Activities of subsidiaries of mBank Group

In 2019, the activities of an open platform of financial products distribution mFinanse were focused on the key business of loans sale intermediation. mFinanse recorded in 2019 an increase in mortgage loan sales by 61.0% (PLN 3,055.7 million in 2019 compared with PLN 1,897.4 million in 2018). In the period under review, mFinanse reported also an increase in cash loan sales by 3.6% (PLN 632.2 million against PLN 610.3 million a year before). The profit from selling car loans dedicated to car dealers rose year on year by 42.3% (PLN 451.1 million compared with PLN 324.4 million in 2018). In 2019 the subsidiary’s sales results in the area of car leasing increased by 5.0% (PLN 133.9 million against PLN 127.6 million 2018).

In 2019, mFinanse continued its sales network development project aimed at placing new outlets (mKiosks). It is oriented on improving the scope of physical presence of mBank and mFinanse in the regions where we were absent before. During the period under review, number of mKiosks managed by mFinanse increased by 23, up to 166 outlets at the end of 2019.

The subsidiary’s profit before tax in 2019 amounted to PLN 33.3 million compared with PLN 364.4 million a year before. The profit before tax generated in 2019 originated mainly from the core activity of the subsidiary in scope of financial intermediation. Significantly higher result recorded in 2018 was, to a large extent, influenced by sale transactions of organised parts of insurance business.

The value of contracts executed by mLeasing in 2019 amounted to PLN 5.3 million compared with PLN 6.1 billion in 2018, which represents a decrease by 13.1% year on year. Sales deterioration in 2019 originated mainly from decline in the vehicles sector, observed on the whole leasing market. Its primary reason was the high reference base, meaning bigger value of transactions in 2018. It was partially justified by changing legal provisions in scope of leasing which took place in 2018. The value of contracts regarding movables concluded in 2019 amounted to PLN 5.0 billion compared with PLN 6.0 billion a year before (i.e. -16.1% year on year), while the value of contracts concerning real estate stood at PLN 0.3 billion compared with PLN 0.1 billion in 2018 (i.e. +127.1% year on year).

The profit before tax of mLeasing in 2019 amounted to PLN 96.1 million and was higher by 47.7% compared to the result generated in 2018, of PLN 65.1 million. In 2019 we observed continuation of increasing cost of funding expressed in higher margin on loans received by mLeasing.

On March 8, 2019, mLeasing concluded an acquisition of 100% shares in LeaseLink. The subsidiary operates in the fintech sector and specialises in funding of business owners’ purchases online and in stationary shops. Transaction enhances mLeasing’s position in funding of small and medium enterprises. It also opens the subsidiary up to new possibilities of funding smaller-value assets. mLeasing is the only owner of LeaseLink. In 2019, profit before tax of LeaseLink amounted to PLN 2.6 million.

2019 was our best year concerning new business of CFM (Car Fleet Management). New agreements worth PLN 1 billion were concluded. According to the CEPIK, central register of vehicles and drivers, mLeasing is the second market player in scope of the number of new cars acquired for CFM in 2019.

The “Leasing in Retail” project continued in 2019. The initiative is dedicated to mBank’s business clients and enables them to conclude a leasing agreement using special leasing processes. Thanks to the combined efforts of Retail Banking and mLeasing, in 2019 mLeasing financed fixed assets obtained in cooperation with Retail Banking worth PLN 395.6 million according to their purchase price.

In 2019, mBank Hipoteczny (mBH) placed 2 issues of mortgage covered bonds in the total nominal amount of PLN 1.4 billion. Details concerning covered bonds issue are described in chapter 5.2. mBank Group funding.

The gross loan portfolio of mBank Hipoteczny totalled PLN 11.9 billion at the end of 2019 (i.e. +6.0% compared to 2018). That change was driven mainly by a systematic rise in the retail portfolio, which expanded over the year by 21.1%. The growth results from conclusion of eight pooling transactions, totalling PLN 1.9 billion in 2019.

In 2019, stand-alone profit before tax of the subsidiary remained at the level close to the previous year. Gross profit of 2019 amounted to PLN 61.3 million compared to PLN 60.7 million a year before.

The highest impact on the generated result was driven by the stronger trading result and growth of net interest income (+5.7%). It is linked, among others, to the higher prepayments in the corporate portfolio by 8% than year ago. Moreover, due to the lower value of corporate loans, mBank Hipoteczny recorded a decline of loan loss provisions by 2.4%.

In 2019, the company was growing dynamically, breaking new business records. Turnover (the value of purchased invoices) increased by 16.3% compared to 2018. It reached historically high level of PLN 22.3 billion. The company was growing at similar pace that the domestic factoring market. Thanks to this the company ranked fifth on the factoring market in Poland, ascending by 1 position compared with 2018. Our market share was 7.9%, according to the Polish Factors Association.

In 2019 mFaktoring acquired nearly 200 new clients and currently serves over 750 customers. All corporate branches actively participated in development of factoring portfolio, adding PLN 1,057 million of new factoring limits. Structure of clients distributed by corporate segments was as follows: K1 – PLN 384 million (9 clients), K2 – PLN 506 million (76 clients), K3 – PLN 168 million (138 clients).

Dynamic business development positively contributed to an improvement of subsidiary’s financial results. The profit before tax of mFaktoring amounted to PLN 25.3 million compared to PLN 21.0 million in the previous year.