Letter of the President of the Management Board of mBank S.A. to the Shareholders
Dear Shareholders,
In
2024,
the
number
of
challenges
and
a
scale
of
uncertainties
faced
by
the
Polish
banking
sector
did
not
diminish,
and
the
macroeconomic,
geopolitical,
regulatory
and
business
operating
environment
did
not
become
any
less
complex.
We
saw
an
increasing
build-up
of
legal
risk
with
regard
to
the
activities
conducted
by
lenders.
In
addition
to
unfavourable
rulings
in
Swiss
franc
mortgage
cases,
there
were
attempts
to
sue
financial
institutions
on
other
grounds,
such
as
the
so-called
“free
loan
sanction”
or
challenging
the
WIBOR
rate.
Stable
and
high
interest
rates
provided
vital
support
for
the
banks’
financial
results.
Following
the
two
cuts
by
a
total
of
100
basis
points
in
the
autumn
2023,
the
Monetary
Policy
Council
did
not
decide
to
make
any
changes
throughout
2024.
Lending
remained
subdued, and investment growth continued at low level.
The
year
2024
was
very
successful
for
us
financially
and
brought
several
records
in
terms
of
results.
We
achieved
the
highest
net
profit
in
the
history
of
mBank
Group,
totalling
more
than
PLN
2.2
billion,
thanks
to
revenue
growth,
good
cost
discipline
and
lower
loan
loss
provisions.
We
were
able
to
do
this
despite
the
fact
that
each
of
last
year’s
quarters
was
still
significantly
burdened
by
the
cost
of
legal
risk
associated
with
the
portfolio
of
foreign
currency
mortgage
loans,
which
in
total
reduced
the
reported
result
by
PLN
4.3
billion.
I
would
like
to
emphasise
that
since
the
beginning
of
the
Swiss
franc
saga, the provisions have consumed PLN 16.5 billion, which is the equivalent of mBank's equity.
One
of
our
priorities
in
2024
was
to
effectively
manage
the
issue
of
foreign
currency
loans
in
order
to
limit
the
risks
and
losses
they
generate
for
the
bank.
We
did
not
slow
down
in
concluding
settlements.
During
the
year,
we
signed
nearly
10,000
of
them,
including
with
borrowers
in
dispute.
In
total,
since
the
start
of
the
programme
in
September
2022,
we
have
reached
22,900
agreements
with
clients.
In
parallel,
we
have
seen
a
steady
decline
in
the
inflow
of
new
lawsuits
for
five
consecutive
quarters.
There
has
also
been
a
consistent
decrease
in
the
number
of
active
contracts
and
pending
court
cases,
which
fell
by
25%
to
16,000
in
2024.
These
trends
and
significant
buffers
in
the
form
of
provisions
allow
us to expect 2025 to be the last year materially burdened by legal risk costs.
In
2024,
we
generated
record-high
total
revenues
of
PLN
12.0
billion.
Their
main
component
was
the
best-ever
net
interest
income
of
nearly
PLN
9.6
billion.
On
a
comparable
basis,
i.e.
excluding
the
impact
of
“credit
holidays”,
it
grew
by
10.3%
year-on-year.
Favourable
interest
rate
environment
in
Poland,
active
shaping
of
the
product
and
term
structure
of
the
balance
sheet,
as
well
as
enhanced
management
of
deposit
offer
allowed
for
improvement
of
the
net
interest
margin
by
16
basis
points
compared
to
2023
to
4.35%.
Net
commission
income
was
higher
by
2.9%
year-on-year
and
approached
PLN
2.0
billion.
Elevated
costs
related
to
client
compliance
processes
and
intermediation
in
the
sale
of
products
were
offset
by
positive
dynamics
of
fees
from
payment
cards,
bank
accounts,
transfers, lending activity and insurance.
We
maintained
leading
operational
efficiency,
as
evidenced
by
the
cost-to-income
ratio
of
28.2%.
Despite
significant
inflationary
pressure,
we
managed
spending
within
approved
limits
and
defined
budgets.
Total
costs
increased
in
relation
to
2023
by
10.2%
to
PLN
3.4
billion.
Compulsory
contributions
paid
by
the
bank
were
down
by
19.3%
year-on-year
and
only
included
a
charge
to
the
Resolution
Fund
set
by
the
Bank
Guarantee
Fund
for
2024
in
the
amount
of
PLN
147
million.
The
double-digit
dynamic
of
personnel
expenses
was
a
function
of
salary
increases
for
our
employees
and
development
of
headcount
in
the
Group,
which
expanded
by
250
FTEs
during
the
year.
Material
costs
went
up
in
the
IT,
consulting
services
and
marketing
area,
reflecting
ongoing
business
and
regulatory
projects
aimed
at
enhancing
customer
experience,
strengthening
cybersecurity,
ensuring
compliance and modernising our digital platforms.
The
marked
reduction
in
risk
costs,
which
reached
49
basis
points
in
2024,
was
a
confirmation
of
good
financial
standing
of
our
clients
and
prudent
underwriting
policies.
The
annual
change
in
potential
impairment
losses
was
partially
distorted
by
negative
one-off
effects
that
inflated
the
base
in
2023.
The
high
quality
of
our
assets
was
evidenced
by
the
NPL
ratio,
oscillating
well
below
the
average
for
the
Polish
sector.
At
the
end
of
2024,
it
stood
at
4.1%,
supported
by
regular
sales
of
non-performing
receivables and effective debt collection and restructuring processes.