Letter
of
the
President
of
the
Management
Board
of
mBank
S.A.
to
the
Shareholders
Dear
Shareholders,
The
year
2021
was
very
intense
for
mBank.
Facing
an
uncertain
environment
and
a
variety
of
challenges,
we
tried
our
best
to
respond
to
clients’
needs
and
expand
our
business.
From
a
macroeconomic
perspective,
after
the
first
recession
in
almost
30
years
which
Poland
experienced
in
2020,
GDP
returned
on
track
of
moderate
growth.
According
to
the
preliminary
estimate,
its
dynamics
reached
5.7%
in
2021.
The
subsequent
waves
of
the
COVID-19
pandemic,
when
increasingly
less
severe
restrictions
were
imposed,
hit
the
economy
less
hard.
Rapidly
accelerating
since
last
Spring
inflation
finally
prompted
the
Monetary
Policy
Council
to
initiate
a
cycle
of
interest
rate
hikes
in
October.
At
the
same
time,
the
labour
market
remained
in
a
very
good
shape.
The
fall
in
unemployment
was
accompanied
by
high
wage
growth.
Salary
expectations
combined
with
rising
energy
and
commodity
prices
exerted
additional
pressure
on
costs
at
enterprises.
Those
factors
had
a
significant
impact
on
banks
which are largely
dependent on the
standing
of
their
customers.
For
2021,
mBank
Group
reported
its
first
net
loss
since
2004
of
PLN
1.2
billion.
It
did
not
in
any
way
result
from
a
weakness
of
our
business
but
was
caused
by
the
decision
to
book
very
high
costs
of legal
risk
related
to
foreign
currency
loans
in
excess
of
PLN
2.7
billion.
I
want
to
stress
very
clearly
that
our
profit
on
core
business,
excluding
this
burden,
amounted
to
PLN
1.6
billion
and
was
the
best
in
mBank’s
history.
It
would also
imply
a
return on equity
(ROE)
of
11.9%.
Our
total
revenues
reached
a
record
level
of
PLN
6.1
billion,
i.e.
higher
by
over
4%
compared
to
2020,
despite
the
still
challenging
market
conditions.
Their
largest
component
constituted
net
interest
income,
which
grew
by
2.4%
year
on
year
to
PLN
4.1
billion.
It
was
supported
mainly
by
expansion
of
volumes
and
only
to
a
limited
extent
by
the
monetary
policy
tightening
initiated
in
the
Autumn
whose
effects
will
not
become
fully
apparent
until
2022.
The
strong
improvement
of
margin
observed
during
Q4
2021
represented
a
break
from
the
negative
trend
which
had
persisted
since
the
Spring
of previous
year.
Interests
from
loans
are
recovering
at
an
accelerating
pace
while
the
high
overliquidity
in
the
banking
sector
allows
us
to
keep
the
cost
of
deposits
reduced
to
a
few
basis
points.
Dynamic
growth
in
our
net
fee
and
commission
income
continued
last
year.
The
rebound
in
customer
activity
after
the
initial
phase
of
the
pandemic
combined
with
further
adjustments
to
tariffs
and
fees
enabled
its
increase
by
25%
year
on
year
to
PLN
1.9
billion.
Most
categories
contributed
positively
to
that
development,
including
cards,
lending,
foreign
exchange,
transactionality
(transfers
and
accounts),
as
well
as
distribution
of
insurance
products.
We
attach
increasing
importance
to
adequate
pricing of
banking
services
and
transparency
in this
area.
Operating
expenses
in
2021
were
higher
by
less
than
2%.
The
reduction
of
contributions
to
the
Bank
Guarantee
Fund
made
it
possible
to
largely
offset
the
almost
10%
increase
in
personnel
costs.
The
latter
resulted
from
pay
rises
for
a
part
of
employees
and
the
Covid-related
awards
granted
in the
Autumn
to
recognise
the
commitment
and
effort
of
the
staff
put
into
the
performed
tasks
in
the
most
difficult
period
of
the
pandemic.
The
headcount
in
mBank
Group
remained
fairly
stable.
At the
end
of
December
2021,
it
was
higher
by
50
FTEs
year
on
year.
In
parallel,
we
continued
to adjust
our
organisational
structure
to
operate
even
more
productively
and
effectively
in
the
rapidly
changing
circumstances.
Maintained
budgetary
discipline
in
other
areas
enabled
further
improvement
of
our
efficiency
as
measured
by
the
cost/income
ratio
which
stood
at
40.2%.
Such
value
is
beyond
the
reach
of
most
local competitors,
ranking
us
among
the
leaders
in
the
financial
industry.
