The total value of contracts executed in 2020 amounted to PLN 5,128.7 million, compared with PLN 5,294.4 million in 2019 (-3.1% year on year). The value of new movable assets purchased by mLeasing in 2020 reached PLN 4,961.6 million, down by 0.8% compared with 2019, when it stood at PLN 5,001.4 million. The value of contracts concerning real estate stood at PLN 167.1 million compared with PLN 283.0 million in 2019 (i.e. -43.0% year on year).
The consolidated pre-tax profit reported by mLeasing in 2020 stood at PLN 9.4 million, which represents a substantial decline compared with 2019, when it amounted to PLN 96.1 million. A decrease of the result year on year was mainly driven by higher credit risk provisions. They stem from the cautious approach of the subsidiary to the potential post-pandemic difficulties of the clients, who might not service their liabilities timely. The cost of risk in 2020 reached PLN 170.1 million, which is higher by 190% year on year, when it stood at PLN 58.7 million.
In connection with the COVID-19 pandemic, we changed the work system at the subsidiary. We implemented remote work, while in cases where physical presence of employees is required, we introduced rotating shift work. We offered our clients the possibility of reducing from three to six leasing instalments. Clients can apply for suspension of principal instalment repayment and extension of the repayment period by a period when the client pays only the interest. We do not charge any commission for applications to reduce instalments. Within a short time, we prepared an automatic process for handling clients’ applications to ensure that the decision-making procedure is quick. In H1 2020 applications for restructuring were filed with respect to 32.9% of the portfolio. In an effort to ensure high quality of the subsidiary’s loan portfolio, we tightened the conditions for granting new financing by taking into account clients’ resilience to the consequences of the pandemic.
In the second half of 2020, we expected another wave of restructuring applications. Therefore, in Autumn, we introduced new rules in the offer for schedule changes. We kept a simple application path for clients with smaller exposures and a deeper analysis of the client’s situation in other cases. We have also reintroduced fees for changes to contracts since the middle of the year. After several months of applying these rules, we see less interest in schedule changes than in the first, Spring wave of applications.
In October 2020, our new mAuto leasing portal was launched. The virtual car showroom is available 7 days a week, 24 hours a day. We handle the sales process itself 6 days a week, using a special Call Center. Through mAuto.pl, customers have access to a wide range of new and used vehicles. Financing options include rental, leasing, or cash purchase. mAuto.pl moves car sales online, applying traditional e-commerce virtues, such as delivery to home and possibility to return. It is another step in digital transformation of mLeasing, which allows to buy a car online at any time and place, without leaving home.
In 2020 we made available to our customers a new product for financing photovoltaic panels. We have implemented an offer addressed to entrepreneurs from the SME sector. Thanks to it, business owners can successfully reduce electricity bills by up to 70% and use renewable energy sources. Importantly, the company’s initial own contribution to the photovoltaic installation is low. Customers can include leasing installments in tax deductible costs. In the period under discussion, mLeasing completed 198 transactions for a total volume of PLN 20 million. Importantly, we achieved the adopted sales assumptions, despite the difficult economic conditions prevailing in 2020. Clients financing photovoltaic installations in mLeasing additionally benefit from the preferential financing cost under the EBI Climate Action program. The target customers received our product well.