Letter of the President of the Management Board of mBank S.A. to the Shareholders
Dear Shareholders,
The
year
of
2022
was
unprecedented
for
the
Polish
banking
sector
and
mBank
Group.
It
brought
many
events
which,
even
at
its
beginning,
could
not
have
been
predicted.
Right
in
the
middle
of
a
cycle
of
interest
rate
hikes,
we
expected
higher
income
and
significant
profitability
improvement
from
the
one-
digit
ROE
level
observed
over
the
last
few
years.
However,
the
geopolitical,
economic,
market
and
legal
situation
resulted
in
a
number
of
additional
challenges
we
had
to
face
while
at
the
same
time
pursuing our primary objective of responding to the clients’ needs and developing our business.
The
series
of
negative
events
started
with
the
Russian
invasion
of
Ukraine.
In
order
to
support
people
affected
by
the
war,
mBank
entered
into
cooperation
with
the
Polish
Center
for
International
Aid
(PCPM),
a
renowned
organisation
with
vast
experience
in
providing
humanitarian
assistance.
Our
clients
could
donate
any
amount
to
the
foundation
by
using
a
convenient
shortcut
in
our
online
banking
and
mobile
application.
mBank
also
arranged
two
customized
living
spaces
for
refugees,
a
school
and
day care, and made basic banking solutions available to Ukrainians.
At
the
end
of
April
2022,
the
government
surprised
us
by
putting
forward
a
support
package
for
borrowers,
which
the
banking
sector
had
not
been
consulted
on
in
any
way.
It
comprised
three
pillars:
the
widely
available
“credit
holidays”,
aid
for
clients
with
temporary
problems
granted
from
the
Borrowers’
Support
Fund
and
a
plan
to
introduce
a
new
reference
rate
to
replace
WIBOR.
The
first
of
the
said
solutions
turned
out
to
generate
particularly
high
costs,
resulting
in
extensive
and
unjustified
transfer
of
the
economic
value
from
banks
to
mortgage
borrowers,
who
could
suspend
instalment
payments
regardless
of
their
financial
situation.
The
total
impact
on
the
main
institutions
in
the
sector
is
estimated
at
approx.
PLN
13
billion.
I
am
strongly
opposed
to
this
form
of
assistance,
also
due
to
potential
long-term
consequences
it
may
have
not
only
for
banks,
but
in
a
broader
sense
as
well.
It
may,
among
others,
substantially
limit
the
economy
financing
potential
or
result
in
growing
moral
hazard shaping undesirable attitudes in the Polish society.
Another
challenge
we
had
to
confront
in
2022
in
order
to
ensure
stability
and
security
of
the
Polish
banking
sector
was
to
agree
on
the
right
approach
to
the
looming
bankruptcy
of
Getin
Noble
Bank.
The
primary
goal
was
to
avoid
mass
deposit
withdrawals
and
secure
undisrupted
access
to
services
and
funds
for
clients
so
as
not
to
generate
a
general
threat
to
the
financial
system
as
a
whole
and
undermine
clients’
trust
in
it.
In
June,
together
with
seven
other
commercial
banks,
we
announced
the
launch
of
a
protection
scheme
serving
as
an
additional
mechanism
strengthening
the
sector’s
resilience.
As
a
result,
the
member
banks
were
obliged
to
contribute
to
an
aid
fund,
which
gave
rise
to
yet
another
unexpected
cost.
The
collected
funds
in
the
amount
of
PLN
3.47
billion
were
earmarked
for
the
resolution
of
Getin
Noble
Bank
initiated
by
the
Bank
Guarantee
Fund
at
the
end
of
September.
This
unfavourable
operational
environment,
aggravated
by
defective
functioning
of
the
Polish
judicial
system
and
a
negative
trend
in
court
decisions
in
CHF
cases,
led
to
mBank
Group
posting
a
net
loss
totalling
PLN
703
million
in
2022.
This
second
negative
result
in
a
row
did
not
again
by
any
means
originate
from
the
weakness
of
our
business,
but
was
caused
by
the
government
interventions
and
our
decision
to
book
very
high
legal
risk
provisions
related
to
foreign
currency
loans
in
the
amount
of
more
than
PLN
3.1
billion.
I
want
to
stress
very
clearly
that
our
pre-tax
profit
on
core
business,
net
of
the said burdens, would exceed PLN 4.9 billion and be the best in mBank’s history.
Our
total
revenues
reached
the
record-high
level
of
PLN
7.8
billion,
i.e.
more
by
28%
compared
to
2021.
The
largest
contributor
was
net
interest
income,
which
grew
by
43%
year
on
year
to
PLN
5.9
billion.
The
key
determinant
of
this
dynamics
was
a
never
seen
before
scale
of
monetary
policy
tightening.
The
Polish
Monetary
Policy
Council
raised
the
reference
rate
from
1.75%
in
December
2021
to
6.75%
in
September
2022.
It
was
accompanied
by
a
strong
improvement
of
margin,
which
excluding
the
impact
of
“credit
holidays”
in
the
amount
of
PLN
1.3
billion
stood
at
3.7%
annually.
Higher
market
rates
boosted
asset
profitability.
However,
since
Q2
2022,
we
have
been
observing
the
materializing
effect
of
deposit
repricing
and
an
increase
in
funding
costs,
which
has
already
partly
reduced
positive
implications
of
interest
rate
hikes.
We
succeeded
to
continue
a
dynamic
growth
of
our
net
fee
and
commission
income
last
year.
Higher
customer
activity
and
transactional
turnover
allowed
to
expand
it
in
a
double-digit
pace
of
14%
year
on
year,
to
PLN
2.1
billion.
Most
categories
contributed
to
that
development,
including
payment
cards,
FX
exchange,
lending,
money
transfers
and
accounts,
as
well
as distribution of insurance products and trade finance.