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Letter of the President of the Management Board

Dear All,

I am extremely pleased to present to you the Integrated Report of mBank Group for 2017. Underlying the “Mobile Bank” strategy by 2020 is the idea of placing clients in the centre of the bank’s attention. This implies responding to their needs in the best way possible and enabling them to access mBank anytime and anywhere. This approach affects all areas of the bank’s operation, is a source of our competitive advantage and contributes to the generation of costs and revenues.

One of the key features which distinguish mBank from the consolidating Polish market is the ability to grow organically. Our customer acquisition in 2017 was once again satisfactory. We added 1,108 companies to our corporate customer base, which stood at 22,048 clients at the end of 2017. The number of mBank’s retail clients grew by 254 thousand in Poland and by more than 36 thousand in the Czech Republic and Slovakia. At the same time, the demographic structure of our client base, which is dominated by the young, allows us to assume that in the coming years the income-generating potential of mBank clients will develop, thus supporting profit growth.

As we place the client in the centre of our attention, we are aware that by offering a comprehensive range of products and services and reaching to various client groups we have a major impact on numerous consumers, including mBank clients in three countries and on their societies. We treat this impact in a responsible manner. Our products and services are provided to clients in accordance with the best market practices. In particular, we conduct regular customer satisfaction surveys. In 2017, 81% of our clients said the language we use when handling complaints was clear and as many as 100% of clients said our agreements (credit agreements, account opening agreements, etc.) were transparent and thus comprehensible. NPS, the key measure of satisfaction among corporate clients, stood at 20 in 2017 and was by 8 up compared with 2016.

We are operating in an ever-changing market environment and in a dynamically developing digital banking industry. To remain competitive and properly protect the security of data and funds entrusted to us by our clients, we must be perfectly aware of the numerous risks inherent in our operations. Consequently, we identify these risks and indicate actions taken to minimize the negative impact of our operations, and at the same time, to enhance the positive impact. In order to ensure ethical conduct of our employees, mBank’s operations are based on a number of internal and external standards and regulations, in particular our Code of Conduct, Model of Values and Behaviours of mBank Employees, CSR Strategy or the Code of Banking Ethics.

Mobility, understood as access to mBank products anytime and anywhere, is an important part of our strategy, which, among others, helps to reduce the threat of social exclusion among the inhabitants of less urbanized regions of Poland. We are relentless in our effort to constantly develop our mobile application. In April 2017, we launched a new version inspired by the opinions and habits of our users. Interestingly, July 2017 was the first month in which the number of clients logging in to their accounts via mobile devices exceeded the number of log-ins via personal computers. Our corporate clients, on the other hand, were provided with a thoroughly overhauled transactional service CompanyNet, which reduces to a minimum the number of clicks needed to perform the basic operations. In 2017, we developed an online process for setting up a business, which has won numerous awards.

Throughout 2017, in line with the “Mobile Bank” strategy, we remained highly efficient, with the costto-income ratio at 45.9%, which is way above the banking sector average. Income in 2017 hit a historic high, driven mainly by dynamic growth in net interest income and net fee and commission income, that is income from recurring business, not one-off events. Moreover, we continued to invest in future growth, especially in the IT and security area, to continuously provide our clients with innovative and reliable digital banking solutions. At the same time, we were involved in a number of other projects, including the construction of our new headquarters in Łódź.

The last year’s changes in the composition of mBank Group and our strategic initiatives reflect mBank’s focus on technological development and the opportunities it creates for an even better, more effective and innovative customer service. In February 2017, we announced the launch of mAccelerator, a fund with EUR 50 million under management. The funds will be invested in new businesses offering innovative solutions for the financial sector in the fields such as cybersecurity, biometrics, robotization of processes, artificial intelligence or digital marketing.

The first transaction made as part of the mBox project was an important confirmation of the lavish praises given to our banking platform. In June 2017, French La Banque Postale purchased a licence for mBank’s online and mobile platform. We perceive the sale of Polish know-how and the transfer of local banking ideas to world markets as proof of the innovative nature of the Polish banking sector, which has started to be noticed also abroad.

As regards our corporate social responsibility activities in 2017, special attention should be paid to the continuation of the social campaign promoting online security (#uwazniwsieci) launched 2 years ago. At the same time, mBank Foundation carried out educational projects supporting children and young people in learning maths. Our corporate social responsibility activities and our guiding values support us in fulfilling our obligations assumed as a member of United Nations Global Compact.

mBank’s inclusion in the RESPECT Index has confirmed the effectiveness of our CSR initiatives. The index consists of 28 companies listed on the Warsaw Stock Exchange which are highly praised for their activities for the environment, society and employees.

Further pursuit of the directions set in the “Mobile Bank” strategy, i.e. development of its pillars: mobility, effectiveness and empathy towards clients based on employees’ engagement and technological agility, is our priority for the next few years. We will keep on developing our mobile application for individuals, being the basic channel of contact with the bank, and enhancing and popularizing the application among corporate clients, thus strengthening our position of the “mobility icon”. In addition, we will also work on automating internal processes inside the bank to enhance operating effectiveness, which is especially vital in today’s environment of low interest rates with banking tax pushing down the profitability of the banking sector, rising regulatory requirements and changing client behaviour.

This report is a product of many months of work involving a great number of people from both the inside and outside of the bank. Our goal was to make it the best response to the expectations of our stakeholders. I wish to express special thanks to our employees, whose continued engagement contributed to mBank Group’s success last year. We are well prepared to leverage our competitive advantages and successfully meet new challenges in 2018.

I invite you to read the Report and find out more about our activities. At the same time, you are welcome to share your opinions and comments, which will allow us to continue with improving our conduct and to develop mobile, convenient and safe banking focused on the client’s needs.

Kind regards,
Cezary Stypułkowski