mBank SA (FRA:BRU) (Q2 2024) Earnings Call Highlights: Record Net Profit Amid Legal Challenges

GuruFocus News
4 min read

In This Article:

  • Group Revenues: Declined marginally in Q2, impacted by credit vacations amounting to PLN257 million.

  • Net Interest Income (NII): Adjusted by credit holidays, grew 3.5% quarter-on-quarter.

  • Net Fee and Commission Income: Increased, driven by higher net results on payment cards.

  • Total Income Target for 2024: Aiming for PLN11 billion, a historic mark for the bank.

  • Total Costs (excluding compulsory contributions): Increased by 5.5% quarter-on-quarter.

  • Cost/Income Ratio: Achieved an extraordinary 27%, with a long-term target below 40%.

  • Cost of Risk: 58 basis points in Q2, with full-year guidance below 70 basis points.

  • Net Profit: Reached PLN422 million in Q2.

  • Tier 1 Capital Increase: PLN126 million or roughly 1% since the beginning of 2024.

  • Gross Loans to Customers: Increased by 4.1% quarter-on-quarter.

  • Corporate Loans: Increased by 7.9% quarter-on-quarter.

  • Retail Loans: Increased by 1.2% quarter-on-quarter.

  • Deposits: Increased by 2.4% quarter-on-quarter, driven by retail deposits.

  • Legal Provisions for FX Loans: Reached PLN1.03 billion in Q2.

  • Swiss Franc Portfolio Coverage: Increased to 130% with respect to the active portfolio.

  • Return on Equity (ROE): Core business ROE at 40%, mBank Group ROE close to 10%.

Release Date: August 01, 2024

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

Positive Points

  • mBank SA (FRA:BRU) reported a strong net profit of PLN 422 million for Q2 2024, marking the highest net operating result in the bank's history when excluding certain impacts.

  • The bank's net interest income (NII) adjusted for credit holidays grew by 3.5%, supported by both loans and deposits.

  • mBank SA (FRA:BRU) achieved an extraordinary cost/income ratio of 27%, well below its long-term strategic target of below 40%.

  • The bank's Tier 1 and total capital ratios are at comfortable levels, with buffers above KNF minimum requirements exceeding 4%.

  • The bank's core business demonstrated strong performance with an ROE of 40% and a gross profit of PLN 2.7 billion, indicating resilience against FX mortgage-related burdens.

Negative Points

  • mBank SA (FRA:BRU) faced high legal costs related to FX mortgage loans, impacting its financial results.

  • The bank's decision not to pay dividends in 2024 aims to strengthen its equity base, reflecting challenges in capital management.

  • The cost of legal risk related to loans indexed to foreign currencies reached PLN 1.03 billion in Q2 2024, indicating ongoing financial strain.

  • The bank's cost of risk increased in Q2, particularly in the Corporate & Investment Banking segment, suggesting potential credit quality concerns.

  • The Swiss franc mortgage portfolio remains a significant issue, with 74% of active contracts currently in court, posing ongoing legal and financial challenges.

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