Summary of financial results of mBank Group subsidiaries

In 2018, the profit before tax generated by mBank Group subsidiaries amounted to PLN 522.7 million, compared with PLN 245.5 million in the previous year.

The year-on-year increase was attributable to, among others, changes in the Group’s structure, in particular sale of an organised part of mFinanse enterprise. Higher results were also recorded by mBank Hipoteczny and mFaktoring. Improvement of “Other” position was mainly related to the sale of real estate previously owned by Garbary subsidiary.

The table below presents the profit before tax posted by individual subsidiaries in 2018 compared with 2017.

PLN M 2017 2018 Change Change in %
mFinanse 141.4 364.41 223 157.7%
mLeasing2 64.8 65.1 0.4 0.6%
mBank Hipoteczny 34.8 60.7 25.9 74.5%
mFaktoring 14.7 21 6.3 43.1%
Other3 -10.1 11.5 21.6 -/+
Total gross profit of mBank’s subsidiaries 245.5 522.7 277.2 112.9%

1Reflects result on the sale transactions of organised parts of enterprise of mFinanse.
2Includes result of Asekum Sp. z o.o.
3Other subsidiaries include mFinance France, mCO, BDH Development, Garbary, Tele-Tech Investments and Future Tech.

About the company:

  • intermediary operations as an open platform for selling financial products of various institutions, including mBank
  • the offer includes loans, accounts, insurances as well as investment and savings products for both individuals and companies
  • offer of 13 financial entities in more than 184 outlets across Poland

In 2018, the activities of an open platform of financial products distribution mFinanse remained under influence of organizational changes resulting from sale of organized parts of business. The biggest impact on the subsidiary’s financial results came from the sale of an organised part of enterprise whose activities involved, among others, providing insurance intermediation in the area of group insurance, which took place in Q1 2018. In Q4 2018 mFinanse performed sale transaction of an organised part of enterprise, providing among others insurance intermediation in scope of group insurance of leasing assets, to Asekum. In consequence, gross profit of subsidiary in 2018 amounted to PLN 364.4 million compared to PLN 141.4 million a year before.

mFinanse recorded in 2018 an increase in mortgage loan sales by 41.5% (PLN 1,897.4 million in 2018 against PLN 1,341.2 million in 2017). In the period under review, mFinanse also reported an increase in cash loan sales by 81.4% (PLN 550.5 in 2018 against PLN 336.9 million a year before). The profit from selling car loans dedicated to car dealers rose year on year by 16.3% (PLN 324.4 million in 2018 against PLN 278.9 million in previous year). In 2018 the subsidiary’s sales results in the area of car leasing increased significantly by 244.1% (PLN 126.0 million compared to PLN 36.6 million in 2017).

In 2018, mFinanse continued its sales network development project aimed at placing new outlets in the regions with no physical presence of mBank and mFinanse. Additional 20 outlets were established in the analysed period and at the end of 2018 the company managed 143 mKiosks.

The subsidiary’s profit before tax in 2018 amounted to PLN 364.4 million compared with PLN 141.4 million a year before. The profit before tax was, to a large extent, influenced by sale transactions of organised parts of insurance business.

About the company:

  • third position on the real-estate leasing market and fourth place on leasing market in 2018
  • offer including leasing, loans, car fleet rental and management for both corporate clients and individuals
  • various leasing products in corporate segment, including lease of private and commercial cars, heavy transport vehicles, car fleet management, lease of machines and equipment, real property lease

In the retail segment the subsidiary operates the “Leasing in Retail” programme addressed to micro-enterprises and SMEs, which can sign lease contracts using dedicated lease processes.

The value of contracts executed in 2018 amounted to PLN 6.1 billion compared with PLN 5.0 billion in 2017, which represents an increase of 22.1% year on year. As demand increased in 2018, the sales grew year on year, mainly driven by an increase in the vehicles sector. The value of contracts regarding movables concluded in 2018 amounted to PLN 6.0 billion compared with PLN 4.6 billion a year before (i.e. +27.9% year on year), while the value of contracts concerning real estate stood at PLN 0.1 billion compared with PLN 0.3 billion in 2017 (i.e. -60.4% year on year).

The profit before tax of mLeasing in 2018 was kept at the level close to last year’s result, i.e. PLN 65.1 million against PLN 64.8 million in 2017. In 2018 continuation of increasing cost of funding expressed in higher margin on loans received by mLeasing could have been observed.

The “Leasing in Retail” project continued in 2018. The initiative is dedicated to mBank’s business clients and enables them to conclude a leasing agreement using special leasing processes. Thanks to the combined efforts of Retail Banking and mLeasing, in 2018 mLeasing financed fixed assets obtained in cooperation with Retail Banking worth PLN 642.3 million according to their purchase price.

The chart below presents the value of leasing contracts executed under the “Leasing in Retail” project:

Value of new lease contracts as a part of the "Leasing in Retail" project (PLN million)

About the company:

  • the longest track record of issuing covered bonds on the Polish capital market
  • improving stability and diversification of mBank Group funding through raising long-term funding in form of mortgage covered bonds
  • financing commercial investments on the real property market, lending to the public sector entities in the area of municipal investments and real properties of local government units
  • analysis and advisory services addressed to investors and entities active on the commercial real property market
  • rating of Fitch Ratings: long-term „BBB”, short-term „F2”. Rating of mortgage covered bonds „A”

In 2018, mBank Hipoteczny (mBH) placed 3 issues of mortgage covered bonds in the total nominal amount of PLN 1.6 billion. Details concerning covered bonds issue are described in section mBank Group funding.

Covered bonds issued in 2013-2018 (PLN million)

The gross loan portfolio of mBank Hipoteczny totalled PLN 11.3 billion at the end of 2018 (i.e. +3.8% in comparison with 2017). That change was driven mainly by a systematic rise in the commercial portfolio (+12.3% year on year). Over the year, sale in this segment amounted to PLN 1.8 billion. Despite transfer of retail loans sale to mBank, in 2018 this portfolio increased by 5.7% at mBH. Retail portfolio in 2018 benefited from pooling transactions which amounted to PLN 603 million over the year.

Despite the additional burden imposed on the bank in the form of a banking tax (PLN 27.6 million), in 2018 the company reported a 74.5% increase year on year in the standalone profit before tax. The profit before tax amounted to PLN 60.7 million at the end of 2018, compared with PLN 34.8 million in 2017.

Compared with the previous year, mBH’s profit was driven mainly by improvement in the net interest income (+11.7%) linked to substantial early repayments in the corporate portfolio (higher by 27.6% than year before). Moreover, in 2018 mBH recorded lower fee and commission costs compared to the previous year, thanks to, among other reasons, transfer of retail loans sale to mBank. In addition, loan loss provisions remained at the similar level to the one observed in 2017 while costs of mBH’s functioning decreased by 6.2% year on year.

About the company:

  • sixth position on the Polish factoring market among the members of the Polish Factors Association – rise by 2 positions compared to 2017
  • financing of ongoing business operations, receivables management, credit protection, maintenance of debtors’ settlement accounts and enforcement of receivables; the offer includes also domestic and export factoring with recourse and credit protection, as well as import guarantees
  • mFaktoring’s offer available in all mBank branches providing services to SMEs and corporations in Poland

In 2018, the company was growing dynamically, breaking new business records. Turnover (the value of purchased invoices) was historically high at PLN 19.2 billion (an increase of 39.5% year on year). The company was growing faster than the factoring market in Poland, which expanded by 31.2% year on year. Thanks to this the company ranked sixth on the factoring market in Poland with a 7.9% market share (according to the Polish Factors Association). In 2018 mFaktoring acquired nearly 200 new clients and currently serves over 600 customers.

All corporate branches actively participated in development of factoring portfolio, adding PLN 695 million of new factoring limits. Structure of clients distributed by corporate segments was as follows: K1 – PLN 65 million (2 clients), K2 – PLN 444 million (64 clients), K3 – PLN 186 million (114 clients).

Dynamic business development positively contributed to an improvement of subsidiary’s financial results. The profit before tax of mFaktoring amounted to PLN 21.0 million in 2018 compared to PLN 14.7 million in the previous year.

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