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Q2-2025 Earnings Call
AI Summary
Earnings Call on Jul 31, 2025
Record Results: mBank delivered its strongest-ever quarter, setting new records for revenue, operating profit, and pre-tax earnings.
Revenue Growth: Total revenues reached PLN 3.2 billion in Q2, up 5.5% quarter-over-quarter and 10.6% year-over-year, driven by robust lending and fee income.
Profit Surge: Net profit for the first half of 2025 hit PLN 1.7 billion, over double last year; Q2 net profit rose 36% quarter-over-quarter to PLN 959 million.
Cost Efficiency: Cost-to-income ratio stayed below 30%, with guidance to remain under 35% for the full year despite rising costs.
Capital Strength: mBank raised EUR 400 million in Tier 2 bonds, further reinforcing its capital base and meeting all regulatory requirements.
Legal Risk Down: Legal risk costs related to FX loans continued to decline for the sixth consecutive quarter, with settlements and court cases dropping.
Guidance Raised: Management expects 2025 full-year revenues to exceed PLN 12 billion, surpassing 2024 levels, and targets above-market loan growth.
Strong Lending & Deposits: Both loan portfolio and deposits grew by around 10% year-over-year, outpacing the broader market.
mBank saw strong expansion in both lending and deposits, with both categories growing around 10% year-over-year. Mortgage loan sales rose by one-third year-on-year and 48% quarter-over-quarter, while non-mortgage loans increased 23% year-on-year. Corporate loans also grew 23% year-on-year, though Q2 corporate loan sales dipped after an exceptionally strong Q1. Deposits were driven primarily by increases in both retail and corporate current accounts.
Net profit more than doubled versus the prior year, reaching PLN 1.7 billion in the first half and PLN 959 million for Q2, with return on equity (ROE) of 19.9% and return on tangible equity (ROTE) of 25.3% in Q2. Operating costs rose 15% year-over-year, largely due to higher regulatory contributions and salary adjustments, but the cost-to-income ratio stayed below 30%. Management expects full-year cost-to-income to remain competitive, below 35%.
Total revenue increased 7.1% year-over-year for the first half, with all main revenue streams contributing. Net interest income rose 3.7% year-over-year (adjusted for one-offs), while net fee and commission income jumped 11%, supported by a one-off PLN 43 million bancassurance fee. Net trading income surged 62% year-over-year. Management forecast full-year revenues to exceed PLN 12 billion.
Legal risk costs for Swiss franc mortgage loans continued to decline for the sixth consecutive quarter, with settlements increasing and court cases decreasing. The Swiss franc mortgage portfolio now makes up just 0.1% of the loan book. Provisions were booked both for FX loan risks and for unauthorized transactions and free loan sanction cases. Management sees 2025 as likely the final year with material FX loan legal costs.
mBank strengthened its capital base through retained earnings and the successful EUR 400 million Tier 2 bond issuance, which was 9x oversubscribed. CET1, Tier 1, and total capital ratios stood at 12.8%, 14%, and 15% at June's end, comfortably above regulatory minimums. Management expects further reinforcement from Tier 2 inclusion and a planned securitization.
Asset quality remains strong, with cost of risk at 46 basis points and NPL ratio down to 3.5%. Declines in non-performing loans resulted from both portfolio growth and successful restructuring and sales of impaired assets. Full-year cost of risk is guided at around 70 basis points, as management remains cautious due to geopolitical uncertainties.
mBank expects to exceed PLN 12 billion in revenue for 2025, with above-market loan growth in both retail and corporate segments. Cost-to-income is projected to remain under 35% for the year, and management will update its strategy and targets for 2026–2030 in September. Legal risk costs are expected to continue declining, and 2025 is expected to be the last year of significant FX loan-related impact.
Hi, Pascal. Nice to see you again, and hi to the new face at the table, Karol.
Hi to you both.
Very good to be here. And it's great to have you, Karol, with us today. Karol, who don't know him, is our Head of Treasury and Head of IR. And he and our teams just made history in the second quarter by issuing the first Tier 2 out of Poland into international markets, and that's definitely a story to share today.
Good to have you both here. So Karol, what was so special about this transaction?
So in June, we executed the first ever broadly distributed euro Tier 2 transaction out of Poland. It is also the largest euro Tier 2 from the CEE region in the last 5 years. We had an order book of EUR 3.6 billion for a EUR 400 million transaction, implying an impressive 9x oversubscription. We had the participation of more than 200 investors in the transaction, and it is great to see that the investor work that we're doing is being appreciated.
So all in all, a great success for us at mBank.
Sounds very good. And Pascal, what about the highlights of the second quarter from your point of view?
Before I go into the highlights, a huge thanks to you, Karol, and our teams. This was a tremendous effort and a great success. So thank you very much. And also thanks to all the investors who have participated and put the trust in us. This is super appreciated.
Now coming to the quarter. The 3 main observations in the quarter. First of all, we see our business is expanding. We are growing our loan book 10% year-on-year, and this is resulting into additional market shares. And that's exactly how we want to have it and therefore, really great news.
Second, with all this, we maintain our best-in-class efficiency with a normalized cost income ratio of below 30%. And last but not least, this translates into a decent profitability. We exceed 20% return on tangible equity despite additional bookings for our Swiss franc mortgage loan issue. And putting the Swiss franc mortgage loan issue into focus, we saw now the sixth consecutive quarter of lower impact than the previous quarter. So a clear sign that the risk is going down.
And what can you tell us about the second half of the year?
The second half of the year, I'm starting off with the guidance change. We improved our guidance on the total income. We expect to exceed EUR 12 billion based on our great success in our business model, which is supposed to be continued.
And then I want to focus on 3 things which we maintain. We aim for further business expansion. So we want to grow market share. Secondly, we want to strengthen our capital base further, therefore, and that means we conduct our fifth securitization in the second half. And thirdly, we expect that this is the last year of a significant P&L burden on the Swiss franc side. And to date, we have around 30,000 settlements achieved, and that's a great basis.
To conclude our second half of the year, I want to invite all of you to our Capital Markets Day on the 23rd of September. And here, we talk about our strategy, and we would really appreciate if you take the time and make the effort to join us there.
Great to hear. And thanks a lot, Karol and Pascal and see you next time.
Thank you very much. Have a great summer break, and see you next time.
Thank you.