Shareholders

mBank shares have been listed on the Warsaw Stock Exchange (WSE) since 1992, therefore we continuously monitor the sentiment on a domestic stock market. The situation on the WSEwas largely affected by foreign investors’ sentiment towards the emerging markets basket. A stronger US dollar and further monetary tightening in the United States in 2018 drove investors to move their assets from riskier markets to US bonds. Despite favourable economic situation in Poland and outstanding GDP growth compared with other EU economies, the WSE was adversely affected by the outflow of foreign capital. This was caused by a stronger dollar, rising US Treasury yield and by investors realising profits generated in 2017, which was a good year for the equity market. Domestic capital also failed to provide a boost to the stock exchange. Share prices were under pressure from a redemption of shares in equity funds managed by investment fund companies (TFI) coupled with reduced demand on the part of open-end pension funds. Trends in global equity markets were not of much help, either. Since January 2018, many of them have seen share prices in decline or under consolidation.

mBank’s share price at close of trade in 2018 (December 28) stood at PLN 424.20, which represents a decline by 8.8% compared with the last trading day of 2017 (December 29) or by 7.7% compared with the share price adjusted for dividends paid on June 7, 2018. In the banking sector only Bank Millennium performed better (-0.8%), partly thanks to investors’ positive reaction to the news of Eurobank’s acquisition. The biggest losers were banks ending the year in the red: Getin Noble Bank (-77.2%) and Idea Bank (-89.5%). mBank’s capitalisation amounted to PLN 18.0 billion (EUR 4.2 billion) as at the end of 2018 compared with PLN 19.7 billion (EUR 4.7 billion) at the end of 2017. P/BV (price/book value) ratio for mBank Group stood at 1.2 at the end of 2018 compared with 1.4 a year before. P/E (price/earnings per share) ratio amounted to 13.6 compared with 18.0 in 2017.

Throughout 2018 WIG-Banks Index sank by 12.1%. The general decline in share prices on the WSEwas triggered by the receding prospects for higher interest margins amid a stable interest rates perspective. Moreover, the stock performance of financial sector companies was also affected by the collapse of large debt collector in H1 and the suspicion of corruption scandal in the Polish Financial Supervision Authority (PFSA) that broke in November 2018.

The bank contacts its stakeholders in Polish and English at meetings, during teleconferences, via e-mail and through regularly updated information published on the official website. Investor relations website (www.mbank.pl/en/investor-relations/) features information divided into categories, in particular on the financial standing of mBank Group, its shareholding structure, General Meetings, ratings and mBank share price performance on the WSE. In addition, it includes current and periodic reports and the consensus estimates for the Group. Interactive Business Intelligence application – mBank Analyzer offers a quick and easy insight into mBank Group’s historical financial results and business data. We encourage new investors to read the key facts and figures about mBank Group and details of the “mobile Bank” strategy in a dedicated tab on the investor relations website. Analysts and mBank’s investors are kept abreast of the major developments in mBank Group in a monthly Newsletter and e-mails.

In 2018, investors and stock market analysts participated in four conferences announcing mBank’s financial results, both in person and online. Every conference was attended by about twenty representatives of brokerage houses and investors. All meetings with the Management Board accompanying the announcement of quarterly figures were broadcast on the internet in Polish and English and posted on the bank’s website. Relations with analysts, shareholders and potential investors are also strengthened through meetings at conferences in Poland and abroad. In 2018, mBank participated in four conferences in Warsaw, six conferences abroad (in Zuers, Frankfurt, Prague and three times in London) and organised individual meetings between institutional investors and the Management Board representatives after the announcement of Q1 2018 results. Moreover, the bank organised one roadshow in the United States. Throughout the year, apart from meetings at conferences and roadshows, the Management Board members and/or the Investor Relations team held individual meetings with investors and analysts.

Just like every year, in 2018 the Management Board representatives met with analysts from rating agencies. Moreover, the bank has been in regular contact with rating agencies through teleconferences and emails exchanged with analysts.

In 2018, the number of mBank shares increased by 24,860. As a result of new issues, mBank’s registered share capital grew by PLN 99,440. New shares were issued pursuant to:

• Resolution No. 21 of the 21st Annual General Meeting of the Bank dated March 14, 2008 on issuing bonds with the pre-emptive right to take up shares of mBank S.A., and on conditional increase of the share capital by way of issuing shares with exclusion of the pre-emptive right of the existing shareholders in order to enable the participants of the incentive programme to take up the mBank S.A. shares, and on applying for admission of the shares to trading on the regulated market, and on dematerialisation of the shares (as amended); and

• Resolution No. 3 of the 16th Extraordinary General Meeting of the Bank dated October 27, 2008 on issuing bonds with the pre-emptive right to take up shares of mBank S.A. and conditional share capital increase by way of issuing shares with exclusion of the pre-emptive right of the existing shareholders in order to enable the participants of the employee incentive programme to take up the bank’s shares, and on application for admission of the shares to trading on the regulated market, and on dematerialisation of the shares (as amended).

mBank shares belong to WSE indexes:

Commerzbank AG has been the strategic shareholder of mBank since 1994. Its stake increased gradually, from 21.0% in 1995 to 50.0% in 2000 and 72.2% in 2003. Starting from 2005, Commerzbank’s stake has declined due to the implementation of the managerial options programmes in the bank. As at the end of 2018, Commerzbank AG held 69.33% of shares and votes at the General Meeting. The remaining 30.67% of mBank shares in free float are held mainly by financial investors, including Polish pension funds, as well as Polish and foreign investment funds. Nationale-Nederlanden Otwarty Fundusz Emerytalny (OFE) was the only investor with more than 5% of votes at the General Meeting. In accordance with the lists of shares of WSE-listed companies held in funds’ portfolios at the end of 2018 published by open-end pension funds (OFE), Nationale-Nederlanden OFE held 5.0% of mBank shares. The third largest shareholder of mBank was AVIVA Otwarty Fundusz Emerytalny AVIVA BZ WBK, which held a 4.1% stake.

On February 4, 2019 the bank was notified by Nationale-Nederlanden Otwarty Fundusz Emerytalny about decreasing the share in the total number of votes at the General Meeting of the Bank below 5%.

For more information about significant holdings and the dominant shareholder, read the section Significant blocks of shares.

In 2018, WIG20 Index and the broad-based WIG Index fell by 7.5% and 9.5% respectively. Lotos Group, which saw its share price surge by 53.4%, and CD Project, a video game maker, up by 50.1%, were the strongest performers among the twenty largest companies. On the other hand, the biggest annual losses were reported by: a wholesale FMCG distributor Eurocash (-33.5%), Alior Bank (-33.1%) and CCC (-32.2%), a footwear manufacturer.

mBank has ratings from Fitch Ratings (Fitch), S&P Global Ratings (S&P), Moody’s Investors Service (Moody’s) and Capital Intelligence Ratings (CI). Fitch and S&P ratings have been assigned at mBank’s request, which means that they are based on detailed information provided to the agencies and talks between Fitch and S&P analysts and mBank’s representatives. The Fitch rating for mBank Hipoteczny and its covered bonds is also a solicited rating. Ratings assigned by Moody’s and Capital Intelligence are based on publically available information.

The table below compares long-term ratings (foreign currency) for mBank, Commerzbank and Poland assigned by the three top agencies, as at the end of 2018.