[G4-4, G4-8, G4-9, FS6] mBank’s Retail Banking segment serves 5,348 thousand individual clients and microenterprises in Poland, the Czech Republic and Slovakia online, directly through the call centre, via mobile banking and other state-of-the-art technological solutions, as well as in a network of 154* branches. The Bank offers a broad range of products and services including current and savings accounts, accounts for microenterprises, credit products, deposit products, payment cards, investment products, insurance products, brokerage services, and leasing for microenterprises. In 2013, the Bank launched a modern, user-friendly online platform (New mBank) designed from scratch, which provides more than 200 new functionalities, solutions and improvements.
Key financial data (at the end of 2016):
Key business data:
|Distribution network (pcs.)
|Loans to retail clients, incl.:
|Deposits of retail clients
- Increase in the retail customer base by more than 400 thousand year on year.
- More than 1.3 million of mobile application’s users, up by 21.9% year on year.
- Sales of PLN 6.1 billion worth of non-mortgage loans, up by 25.9% year on year.
- Increase of retail deposits by 16.0%, mainly driven by growing current accounts (+17.2% year on year).
- Increase of the value of payment card transactions carried out by mBank by 21.2%; increase in the number of card transactions by 27.8% year on year.
- Increase of core income to PLN 2,596.0 million, i.e. up by 9.7% year on year.
* Including 138 in Poland Polsce and 16 in Czech Republic and Slovakia; excluding mFinanse (43) and mKiosks (119).
Summary of Retail Banking segment financial results
The Retail Banking segment generated a profit before tax of PLN 1,023.9 million in 2016, which represents a decrease by PLN 36.8 million, i.e. 3.5% year on year.
in PLN M
|Net interest income
|Net fee and commission income
|Net trading income
|Gains less losses from investment securities,
investments in subsidiaries and associates
|Net other operating income
|Net impairment losses on loans and advances
|Overhead costs and amortization
|Taxes on Group's balance sheet items
|Profit before tax of Retail Banking
The profit before tax of Retail Banking in 2016 was driven by the following factors:
- Increase in total income by PLN 230.0 million, i.e. 9.7% year on year to PLN 2,596.0 million. Increased income from the core business: net interest income went up by PLN 196.9 million (due to the change in the structure of credit portfolio – increasing share of high margin products), and net fee and commission income was higher by PLN 10.4 million (rise in the number of payment cards issued, the number and volume of transactions as well as in lending and insurance commissions). Moreover, the increase in total income was stimulated by a rise in gains less losses from investment securities, investments in subsidiaries and associates by PLN 36.4 million, driven by the booking of the settlement of the takeover of Visa Europe Limited by Visa Inc. (in 2015 the profit was posted due to the sale of BRE Ubezpieczenia TUiR and the signing of agreements accompanying the sale with AXA Group companies).
- Increase in operating expenses (including amortisation) by PLN 31.2 million, i.e. 2.9% year on year, driven mainly by the 20.4% growth in amortisation.
- Increase in net impairment losses on loans and advances by PLN 60.7 million, i.e. 27.0% year on year caused by a change in the structure of the retail loans portfolio with the rising share of non- mortgage loans (unsecured loans) and weaker zloty against the Swiss franc and the euro.
- Tax on the Group’s balance sheet items at PLN 178.5 million.
Activity of the Retail Banking area (Bank)
|Number of retail clients, including:
|The Czech Republic
|Loans to retail clients, including:
|The Czech Republic
|Deposits of retail clients, including:
|The Czech Republic
|Investment funds (Poland)
|Credit cards, including
|Debit cards, including:
|Advisory Centres within "One Network" Project
|Light branches within "One Network" Project
|mBank (former Multibank)
|mKiosks (incl. Partner Kiosks)
|mFinanse Financial Centres
|Czech Republic & Slovakia
Product mix, acquisition and marketing
In 2016, the number of retail banking clients of mBank rose by 400.5 thousand, mainly thanks to active acquisition, focused marketing efforts, product mix development and effective cross-selling.
In 2016, mBank considerably simplified the offer of personal accounts and withdrew the following products: eKonto, eKonto mobilne, eKonto mobilne plus and mKonto Multi. They were replaced with the eKonto account in two versions: eKonto with a standard tariff and eKonto with a plus tariff. Both accounts include a mechanism releasing the client from a debit card fee in a situation when the client makes at least five cash-less transactions a month using the card.
mBank continues its marketing campaign based on a slogan: “Follow what you borrow”, stressing clear lending rules and repayment security. The main aim of the campaign is to build awareness that mBank has an attractive credit offer and create an image of the bank boasting the simplest lending conditions. Measures taken within the Responsible Lending initiative are an inherent part of the campaign and communication, and a comprehensive credit guide, the one of its kind on the market, addressed to mBank’s clients, “Credit ABC”, is a crowning achievement of that action.
Moreover, in June 2016 mBank launched the third edition of the promotion encouraging clients to actively use mBank’s mobile application (Mobile Clients Have It Better - 3rd edition).
In 2016, mBank cooperated with a key player on e-commerce market - PayU - in the scope of granting instalment loans for online shopping, reaching high sales of this product (an increase by approx. 170% of the value of granted loans).
The development of the area of cash and instalment loans focused also on the range of cross-selling initiatives, offering clients i.a.:
- the fully remote process of consolidation of loans from other banks;
- a possibility to increase funding under a cash loan in a quick and simple way;
- an option to split payments debiting their current and savings accounts into instalments.
The Bank made it possible for its retail clients to apply for child benefits under the Family 500+ Programme.
In 2017, the retail banking will take up challenges based on the use of the new sources of information about clients, such as e-public administration or social media.
Offer for small and medium-sized enterprises
In the area of small and medium-sized enterprises (SME), one of the main achievements in 2016 was the launch of mAccounting developed in cooperation between mBank and SuperKsięgowa (Extor S.A.). Thanks to the exchange of basic data between banking and accounting systems, SMEs receive benefits which so far have only been available to corporate clients, including automatic monitoring of payments, quick invoicing, simplified invoice payment, analysis of business partners, electronic settlement of tax returns and up-to-date tax data.
With the aim to acquire new clients, mBank incorporated a new promotion “Good start with mBank” into the offer of company accounts. When opening a company account, the client may also order a stamp, a card holder and business cards for his/her new business. This offer is available in mBank’s outlets, and since August 2016 it has been offered via direct channels - on the Internet and in the call centre.
Moreover, in an attempt to broaden its offer for small and medium-sized enterprises, the Bank and Akademickie Inkubatory Przedsiębiorczości (Academic Business Incubators, owner of Business Link, an office network) launched a new promotion “mBusiness account plus office”. All clients who decide to open company accounts will be offered free access to Business Link infrastructure for a period of 6 months. Business Link operates 11 business development hubs available round the clock, which makes it the largest such network in Poland. The offices are located in 10 largest Polish cities. As part of the Partner’s ecosystem, the clients will have an unlimited access to the office space in the largest Polish cities and will have the chance to meet with mentors/experienced entrepreneurs who can show them possible development opportunities and help them establish valuable business relations with other businessmen, while innovative companies may seek help in finding investors.
2016 was yet another period in which mBank confirmed its leading role in the e-Commerce and m- Commerce transaction area. The Mobile mTransfer solution, making the mTransfer service available in the mobile channel, was once again appreciated by the market in the “Debut of the Year” category at Ekomersy 2015 gala. In addition, Mobile mTransfer was recognised in the Mobile Trend Awards 2016 competition and won 1st award for “Company supporting the popularisation of mobile techniques and technologies” and a Special Award - 2nd place in a vote by Internet users. For more information about awards for mBank Group in 2016, go to section 6.1. Key projects and innovations of mBank Group.
At the beginning of 2016 mBank also expanded the mPlatforma Walutowa service, an FX platform (dedicated to small and medium-sized enterprises) with individual clients segment, offering them mKantor. mKantor offers all the benefits of mPlatforma Walutowa: making transactions in two clicks, very attractive FX rates, and the possibility to make transactions via the mobile application.
In the area of financing of companies a new product was added to the product offer: an overdraft facility guaranteed by COSME (an EU programme aimed at the strengthening of competitiveness of companies), which combines higher credit amounts with attractive terms of financing. In the case of investment loans with de minimis guarantee and registered pledge, the collateral catalogue was expanded so that mortgage is no longer the main security for the loan.
In March 2016 mBank also obtained the consent of the Minister of Digital Affairs to establishing a centre of confirmation of ePUAP (electronic public administration services platform) trusted profiles, starting the process of integration of the Bank with electronic public administration services. At the same time, the Bank offered account maintenance services to limited partnerships, associations, schools and educational institutions.
The mobile application, launched in February 2014, has won a large group of new users over the last three years, and based on a survey of actual needs of the clients, has been enriched with a number of new features. Mobile banking services are used systematically by over 1.3 million clients, an average user does banking via mobile devices 18 times a month. The “mBank PL” application offers a wide range of convenient and unique solutions, e.g. the “loan in 30 seconds” which now accounts for 18% of overall cash loan sales.
Following the positive reception of the new features introduced in 2015, such as the payment of invoices using QR code scanning, NFC payments for Android system (available to Orange subscribers), and the option to change the authorisation limits on payment cards, mBank decided to pursue further development.
In 2016 we introduced a number of new features and improvements into the application, including:
- “mLine in a click” service, which allows clients to connect with mLine consultants directly from the application, without the need to use one’s ID and telecode;
- option to change card transaction limits;
- possibility of logging into the application with a fingerprint;
- express transfers using telephone numbers within the BLIK system;
- possibility of purchasing travel insurance (at present, 15% of travel insurance policies are bought via the application);
- “Payment Assistant” service which reminds clients of all regular payments, suggesting the amount due and the payment date and allowing them to quickly settle invoices;
- mobile Authorisation - a service allowing users to authorise transactions made in the transaction system via the mobile application. Instead of typing passwords received in a text message, all that the client needs to do is to log into the application and accept (or reject) a given transaction with one click.
In February 2016, the mobile application was ranked the best banking application in the Mobile Trends Awards competition, and in September it won the "Newsweek Friendly Bank" ranking in the “Mobile Banking” category. For more information about awards for mBank Group in 2016, go to section 6.1. Key projects and innovations of mBank Group.
Cooperation with AXA Group
In 2016 the cooperation with mBank’s strategic partner in the insurance sector, AXA Group, was continued. It started in 2015, along with the finalisation of the sale of shares in BRE Ubezpieczenia TUiR and conclusion of distribution agreements, governing long-term cooperation between mBank Group and AXA Group with regard to the distribution of insurance products.
Works are pending on intensifying cross-selling and stand-alone sales among the Bank’s clients.
In the insurance area, in 2016 the Bank made travel insurance available in the mobile channel and launched civil liability insurance (OC) and comprehensive motor insurance (AC) for small and medium-sized enterprises. Moreover, the Bank offered a new product, individual term life insurance, which is sold in the network of mBank and mFinanse.
mBank: get cancer off your chest (odetchnij pełną piersią)
The above slogan was used in mBank’s campaign supporting its clients in their decision on taking out insurance in case of developing malignant breast cancer. The activities were aimed at women who tend to forget about themselves in the daily hustle and bustle. The campaign lasted until the end of November 2016.
Breast cancer is the type of cancer most frequently diagnosed in women in Poland. According to some sources, over 16 thousand Polish women develop breast tumor yearly. What is worse, the majority of patients are diagnosed when the cancer is already at an advanced stage, whereas early detection gives patients the best chance of treating the tumor successfully. In Poland, as little as one in four women use the opportunity to undergo free mammography. This is why education and prevention are of major importance.
The campaign was related to breast cancer, but the insurance covers much more. The product is addressed to both women and men, and it covers a long list of malignant tumours. The insurance is available in three versions. The maximum amount to be paid to a client in the event of cancer diagnosis is PLN 100 thousand. The product was developed in co-operation with the insurance company AXA, which also co-organises all activities.
Cooperation with Orange
It has already been two years since the joint-venture of mBank and Orange, Poland’s leading landline telephone, mobile, Internet and data transfer provider, called Orange Finanse, was launched.
At the end of 2016, the number of Orange Finanse accounts reached over 330 thousand, including approximately 100 thousand opened in 2016 alone. Orange Finanse became one of mBank’s key acquisition channels.
2016 was a period of changes in the product offer supported by marketing campaigns promoting the Orange Finanse brand among the existing and prospective clients of Orange. The key component of the new offer is the option for active users of the Bank’s services to lower their monthly phone bills in a period of up to 24 months. A new, more comprehensive credit offer was introduced in June 2016. The existing clients of Orange Finanse can now take out cash loans of up to PLN 150 thousand in all Orange stores.
In 2016, Orange Finanse was enhanced with new interesting functionalities in the mobile application and online banking. For example, by clicking a dedicated button in the mobile application, the users of all platforms can now quickly get in touch with the Bank’s contact centre, a one-of-a-kind solution on the market. Another novelty is the Payment Assistant sending text messages reminding them of upcoming transfers.
H2 2016 was marked with further efforts to improve selling competences of Orange stores’ employees. Tests of new selling scenarios and client communication methods were conducted and a series of training sessions was implemented to broaden the knowledge on Orange Finanse products.
In September, Orange Finanse ranked second in the mobile banking category of the Newsweek’s Friendly Bank ranking (mBank ranked first). This means advantage over competition in terms of easy navigation in mobile application, effective channels of communication with the Bank and services and functionalities available in the application.
For more information about the strategic cooperation with Orange, go to chapter 6.1.Key projects and innovations of mBank Group.
Development of the retail banking offer in Poland
The graph below presents the structure of the Retail Banking loan portfolio in Poland at the end of 2016:
In 2016 new sales of non-mortgage loans amounted to PLN 5,639.5 million, up by 25.3% year on year. Sales of mortgage loans in 2016 stood at PLN 2,186.9 million (including sales of mBank Hipoteczny), which represents a decrease of 36.5% year on year. The drop in sales of mortgage loans, with non-mortgage loans increasing at the same time, was mainly driven by changes in the strategy and focus on sales of higher margin products.
2016 was another year when the portfolio of non-mortgage loans granted to households grew dynamically, by PLN 1,662.4 million, i.e., 18.7% year on year. The portfolio of mortgage loans stood at PLN 34,112.7 million, with an increase by PLN 639.3 million year on year.
The NPL ratio of the mortgage loan portfolio slightly dropped year on year, and stood at 3.7% at the end of 2016.
Deposits and investment funds
In 2016, the balance of savings products (term deposits and savings accounts) grew by PLN 6,453.9 million, which represents a 16.4% rise compared with the end of 2015. The strong sales results in the area of savings products were possible thanks to a number of initiatives taken, including:
- implementation of the effective process of term deposits retention, which aims at retaining the base of maturing term deposits and strengthening the long-term relations with the Bank’s clients;
- special offers supporting cross-selling - promotional offer of Open-end Investment Funds combined with term deposits;
- introduction of the umbrella fund Promising mFunds (in Polish: mFundusze Dobrze Lokujące) comprising three strategies of investment funds, varying in terms of risk;
- implementation of subscriptions for investment certificates of Closed-end Investment Funds and structured certificates;
- enabling clients to invest in new subscriptions for structured deposits;
- introduction of public offering of corporate bonds for retail clients.
The balances of deposit products increased while the financial discipline was maintained.
The growth in retail clients’ deposit base was accompanied by a slight rise in spending on investment products. Due to unfavourable situation on capital markets in H1 2016, the Bank offered its clients mainly solutions characterized by low or highly-limited investment risk (e.g. structured products, money market funds). In H2 2016, the Bank conducted a subscription of the umbrella fund Promising mFunds and a subscription of investment certificates of Closed-end Investment Funds. In December 2016, the Bank participated in the public offering of corporate bonds.
At the end of 2016, retail deposits in Poland amounted to PLN 45,727.6 million compared with PLN 39,273.6 million at the end of 2015.
Since 2016, young clients of mBank have been offered new credit cards of the Mastercard Me series. Thanks to these cards, they can express their individuality and satisfy their financial needs at the same time. mBank’s card won the title of “the most innovative card in Poland”, and its commercial was hailed “the best card product commercial in Polish media” at the 2016 Polish Card Gala. Moreover, clients voted mBank one of the top three providers of “the most beautiful Polish card of the year” in 2016 in an online voting. What is so innovative about the card is the possibility of designing its layout and placing one’s own picture or a picture from the Bank’s gallery on it, or alternatively choosing a transparent card.
In 2016, the value of payment card transactions made by mBank’s retail clients exceeded PLN 26 billion, which represents a rise by 21.2% year on year. The number of transactions made by mBank clients grew by 27.8% year on year. mBank’s credit cards are also characterised by a very high average number of transactions per client. The market share of transactions made with the use of mBank’s cards stood at 12.6% at the end of September 2016.
Brokerage operations and asset management
In May 2016, the brokerage services rendered by Dom Maklerski mBanku and mWealth Management were subject to integration within the Bank, as a result of which all brokerage operations of mBank Group are currently offered through mBank Brokerage Bureau, which is an organisational unit of the Bank.
The operations of mWealth Management were taken over by mBank’s Retail Banking segment. In 2016, the Bank developed its comprehensive wealth management services including investment advisory and asset management. The assets managed by Private Banking remained stable year on year and stood at PLN 5.2 billion at the end of 2016.
The year 2016 ended with a great success in respect of the strategies managed as part of asset management services dedicated to mBank’s Private Banking clients. In the latest ranking of asset management by GG Parkiet for Q4 2016, mBank took the leading positions in almost all categories. Aggressive share strategy, sustainable growth model portfolio, stable growth model portfolio and conservative model portfolio ranked first in their categories. In acknowledgement of the top quality services, the Bank received the Euromoney award for the best private banking and wealth management offer in Poland for the eighth time.
The Brokerage Bureau of mBank (BM) provides a comprehensive offer of brokerage services to the largest Polish institutional investors (pension funds, investment funds, asset managers), foreign funds, and individual clients, i.e. retail and affluent clients. The Brokerage Bureau enables clients to trade on regulated markets in Poland and abroad as well as on the OTC (FOREX/CFD) market. As part of wealth management services, clients may use investment advisory and asset portfolio management services. The Bureau is an active player on the primary market – it prepares and conducts public offerings (IPO/SPO/ABB).
At the end of 2016, the Brokerage Bureau maintained 300.3 thousand brokerage accounts (including 5.4 thousand Forex/CFD-related accounts and 1.4 thousand accounts held by financial institutions), which represented an increase by 1.3 thousand year on year.
Retail Banking in the Czech Republic and Slovakia
In 2016, in the Czech Republic and Slovakia, mBank acquired 72.9 thousand clients (out of which 17.2 thousand clients in Slovakia, and 55.7 thousand clients on the Czech market).
The activity of mBank in the Czech Republic and Slovakia in 2016 was focused on intensifying its acquisition efforts, as well as continually building the position of a mobile bank of reference.
The offer was expanded with (as was the case in Poland) a new current and savings account for young clients, which develops alongside the client’s needs in terms of pricing and functionalities.
The branch network modernisation is on track: two new “light branch” financial centres were opened in the Czech Republic and Slovakia. Also, 12 new outlets specialising in banking services were opened as a result of cooperation with Broker Consulting, a Czech agent on the financial services market. mBank is the main banking partner in this undertaking. The cooperation also led to the introduction of two new co-branded cards: a debit and a credit card.
In addition, mBank in the Czech Republic and Slovakia also extended its offer by adding four new debit cards to the offer: gold debit card, debit phone sticker, debit card for entrepreneurs and debit card for the young. Three new credit cards were also added to the offer.
The activity of mBank in the Czech Republic and Slovakia in 2016 won several awards. mBank’s account for entrepreneurs was ranked first on the market, while mKonto account and online banking ranked second in the Zlata Koruna contest. Additionally, mBank’s mortgage loan for refinancing real estate was ranked third in the weekly newspaper Trend. Apart from that, mBank’s mobile application was yet again appreciated, this time with the Golden PCNews award, as one of the best on the Slovak market. mBank in the Czech Republic received the title of “Superbrand 2016”, becoming one of the strongest brands on the local market.
Loans and deposits
At the end of 2016, the loan portfolio of mBank clients in the Czech Republic and Slovakia stood at PLN 4,279.7 million, which represents an increase by PLN 455.7 million, i.e. 11.9% compared with the end of 2015.
The Bank pursued targeted initiatives to grow sales of non-mortgage loans. In 2016 the sales of non- mortgage loans amounted to PLN 489.4 million, up by 25.3% year on year. Sales of non-mortgage loans in the Czech Republic amounted to PLN 361.2 million, up by 24.6% year on year. At the same time, sales of non-mortgage loans in Slovakia increased by 66.1% year on year and stood at PLN 128.2 million.
Sales of mortgage loans decreased by 34.6% year on year to PLN 692.5 million in 2016. Sales of mortgage loans in the Czech Republic totalled PLN 551.0 million compared with PLN 751.3 million in 2015 (i.e. - 26.7%), while in Slovakia it stood at PLN 141.6 million (down by 54.0% year on year). The drop was the consequence of sales efforts in the area of credit products with higher margin and the changes in pricing policy of mortgage loans.
The Bank’s deposit base in the Czech Republic and Slovakia increased by PLN 1,563.5 million or 24.5%. compared to the end of 2015.