Letter from the Chairwoman of the Supervisory Board of mBank S.A. to
Shareholders
Dear Shareholders,
The
weakening
global
economy
was
in
the
spotlight
in
2024
as
leaders
sought
to
balance
productivity
and
sustainability
while
grappling
with
the
lingering
effects
of
inflation,
changes
in
monetary
policy,
and
looking
for
ways
to
ensure
growth
in
the
age
of
artificial
intelligence.
This
has
not
been
easy
in
a
dramatically
changing
world,
guided
by
globalisation
over
the
past
decades
and
now
facing
new
geopolitical
risks.
The
rise
of
nationalism
and
protectionism,
armed
conflicts
in
Ukraine
and
the
Middle
East,
polarising
populist
decisions,
antagonising
political
scene
and
socio-economic
relations
are
all
having
an
adverse
impact
on
financial
stability.
Navigating
these
complexities
requires
the
European
Union
and
Poland,
which
has
taken
over
the
Presidency
of
the
Council
of
the
EU,
to
strengthen
security
in
the
broadest
sense,
including
external
security
and
energy
security,
economic
freedom,
improve
the
competitiveness
of
the
economy,
and
build
up
resilience in the supply chains.
Growth
in
the
European
Union
fluctuated
around
0.8
percent
in
2024,
a
result
of
weak
consumption
and
cautious
investment
decisions
combined
with
stagnation
of
Poland's
largest
trading
partner,
Germany.
Against
this
backdrop,
Poland
performed
better
and
recorded
an
economic
recovery.
According
to
preliminary
data
from
Statistics
Poland
(GUS),
GDP
grew
by
2.9%
in
2024,
an
acceleration
from
the
0.1%
growth
in
2023.
Consumer
prices
rose
by
4.7%
year
on
year
in
December
2024,
and
average
annual
inflation
was
3.6%.
Rising
energy
and
food
prices
were
among
the
factors
that
contributed
to
the
rise
in
inflation
in
the
second
half
of
2024.
These
conditions
influenced
the
decisions
of
the
Monetary
Policy
Council
(RPP),
which kept interest rates in 2024 steady, unchanged since October 2023.
Although
Poland's
economic
growth
rate
is
higher
than
in
other
European
countries,
its
acceleration
is
still
insufficient
to
finance
the
necessary
armament
and
energy
transition
and
to
face
geopolitical
and
structural
risks,
including
the
ageing
population.
Stronger
economic
growth
and
competitiveness
of
the
Polish
economy
cannot
be
achieved
without
a
significant
reduction
in
energy
costs,
which
are
160%
higher
than
in
the
United
States
according
to
estimates
of
the
Bruegel
Institute.
In Poland,
high
energy
costs
and
the
longest
power
outages
in
Europe
will
also
pose
an
obstacle
to
the
development
of
generative
artificial
intelligence
technology.
The
scale
of
investments
in
the
energy
transition
towards
renewable
energy
sources
is
enormous
and
represents
a
great
development
opportunity
for
Poland,
leading
to
independence
from
foreign
energy
sources.
According
to
the
World
Bank's
2024
estimates,
such
independence
will
require
an
investment
of
USD
450
billion
over
the
next
25
years.
A
significant
part
of
this
expenditure
is
required
to
gradually
replace
legacy
assets
but
significant
outlays
will
be
required
to
finance
new
green
technologies.
Poland
is
the
sixth
economy
in
the
EU
where
approximately
60%
of
energy
consumption
comes
from
fossil
fuels.
Investment
needs
are
greater
than
in
other
EU
countries
of
comparable
size,
not
least
because
of
the
need
to
catch
up
with
the
other
member
states.
The
implementation
of
investment
plans
in
Poland
depends
and
will
continue
to
depend
to
a
large
extent
on
the
banks'
ability
to
finance
the
economy.
Banks
in
Poland,
as
in
the
EU,
are
the
main
source
of
external
financing.
Meanwhile,
2024
analyses
by
the
Polish
Bank
Association
show
that
banks
in
Poland
are
still
too
small
in
relation
to
the
size
of
the
economy
(around
90%).
Furthermore,
Poland
is
one
of
the
countries
with
the
lowest
investment
rates
in
the
European
Union
and
the
smallest
share
of
long-term
loans
in
the
absence
of
clear
incentives
to
lend.
In
order
to
amplify
the
banks'
ability
to
finance
the
economy,
it
is
imperative
to
increase
the
banks'
capital,
which
is
difficult
to
achieve
under
the
persistently
highest
public
sector
burdens
in
Europe
and
additional state interventions.
Despite
a
range
of
demanding
challenges
posed
by
the
dynamic
external
environment,
the
mBank
Group
generated
its
highest
ever
income
at
PLN
12.0
billion.
The
main
driver
of
growth
was
net
interest
income,
which
increased
by
10.3%
year
on
year.
Effective
management
of
deposit
and
loan
margins
and
the
treasury
securities
portfolio
in
a
high
interest
rate
environment
undoubtedly
underpinned
this
result.
Consequently,
the
interest
margin
increased
from
4.18%
in
2023
to
4.35%
in 2024.
Similar
to
previous
years,
the
cost
of
legal
risks
associated
with
foreign
currency
mortgage
loans
remains
a
significant
burden.
Case
law
unfavourable
to
banks
prevailed
in
2024.
However,
the
number
of
new
lawsuits
has
been
falling
steadily
for
five
consecutive
quarters.
The
mBank
Group
recognised
legal
risk
costs
related
to
foreign
currency
loans
of
PLN
4.3
billion
in
the
profit
and
loss
account
for
2024,
compared
with
PLN
4.9
billion
in
2023.
These
costs
were
mainly
due
to
an
update
of
forecasts
of
the
number
of
litigation
cases
and
the
adopted
model
parameters,
taking
into
account,
among
others,
the
expected
cost
associated
with
adverse
court
decisions
and
the
number
and
cost
of
settlements.
The
Bank
has
consistently
continued
to
implement
its
settlement
programme
for
borrowers
as
an
alternative
to
lengthy
and
costly
litigation.
The
Bank
signed
nearly
10,000
settlements
with
clients
in
2024
and
more
than
22,900
settlements
since
the
launch
of
the
programme
in
September
2022.
This
demonstrates
the
high
efficiency
of
efforts
in
this
area.
The
coverage
of
the
portfolio
of
CHF-indexed
loans
with
provisions
stood
at
147%,
ensuring
very
strong
protection
for
the
Bank
in
the
event
of
the
materialisation
of
legal
risks
relating
to
foreign
currency
loans.
Furthermore,
the
steadily
decreasing
number
of
active
loan
contracts
and
the
decrease
in
the
number
of
pending
court
cases
offer
prospects
of
final
recognition
of
legal
risk
costs
related to foreign currency loans in 2025.
The
mBank
Group
closed
2024
with
a
net
profit
attributable
to
shareholders
of
PLN 2
243
million
compared
to
PLN
24
million
in
2023.
It
must
be
stressed
that
the
financial
performance
of
the
core
business,
i.e.
excluding
the
FX
Mortgage
Lending
segment,
corroborates
the
actual
potential
of
the
business
model
and
offers
a positive
outlook
necessary
to
continue
organic
growth
and
increase
shareholder
value.
The
mBank
Group's
core
business
generated
a
net
profit
of
PLN
5
638
million
in
2024,
a
year-on-year
increase
of
22.4%.
ROE
in
2023
was
39.7%.
The
Bank
maintained
strict
discipline
of
cost
efficiency,
which
ensured
a
stable
level
of
the
cost/income ratio (C/I) year on year: 28.2% in 2024 vs. 28.5% in 2023.
The
Bank
successfully
continues
to
mitigate
the
impact
of
negative
factors
exerting
pressure
on
capital
ratios
by
maintaining
robust
capital
buffers,
including
Tier
1
and
TCR (14.5% and 15.9% for Tier 1 and TCR ratios, respectively, at the end of 2024).
This
was
possible,
among
others,
due
to
the
placement
of
bonds
with
a
wide
range
of
investors,
which
qualify
as
AT1
capital.
Demand
for
the
bonds
amounted
to
PLN 1.76
billion
and
the
Bank
raised
PLN
1.5
billion,
the
maximum
expected
value
of
the
issue.
mBank
was
the
first
commercial
bank
in
Poland
to
take
advantage
of
this
opportunity
and
successfully
complete
this
landmark
transaction
in
December
2024.
In
addition,
the
MREL
requirements
were
more
than
met
with
the
issuance
of
green
senior
unsecured
bonds
with
a
total
nominal
value
of
EUR
500
million
under
the
EMTN
Programme.
Once
again,
the
Bank
completed
a
transaction
in
line
with
the
mBank
Group's
Green
Bond
Framework,
and
the
transaction
proved
attractive
to
investors,
as
evidenced
by
the
oversubscription.
The
Bank
also
demonstrated
stability
and
security
in
liquidity
management.
This
is
demonstrated
by
the
high
levels
of
the
liquidity
ratios
LCR
and
NSFR
and
the
net
loan-to-deposit
ratio at 60.5%.
The
mBank
Group's
strategy
for
2021-2025,
"From
an
icon
of
mobility
to
an
icon
of
possibility",
laid
the
foundation
for
such
performance.
The
Supervisory
Board
acknowledged
the
Management
Board
report
on
the
status
of
implementation
of
the
strategy
and
reviewed
the
key
objectives
and
business
metrics
of
the
Group's
main
development
directions.
The
Bank
is
continuously
adapting
its
business
model
to
primarily
provide
solutions
meeting
current
needs
of
clients.
Retail
banking
services
have
been
further
developed
with
a
particular
focus
on
promoting
regular
investment
and
securing
a
sustainable
future
beyond
retirement
age
by,
among
others,
launching
a
mobile
calculator
to
help
define
the
appropriate
amounts
to
be
saved
in
order
to
achieve
individual
goals.
In
addition,
the
Bank
in
cooperation
with
Morele
gives
all
users
of
the
mobile
app
access
to
a
service
with
the
full
functionality
of
a
state-of-the-art
e-commerce
platform
offering
1.5
million
products
in
around
2,000
categories
without
having
to
be
redirected
to
an
external
environment.
It
is
with
genuine
satisfaction
that
I
note
the
following:
the
mBank
Group
knows
that
banks
are
key
to
unlocking
green
financing
and
therefore
the
mBank
Group
remains
an
important
provider
of
financing
for
green
projects
and
transition
to
a net-zero
economy.
mBank
supports
corporate
clients,
including
large
companies
as
well
as
the
SME
sector
and
individual
clients,
in
their
green
transition
by
engaging
financial
capital
and
providing
competences
and
technology.
The
total
value
of
sustainable
finance
in
the
corporate
area
reached
PLN
16.1
billion
at
the
end
of
2024,
equal
to
the
sum
of
loans
granted
and
capital
mobilised.
The
financing
granted
to
companies
at
PLN
7.6
billion
as
at
the
end
of
2024
went
to
renewable
energy
projects,
sustainability-linked
loans,
and
transactions
compliant
with
the
criteria
of
the
EU
Taxonomy
or
mBank's
ESG
Strategy.
Capital
mobilised
on
the
market
amounted
to
PLN
8.5
billion.
This
includes
syndicated
financing
and
the
bank's
involvement
in
corporate
clients'
green
bond
issues
of
nearly
PLN
1.5
billion.
With
regard
to
retail
clients,
mBank
increased
the
annual
sales
of
mortgages
for
low
energy
demand
properties
in
accordance
with
the
NZEB-10%
(Nearly
Zero
Energy
Building)
standard
to
13.2%
of
the
total
volume
of
mortgages
granted
in
2024.
The
mBank
Group
is
also
developing
an
investment
offering
that
takes
into
account
sustainability
factors,
and
has
set
a
target
of
50%
of
investment
solutions
offered
by
the
Brokerage
Office
and
mTFI
SA
that
promote
environmental
or
social
aspects,
subject
to
disclosure
requirements
under
Article
8
of
the
SFDR
(Sustainable
Finance
Disclosure
Regulation).
Thus,
as
of
the
beginning
of
2025,
half
of
all
investment
solutions
are
classified
as
“light
green”.
At
the
same
time,
mBank
continued
to
work
on
decarbonisation
and
reducing
its
carbon
footprint.
In September
2024,
mBank
submitted
climate
targets
in
line
with
a
science-based
approach
for
validation
to
the
Science
Based
Targets
Initiative
(SBTi).
The
Bank
was
preparing
to
publish
a
sustainability
report
in
line
with
the
Corporate
Sustainability
Reporting
Directive
(CSRD).
I
hope
that
it
will
provide
stakeholders
with
a
full
picture
of
the
Bank's
impact
on
the
environment
and
allow
for
a
better
presentation of the effects of the strategy under implementation.
The
mBank
Group
has
successfully
implemented
various
initiatives
to
build
an
inclusive
working
environment.
The
Management
Board
made
efforts
to
achieve
one
of
the
goals
of
senior
management:
to
increase
the
representation
of
women
on
the
management
bodies
of
mBank's
key
subsidiaries
to
40%
by
the
end
of
2026.
It
should
be
noted
that
with
a
view
to
ensuring
a
diverse,
equitable
and
inclusive
work
environment,
mBank
reduced
the
pay
gap
to
3.2%
in
2024.
In
support
of
financial
health
and
education
of
clients,
mBank
announced
in
June
2024
that
UNEP
FI
will
pursue
the
objective
to
increase
and
maintain
the
financial
resilience
and
financial
health
of
Poles
by
supporting
them
in
managing
their
spending
and
building
a
financial
cushion.
The
goal
is
to
increase
the
percentage
of
retail
clients
who
consider
themselves
financially
resilient
to
a
minimum
of
50%
by
the
end
of
2025.
This
is
just
a
selection
of
the
measures
that
have
contributed
to
the
recognition
of
the
Bank's
progress
in
social
responsibility
and
sustainability
with
the
upgrade of mBank's MSCI ESG Ratings from A to AA (leader) in 2024.
What
is
key
for
mBank
is
communication
with
shareholders
and
other
stakeholders.
The
high
utility
value
of
the
Bank's
reports
is
proved
by
the
fact
that,
for
the
twelfth
consecutive
year,
the
Bank
won
the
special
award
"The
Best
of
the
Best"
in
the
latest
edition
of
The
Best
Annual
Report
competition
organised
by
the
Institute
of
Accounting
and
Taxation
in
recognition
of
the
best
annual
reports
in
the category of financial institutions.
On
behalf
of
the
entire
Supervisory
Board,
I
would
like
to
express
my
great
thanks
to
the
Management
Board
and
all
mBank
employees
for
their
cooperation
and
commitment,
and
to
you,
dear
Shareholders,
for
the
trust
you
have
placed
in
us.
I am
confident
that
mBank
will
continue
to
successfully
achieve
its
business
goals
in
2025
through
consistent
implementation
of
its
strategy,
and
that
this
will
bring
the
expected
return
on
investment
and
stable
development
of
mBank
that
is
so
important to clients, employees, regulators, and other stakeholders.
Professor Agnieszka Słomka-Gołębiowska
Chairwoman of the Supervisory Board