 ratio at least 2.5% above the KNF minimum, even after the AT1 transaction, while pursuing growth.
Q: What drove the increase in deposit costs this quarter?
A: Pascal Ruhland noted that the increase was primarily due to the need to remain competitive in the corporate sector's term deposit side, impacting the net interest margin.
Q: Do you plan to issue new midterm strategic KPIs like your peers, as some current ones for 2025 appear undemanding?
A: Pascal Ruhland mentioned that while mBank is not planning to issue new KPIs for 2025 immediately, they are conducting a strategy process and will announce new targets likely in autumn next year.
Q: When does mBank management see FX mortgage provisions sunsetting finally?
A: Pascal Ruhland indicated that while there is no clear end yet, the impact of FX mortgage provisions is expected to decrease each quarter, with a significant reduction anticipated by the end of 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
