Retail Banking

• Increase of core income by 11.7% year on year.
• Sales of PLN 10.3 billion worth of non-mortgage loans, up by 14.9% year on year
• Sales of PLN 8.2 billion worth of mortgage loans, up by 77.0% year on year.
• Increase in the number of active users of mobile application by 27.6%, up to 1,894.7 thousand.
• Increase of retail deposits by 17.8% in 2019, mainly driven by growing current accounts and savings (+20.3% year on year).
• Increase of the value of transactions carried out with mBank’s payment cards by 22.0%; increase in the number of card transactions by 23.4% year on year.
• Optimization of digital processes under the „digital first” approach.
• Implementation of factoring for sole proprietors.

As a leader in online and mobile banking, mBank focuses on technological innovations which make its processes even more efficient. We develop our offer to cater for the expectations of our clients, especially the young ones, which is reflected by our client acquisition structure. Thanks to our activities, mBank has become the first-choice bank for clients aged 16-20 according to the IQS Tracking survey. In addition, the Miesięcznik Finansowy Bank monthly awarded mBank the main prize in the Bank for the Young and Innovation categories.

mBank is among the banks with the largest number of mobile clients. In its Most Mobile Banks in Poland report published on 27 March 2019, cashless.pl listed Polish banks with the highest ability to migrate traditional customer service channels to the modern ones. The results were based on the client mobility ratio. mBank topped the podium with the ratio of 53.5%, which means that more than half of our clients regularly log in to their accounts using smartphones. At the end of 2019, as many as 1,894,700 clients actively used mBank’s mobile app, which represents an increase by 27.6% year on year (1,484,500 in 2018). Currently, 72.1% of all logins to mBank’s systems are from the mobile app.

In 2019, we continued to optimise our digital processes under the slogan “digital first” to make our products more attractive and to increase the availability of unsecured loans to individuals. This translated into a substantial increase in sales in direct channels (mobile app and online banking). Cash loan sales in the mobile app grew more than 2.5 times. The focus on direct channels can also be observed in our branches and in the contact centre. Our client advisors and consultants teach clients how to apply for banking products using the mobile app and online banking, and how to best utilise the opportunities offered by these channels. Currently, one-fourth of all unsecured loans granted in our branches are applied for by clients who file applications on their own with the help of advisors. New sales of non-mortgage loans to individuals in Poland amounted to PLN 6.8 billion in 2019 compared with PLN 6.0 billion in 2018, which represents an increase by 13.7% year on year.

At the beginning of 2019, we introduced the possibility of applying for a cash loan with a discount code. Currently, more than 50% of cash loans sold outside of special offers are purchased with the discount code.

In August, we made a new application form for cash loans available. It guides clients filing applications in the mobile app or in online banking in an easy and friendly manner. Thanks to the new application form clients can calculate their creditworthiness even more accurately and adjust the instalments to their capabilities.

In 2019 we achieved a significant increase in mortgage loan sales while maintaining excellent pricing parameters. The sales of mortgage loans to individuals in Poland amounted to PLN 6.8 billion in 2019 compared with PLN 3.5 billion in 2018, which represents an increase by 94.0% year on year. It is worth mentioning that in 2019, in line with the adopted strategy, the vast majority of originated mortgage loans again qualified for a transfer to mBank Hipoteczny under the pooling procedure, which allows for funding the assets with a better-matched maturity structure. The ongoing work on enhancing the process of granting mortgage loans to clients is expected to significantly shorten the time necessary to issue a credit decision and improve the scalability of the process.

Last year we launched a special offer on mortgage loans for our internal clients. We selected two client groups with the highest activity level. As a result, almost 500,000 clients can now check the special price for a mortgage loan for which they are eligible. The initiative is meant to promote the image of the bank as an institution with an attractive mortgage loan offering, especially for the clients for whom we are the first-choice bank.

The NPL ratio of the mortgage loan portfolio for individuals in Poland dropped year on year and stood at 2.0% at the end of 2019, compared with 2.6% a year before.

The graph below presents the structure of the Retail Banking loan portfolio in Poland (including mBank Hipoteczny) at the end of 2019:

As at the end of 2019 the total amount of Retail Banking deposits in Poland stood at PLN 66,837.9 million compared to PLN 55,733.9 million a year ago, up by 19.9% year on year. At the same time, the balance of current accounts and savings accounts rose by 20.5% and 26.0%, respectively. The strong sales results in the area of savings products were possible thanks to a number of initiatives carried out in 2019, including the following:

• we implemented a new functionality in the savings account entitling to obtain a bonus for depositing new funds;
• we ran two promotional campaigns for the eKonto savings and settlement account offering higher interest on new money;
• we launched the savings product “My Goals” for clients aged 13-17, which allows them to regularly save a fixed amount of money and to save money by rounding up purchases;
• we ran four promotional campaigns concerning “My Goals” with a preferential interest rate;
• we continued the term deposit retention process aimed at rolling-over maturing term deposits.

Growth in retail deposits was accompanied by a decrease in investment products. In 2019 we launched a number of initiatives to adapt our activities in the area of distribution of investment funds units to the new legal environment. Among others, we worked on a new distribution fee settlement model. Additionally, we undertook numerous initiatives supporting the development of investment fund participation units sales. For example, we introduced a simplified MiFID survey, which helps clients determine whether given investment products are suitable for their investment profile.

In November, we started offering free-of-charge individual pension accounts (IKE eMakler) and individual retirement security accounts (IKZE eMakler). The accounts allow independent investors to save for retirement by investing in WSE-traded shares and bonds, as well as in shares traded on four leading foreign stock markets and ETFs from London and Frankfurt. This way, they can earn on changes in stock prices of companies such as Apple, Google, Facebook, or BP. mBank clients can thus take advantage of increases in stock prices on leading stock markets worldwide, which often take place even when the WSE stagnates. By investing in ETFs (Exchange Traded Funds), which track the performance of given indexes, investors can further diversify their investment risk. Apart from lower price volatility, ETFs also offer lower transaction costs than traditional investment funds.

In H1 2019, we launched a simplified offering of accounts for individuals comprising the new personal eKonto account and an account for young clients, eKonto możliwości. Both accounts are free of charge and offer free money withdrawals at all ATMs in Poland and abroad.

We offer the most favourable conditions on the market, which pushes us to the top of many industry league tables. eKonto możliwości ranks first in the league table of accounts for young clients compiled by kontomlodziezowe.com, and it is the most frequently selected account by this client group according to kontostudenta.pl. The IQS Tracking survey at mBank’s request showed that we are the first-choice bank for young clients.

Thanks to the cooperation with Przelewy 24, we made the quick transfer service available to our clients. It allows clients to transfer money to their mBank accounts from accounts held with another bank. The transferred funds are credited to the client’s account within 15 minutes.

In February 2019, we were the first bank in Poland to offer an online emergency service. The Cyber Rescue service provides assistance to users experiencing online security problems. Specialists are available around the clock and they can be accessed conveniently and quickly via Messenger, telephone or text message. Users can request assistance in the case of a hacking attack, problems with viruses, loss of passwords to social media etc. The service is unconditionally free-of-charge for mBank clients.

In 2019, we focused on client acquisition in medium-sized towns. The initiative consisting in opening mBank’s ice rinks proved a huge success. In early December, free ice rinks were launched in 10 Polish towns, including Włocławek, Suwałki, and Przemyśl. The inhabitants were also offered the possibility of renting skates and getting an instructor. Within one month from the launch of the ice rinks, client acquisition in the towns covered by the programme grew remarkably.

In April 2019, we added the MasterCard card to the multi-currency service. Now, not only VISA card holders can use the service free of charge. It is available for eleven currencies (JPY, NOK, SEK, CZK, DKK, HUF, HRK, EUR, USD, CHF, GBP). Similarly to FX accounts, we do not charge any fees for using the service. Thanks to the multi-currency service, a debit card can be linked not only to a client’s main PLN account, but also to FX accounts.

In June 2019, we introduced a MasterCard card in the limited Pol’and’Rock edition, designed by Jurek Owsiak. In December, we launched a limited MasterCard card to mark the 28th Grand Finale of the Great Orchestra of Christmas Charity (WOŚP), featuring a special design by Jurek Owsiak.

Since September 2, 2019, clients may order debit cards in a portrait format. The new Visa and MasterCard cards are simple and minimalist. They no longer feature client data on the front side. All information, including the name and surname, card number and expiry date are displayed on the reverse of the card.

In 2019, the value of payment card transactions made by mBank’s retail clients in Poland amounted to PLN 46.6 billion, which represents a rise by 22.0% year on year. The number of transactions made by mBank clients grew by 23.4% year on year. mBank’s credit cards are also characterised by a very high average number of transactions per client. At the end of September 2019, the market share of transactions by mBank’s cards (by number of transactions) stood at 13.0%.

In 2019, we continued the acquisition of affluent clients, who are the target group of our mKonto Intensive account. The account holders enjoy free cash withdrawals from ATMs all over the world, can make three instant transfers per month free of charge and have access to priority service in the call centre. In addition, mKonto Intensive is the only account that comes with a Visa Świat Intensive multi-currency card and a World MasterCard Intensive credit card. Both cards allow commission-free conversion of transactions, thanks to which clients do not incur any additional costs when making payments abroad or shopping online in a foreign currency.

Apart from offering attractive products and services to new clients, we also launch temporary special offers concerning selected products for our existing clients. In 2019, we ran a special mortgage loan offer with a reduced commission and margin for affluent clients being mKonto Intensive holders. We also introduced a promotional savings offer with a preferential interest rate to cater for the special needs of this client group.

The Brokerage Bureau of mBank (BM) provides a comprehensive range of brokerage services to the largest Polish institutional investors (pension funds, investment funds, asset management companies), foreign funds, and individual and private banking clients. The Brokerage Bureau enables clients to trade in regulated markets in Poland and abroad as well as in the OTC (CFD) market. As part of wealth management services, clients may use investment advisory and asset portfolio management services. The Bureau is an active player in the capital market, preparing and conducting public and private offerings (IPO/SPO/ABB).

In 2019 we observed a visible decrease in investor activity on the WSE compared with 2018 (-8.0% year on year in the stock market) accompanied by a weakening position of domestic investors and growing domination of global investment banks operating as remote members of the WSE. The turnover of BM on the WSE stock market amounted to PLN 13.4 billion (-23.5% year on year), which made mBank the thirteenth player on the market in terms of total turnover (3.4% market share) and eighth player from the perspective of turnover on the client’s account (5.7% market share). Our clients express systematically growing interest in investing in foreign markets. At the end of the year, the number of brokerage accounts of BM clients amounted to 311,200.

The conditions on global financial markets in 2019 fostered growth of assets under management. Wealth Management benefited from the changes introduced in the investment structure in the previous years, moving toward global, diversified solutions. The value of assets under management in discretionary portfolios (i.e. assets managed by BM without clients’ active involvement) increased by a third. Aside from the above-mentioned portfolios, we continued to develop white label solutions. Four mBank FIO sub-funds (including one equity, one multi-asset, and two bond sub-funds) joined the existing mFundusz Konserwatywny SFIO, thereby increasing assets accumulated in these solutions by over PLN 230 million in 2019.

In 2019 mBank’s Wealth Management pioneered a fully diversified strategy of socially responsible investing for its clients in Poland, in line with the ESG principles.

The Brokerage Bureau of mBank (BM) provides a comprehensive range of brokerage services to the largest Polish institutional investors (pension funds, investment funds, asset management companies), foreign funds, and individual and private banking clients. The Brokerage Bureau enables clients to trade in regulated markets in Poland and abroad as well as in the OTC (CFD) market. As part of wealth management services, clients may use investment advisory and asset portfolio management services. The Bureau is an active player in the capital market, preparing and conducting public and private offerings (IPO/SPO/ABB).

In 2019 we observed a visible decrease in investor activity on the WSE compared with 2018 (-8.0% year on year in the stock market) accompanied by a weakening position of domestic investors and growing domination of global investment banks operating as remote members of the WSE. The turnover of BM on the WSE stock market amounted to PLN 13.4 billion (-23.5% year on year), which made mBank the thirteenth player on the market in terms of total turnover (3.4% market share) and eighth player from the perspective of turnover on the client’s account (5.7% market share). Our clients express systematically growing interest in investing in foreign markets. At the end of the year, the number of brokerage accounts of BM clients amounted to 311,200.

The conditions on global financial markets in 2019 fostered growth of assets under management. Wealth Management benefited from the changes introduced in the investment structure in the previous years, moving toward global, diversified solutions. The value of assets under management in discretionary portfolios (i.e. assets managed by BM without clients’ active involvement) increased by a third. Aside from the above-mentioned portfolios, we continued to develop white label solutions. Four mBank FIO sub-funds (including one equity, one multi-asset, and two bond sub-funds) joined the existing mFundusz Konserwatywny SFIO, thereby increasing assets accumulated in these solutions by over PLN 230 million in 2019.

In 2019 mBank’s Wealth Management pioneered a fully diversified strategy of socially responsible investing for its clients in Poland, in line with the ESG principles.

In 2019, mBank continued to cooperate with its strategic insurance partner AXA in the area of bancassurance. The partnership covers selling insurance products to mBank clients and focuses particularly on the standalone product segment, including motor, travel, home, and life insurance as well as the segment of products linked to banking products, e.g. loans.

The bank continued the transformation of its insurance product portfolio to meet the needs of digital clients who intensively take advantage of direct channels to fulfil their needs and contact the bank. As a result, we refreshed our standalone product mix. All standalone products (i.e. motor, home, travel, and life & health insurance) can be purchased in the bank’s mobile app. Over 40% of travel insurance policies are now sold via the mobile app.

The company account with 24 months’ no fee guarantee was the main product driving client acquisition in 2019. The product was offered on a standalone basis and as part of the “mBank Business Starter” (Firmootwieracz), which enables potential clients to set up a company and open a bank account via mBank. The main assumptions of our acquisition offer (no fees for a bank account, debit card, transfers, withdrawals from selected ATMs, and deposits made at CDMs) remained consistent throughout the year.

In 2019, we had to adjust our systems and procedures to new regulations. We expanded the split payment mechanism and implemented the new type of transfer to the Tax Office following the introduction of Individual Tax Accounts. We adjust to new regulations bearing in mind their impact on businesses. Therefore, we prepared a comprehensive information campaign concerning all legal changes introduced in 2019. It included direct communication via online banking and the mobile app, articles published on mBank’s blog, and webinars.

We accompany businesses and listen to their needs on a day-to-day basis. Aside from our monthly meetings with businesspeople, we organised an inspirational meeting (OkO w OkO) and photography workshops during the ALIBI women’s fair in Łódź. We made use of our personal hobbies and interests to promote mBank among businesspeople. The event met with a warm reception with participants appreciating mBank for “really helping and giving directions to people who consider setting up their own business”.

2019 was marked by a 19.1% year-on-year increase in unsecured loan sales. Mortgage sales rose by 50.2% compared to the previous year.

In April 2019, we launched factoring services for sole traders. A limit of up to PLN 50,000 can be applied for online. The decision comes within 5 minutes. The same amount of time is needed to get an invoice financing decision. The service is tied to the current account and enables clients to make repayments manually or automatically. It only takes one click to prolong the repayment deadline by 30 days from the invoice due date.

In H1 2019, we launched EUR and USD Visa Business currency cards for business clients with free-of-charge ATM withdrawals and no currency conversion when paying for company expenses abroad.

In August 2019, we enhanced the mKsięgowość (mAccounting) service with new features, including the option to upload document images (e.g. invoices) using the CashDirector mobile app. We also added a financial liquidity analysis tool, which shows clients if their financial liquidity could be at risk within the next four weeks.

In 2019, our branches in the Czech Republic and Slovakia put the greatest emphasis on deposit products, acquisition of active clients, lending growth, and process optimisation. The branches completed several projects aimed to increase sales capacities and sales process excellence. The product mix was expanded with new scenarios, which strengthened and increased the range of available solutions.

mBank continued to reinforce its leading position in mobile banking. The year was marked by further development of mobile banking. The branches added new solutions and enhanced the existing ones. We improved communication in the app and increased its security with the new mobile authorisation tool mKlíč (mKey). The tool offers a higher level of security and more comfortable authorisation of transactions. The application tells the client why their transaction has been rejected and how they can avoid this in the future. The Slovak branch launched express payments. The service allows faster money transfers to beneficiaries in other banks.

In February, our Czech branch launched the innovative Visa World (mKarta Svět) card. The card is very popular with clients who travel and pay abroad. The card has become the new standard debit card for the mKonto account. The card combines the best exchange rates on the market (compared with debit cards offered by other banks) and commission-free payments with comfort offered by a local bank. In addition, the Czech and Slovak branches launched mSaver (My Goals), an automatic savings product developed on the basis of customer behaviour analysis. In H1 2019, we were the first on the market to launch new solutions which had been expected by many clients. We introduced modern payment methods, including Apple Pay, Garmin Pay, and Fitbit Pay, on both markets in 2019.

Both branches acquired 34,200 clients in 2019. The total number of clients served on both markets went up to 958,600 at the end of 2019 (291,500 in Slovakia and 667,000 in the Czech Republic). As part of the strategic partnership with Broker Consulting, a Czech independent financial service broker, our products and services were available in 45 co-branded advisory centres (OK Points) specialising in banking services. The OK Points were equipped with mBank’s cash deposit machines.

mBank’s business in the Czech Republic and Slovakia won several major awards in 2019. We again took top spots in the Zlatá koruna (Golden Crown) contest, winning a total of four awards, including the main awards in the two most important categories – Retail Clients’ Choice and Entrepreneurs’ Choice. Our mobile app ranked third in the league table of online and mobile banking channels. mBank’s mortgage and mKonto won the golden and silver awards in the Finparáda – The Financial Product of the Year contest, respectively. The contest is based on an evaluation of annual market data conducted by Scott & Ross analysts to determine the best products from the point of view of benefits offered to clients in the previous year. mBank’s business in the Czech Republic received the Superbrands award for the fourth consecutive time, while the Slovak branch won this distinction for the third time. The awards confirm mBank’s position among the strongest brands in both countries.

The growth rate of mBank’s loan portfolio in the Czech Republic and Slovakia demonstrates the positive development trend. As at the end of 2019, the loan portfolio was worth PLN 5,083.8 million, up by PLN 374.9 million or 8.0% compared to the end of 2018. The growth was again driven primarily by non-mortgage loans.

New non-mortgage loan sales initiatives accompanied by product and origination process enhancements allowed the foreign branches to increase non-mortgage loans’ sales by 11.3% year on year to PLN 788.4 million. Sales of non-mortgage loans in the Czech Republic amounted to PLN 585.0 million, up by 12.2% year on year. Sales of non-mortgage loans in Slovakia increased by 9.1% year on year and stood at PLN 203.4 million. Increases were reported in all sales channels. The increase in the share of cash loans sold via the mobile app from 5% to 10% in the whole of 2019 is particularly worth mentioning.

Our mortgage loan sales efforts in 2019 were focused on reviving lending in our Slovak branch, which was impacted by the introduction of the Polish banking tax, and maintaining previous sales levels in the Czech Republic. Total new sales of mortgages in the foreign branches amounted to PLN 844.8 million in 2019, up by 12.0% year on year. We successfully increased mortgage sales in Slovakia to PLN 311.8 million, up by 88.9% against the previous year.

The volume of deposits in the foreign branches continued to grow in 2019 to reach PLN 10,649.8 million at the end of the year, which represents an increase of 5.2% year on year. Most of the deposits were current account deposits, which was primarily attributable to an increase in clients’ transactional activity.