Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• mBank SA (FRA:BRU) achieved the highest net profit in its history, reaching $2.2 billion in 2024.
• The company significantly improved its capital position, enhancing its readiness for future growth.
• Mortgage loan sales increased by more than 150% compared to 2023, reaching a record high volume.
• The bank's total revenues rose by 11% to 12 billion Polish zloty, marking the highest level in its history.
• mBank SA (FRA:BRU) successfully reduced the risk related to its CHF mortgage portfolio, with a significant decrease in new lawsuits and an increase in settlements.

Negative Points

• Operating costs increased by 10% year on year, driven by wage increases and higher spending on IT, consulting, and marketing.
• The cost of risk, although improved, still presents a challenge with a strategic midterm guidance of 80 basis points.
• Legal risks related to FX mortgage loans resulted in a burden of 4.3 billion Polish zloty.
• The bank expects further regulatory RWA inflation in 2025, which could impact its capital ratios.
• No dividend will be paid out from the profit ending 2025, as funds are allocated for further loan expansion.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with FRA:BRU.

Q: Are there any concerns regarding the potential acquisition of Commerzbank by UniCredit, and what would be the impact for mBank? A: We do not comment on the situations of our main shareholders. Commerzbank and UniCredit are not present in Poland, so there is no direct impact on mBank. We are focused on our organic growth and development, aiming to increase our profits and revenues. (Unidentified_2)

Q: How do you assess the risk related to free loan sanctions, and what are the current statistics? A: Currently, we have 46 final verdicts, with 44 being positive for mBank and only two negative. We have over 600 pending cases. The verdicts so far are favorable, but we are monitoring the situation closely. This portfolio is different from the Swiss franc mortgage loans, and we do not expect it to be as burdensome. (Unidentified_2)

Q: Is the increase in risk-weighted assets in Q4 2024 already the full impact of the new CRR/CRD regulations? A: We expect an additional effect in 2025 under CRR, currently assuming a 6.5% increase. (Unidentified_3)

Q: What is your guidance for operating costs and cost of risk for 2025? A: We expect a low double-digit increase in operating costs for 2025, driven by new initiatives, inflation, and higher BFG contributions. For the cost of risk, we expect it to be below our strategic target of 80 basis points, with a range of 70 to 80 basis points. (Unidentified_3 and Unidentified_4)

Q: From what amount do you treat the impact on results as a material burden? A: We consider it immaterial if we no longer report it separately as a non-core on the CHF mortgage loans. We aim to close this by the end of 2025, so it will not significantly burden our P&L in the following years. (Unidentified_3)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.