One of the bank's main tasks is to ensure an adequate level of capital. As part of the capital management policy, the bank creates a framework and guidelines for the most effective planning and use of the capital base.
The strategic goals of mBank and mBank Group are aimed at maintaining the total capital ratio as well as the Common Equity Tier 1 capital ratio above the levels required by the supervision authority. This allows to maintain business development while meeting the supervisory requirements in the long perspective.
The capital ratios of mBank Group in 2019 were driven by the following factors:
- inclusion, in Common Equity Tier 1 capital, of the remaining part (not included earlier) of the net profit of mBank Group for the year 2018 as approved by the General Meeting of Shareholders
- inclusion in the calculation of own funds of the amount of impairment or reversal of impairment of financial assets not measured at fair value in the financial result in 2019
- expansion of mBank Group business activity;
- implementation from January 1, 2019 of the International Financial Reporting Standard 16
mBank Group is obligated to maintain own funds on the level exceeding regulatory and supervisory requirements. Consequently the level of the required capital ratios encompasses:
- the basic requirement resulting from CRR provisions to maintain the total capital ratio of 8% and the Tier 1 ratio of 6%;
- the additional capital charge in Pillar II with regard to FX mortgage loan portfolio – 3.11% at the level of total capital ratio and 2.33% at the level of Tier 1 capital on consolidated basis (and on individual basis 3.62% and 3.71% accordingly), according to the PFSA decision of November 5, 2019, and the subsequent communication of November 18, 2019;
- the combined buffer requirement of additional 6.14% (on consolidated basis), which consists of:
- the capital conservation buffer (2.50%);
- the other systemically important institution’s buffer (0.75%) – according to the PFSA decision, in 2016 mBank had been identified as other systemically important institution (O-SII) subject to a capital buffer; according to the PFSA decision of October 14, 2019, the capital buffer amounted to 0.75%;
- systemic risk buffer (2.83%) – due to the fact that not all exposures are located in Poland, due to mBank two foreign branches in Czech Republic and in Slovakia, the systemic risk buffer rate applicable to mBank Group amounted to 2.83% in December 2019;
- countercyclical capital buffer (0.06%).
On individual basis the value of the combined buffer requirement is 6.13% mainly due to a lower, than at the Group level, value of the systemic risk buffer (2.81%) and higher countercyclical capital buffer (0.07%).
Capital ratios, both on consolidated and individual basis, were above the values required throughout the 2019. With a considerable surplus of own funds mBank Group comfortably meets the additional own funds requirement and the combined buffer requirement.
The consolidated leverage ratio calculated in accordance with the provisions of the CRR Regulation and the Commission Delegated Regulation (EU) 2015/62 of October 10, 2014, amending Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to the leverage ratio, including provisions regarding transitional period, amounted to 8.25%. The stand-alone leverage ratio amounted to 8.60%.
More details on capital adequacy of mBank Group at the end of 2019 can be found in the Disclosures regarding capital adequacy.