Profit and loss account of mBank Group
mBank Group reported a profit before income tax of PLN 609.7 million in 2020, compared with PLN 1,555.0 million in 2019 (PLN -945.3 million or -60.8%). Net profit attributable to the owners of mBank reached PLN 103.8 million, compared with PLN 1,010.4 million in the previous year (PLN – 906.5 million or -89.7%). Income tax paid by mBank Group amounted to PLN 506.0 million in 2020 v. PLN 544.8 million a year before (-7.1%). A summary of the financial results of mBank Group is presented in the table below.
| PLN M | 2019 | 2020 | Change in PLN M |
Change in % |
|---|---|---|---|---|
| Interest income | 5,071.7 | 4,688.4 | -383.3 | -7.6% |
| Interest expense | -1,068.9 | -679.1 | 389.8 | -36.5% |
| Net interest income | 4,002.8 | 4,009.3 | 6.5 | 0.2% |
| Fee and commission income | 2,010.7 | 2,244.6 | 233.9 | 11.6% |
| Fee and commission expense | -740.0 | -736.3 | 3.8 | -0.5% |
| Net fee and commission income | 1,270.6 | 1,508.3 | 237.7 | 18.7% |
| Core income | 5,273.4 | 5,517.6 | 244.2 | 4.6% |
| Dividend income | 4.2 | 4.9 | 0.7 | 16.7% |
| Net trading income | 134.5 | 184.8 | 50.2 | 37.3% |
| Other income | 185.5 | 176.3 | -9.3 | -5.0% |
| Other operating income | 234.5 | 218.1 | -16.4 | -7.0% |
| Other operating expenses | -307.7 | -234.8 | 72.9 | -23.7% |
| Total income | 5,524.4 | 5,866.8 | 342.3 | 6.2% |
| Net impairment losses and fair value change on loans and advances | -793.8 | -1,292.8 | -499.0 | 62.9% |
| Result on provisions for legal risk related to foreign currency loans | -387.8 | -1,021.7 | -633.9 | 163.5% |
| Overhead costs and depreciation | -2,329.2 | -2,411.1 | -82.0 | 3.5% |
| Taxes on Group balance sheet items | -458.7 | -531.4 | -72.7 | 15.9% |
| Profit before income tax | 1,555.0 | 609.7 | -945.3 | 60.8% |
| Income tax expense | -544.8 | -506.0 | 38.8 | -7.1% |
| Net profit | 1,010.3 | 103.8 | -906.5 | -89.7% |
| – attributable to Owners of mBank S.A. | 1,010.4 | 103.8 | -906.5 | -89.7% |
| – Non-controlling interests | -0.1 | -0.1 | 0.0 | -24.5% |
| ROA net | 0.7% | 0.1% | ||
| ROE gross | 10.2% | 3.7% | ||
| ROE net | 6.6% | 0.6% | ||
| Cost / Income ratio | 42.2% | 41.1% | ||
| Net interest margin | 2.7% | 2.3% | ||
| Common Equity Tier 1 ratio | 16.5% | 17.0% | ||
| Total capital ratio | 19.5% | 19.9% | ||
| Leverage ratio | 8.3% | 7.9% |
Core income – calculated as the sum of net interest income and net fee and commission income.
Other income – calculated as gains less losses from financial assets and liabilities not measured at fair value through profit or loss and investments in subsidiaries and associates and gains or losses from non-trading financial assets (including equity instruments and debt securities) mandatorily measured at fair value through profit or loss (except for loans and advances).
Total income – calculated as the sum of net interest income, net fee and commission income, dividend income, net trading income, other income, other operating income and other operating expenses.
Overhead costs and depreciation – calculated as the sum of total overhead costs and depreciation.
Net impairment losses and fair value change on loans and advances – calculated as the sum of impairment or reversal of impairment on financial assets not measured at fair value through profit or loss and gains or losses from non-trading loans and advances mandatorily measured at fair value through profit or loss.
Net ROA – calculated by dividing net profit attributable to the owners of mBank by the average total assets. The average total assets are calculated on the basis of the balances as at the end of each month. Net profit attributable to the owners of mBank is annualised based on the number of days in the analysed period (the annualisation ratio is calculated as the quotient of the number of days in a year and the number of days in the analysed period).
Gross ROE – calculated by dividing profit before income tax by the average equity (net of the year’s results). The average equity is calculated on the basis of the balances as at the end of each month. Profit before income tax is annualised based on the number of days in the analysed period (the annualisation ratio is calculated as the quotient of the number of days in a year and the number of days in the analysed period).
Net ROE – calculated by dividing net profit attributable to the owners of mBank by the average equity (net of the year’s results). The average equity is calculated on the basis of the balances as at the end of each month. Net profit attributable to the owners of mBank is annualised based on the number of days in the analysed period (the annualisation ratio is calculated as the quotient of the number of days in a year and the number of days in the analysed period).
Cost/Income ratio – calculated by dividing overhead costs and depreciation by total income (excluding tax on balance sheet items of the Group).
Net interest margin – calculated by dividing net interest income by average interest earning assets. Interest earning assets are the sum of cash and balances with the Central Bank, loans and advances to banks, debt securities (in all valuation methods) and loans and advances to clients (net; in all valuation methods). The average interest earning assets are calculated on the basis of the balances as at the end of each month. Net interest income is annualised based on the number of days in the analysed period (the annualisation ratio is calculated as the quotient of the number of days in a year and the number of days in the analysed period).
The main drivers of the financial results of mBank Group in 2020 included:
-
Increase in total income, which stood at PLN 5,866.8 million. Net interest income remained its main growth driver. It reached PLN 4,009.3 million and was stable year on year despite sharp interest rate cuts. Net fee and commission income increased significantly by 18.7% year on year and stood at
PLN 1,508.3 million. - Increase in operating expenses (including depreciation) by 3.5% to PLN 2,411.1 million. In particular, contributions and transfers to the Bank Guarantee Fund and depreciation increased while staff-related expenses decreased in 2020.
- Improved efficiency measured by the Cost/Income ratio, which stood at 41.1% in 2020 v. 42.2% in 2019.
- Increased cost of risk at 119 bps, compared with 79 bps in 2019, driven by a conservative approach to client risk rating during the pandemic.
- Increase in provisions for legal risk related to foreign currency loans which stood at PLN 1,021.7 million v. PLN 387.8 million in 2019.
-
Continued organic growth and business expansion as demonstrated by:
- increase in the number of corporate clients to 29,083 (+2,607 clients compared with the end of December 2019);
- increase in the number of retail clients to 5,661.8 thousand (+58.0 thousand clients compared with the end of December 2019);
- growing sales of mortgage loans at PLN 8,985.4 million in 2020 compared with PLN 8,176.4 million in 2019, despite unfavourable market conditions during the pandemic.
The changes in the Group’s results translated into the following profitability ratios:
- Gross ROE of 7% (10.2% in 2019);
- Net ROE of 6% (6.6% in 2019).
Capital ratios of mBank Group rose in 2020. At the end of 2020, the consolidated Total Capital Ratio stood at 19.86% compared with 19.46% in the previous year. The Common Equity Tier 1 capital ratio reached 16.99% v. 16.51% at the end of 2019. The leverage ratio stood at 7.9% at the end of December 2020, compared with 8.3% a year before.
Income of mBank Group
Total income generated by mBank Group was PLN 5,866.8 million in 2020, compared with PLN 5,524.4 million in 2019, which represents an increase by PLN 324.3 million or 6.2%. The increase was mainly driven by improved net fee and commission income.
Similarly to 2019, net interest income remained mBank Group’s largest income source in 2020 (68.3%). It reached PLN 4,009.3 million, compared with PLN 4,002.8 million in 2019 (+0.2%). The net interest income was mainly impacted by interest rate cuts by 140 basis points in aggregate in 2020.
Net interest margin, calculated as a relation between net interest income and average interest earning assets, stood at 2.32% compared with 2.69% in 2019.
Interest income decreased by PLN 383.3 million or -7.6% year on year to PLN 4,688.4 million. Loans and advances were the main source of the Group’s interest income. Interest income from loans and advances decreased by PLN 305.0 million or -7.7% year on year to PLN 3,648.9 million. The decrease resulted mainly from interest rate cuts. For the same reason, interest income from investment securities decreased by PLN 59.0 million or -8.4% despite a significant increase in the value of the portfolio. Interest income from trading debt securities decreased by PLN 21.4 million, i.e., -44.1%.
| PLN M | 2019 | 2020 | Change in PLN M | Change in % |
|---|---|---|---|---|
| Loans and advances including the unwind of the impairment provision discount | 3,953.9 | 3,648.9 | -305.0 | -7.7% |
| Investment securities | 705.0 | 646.0 | -59.0 | -8.4% |
| Cash and short-term placements | 56.2 | 20.5 | -35.7 | -63.5% |
| Trading debt securities | 48.6 | 27.2 | -21.4 | -44.1% |
| Interest income on derivatives classified into banking book | 181.8 | 126.1 | -55.7 | -30.6% |
| Interest income on derivatives concluded under the fair value hedge | 75.1 | 85.7 | 10.6 | 14.1% |
| Interest income on derivatives concluded under the cash flow hedge | 50.5 | 144.6 | 94.1 | 186.4% |
| Other | 0.5 | -10.7 | -11.2 | +/- |
| Total interest income | 5,071.7 | 4,688.4 | -383.3 | -7.6% |
Interest income from loans and advances include interest income from loans and advances on the following items: assets held for trading, non-trading financial assets measured mandatorily at fair value through profit or loss and financial assets measured at amortised cost.
Interest income from investment securities include interest income on the following items: non-trading financial assets measured mandatorily at fair value through profit or loss, including debt securities, financial assets measured at fair value through other comprehensive income and financial assets measured at amortised cost, including debt securities.
In the period under review, interest expenses decreased significantly (by PLN 389.8 million or – 36.5%), which was mainly attributable to lower deposit costs (down by PLN 314.8 million or – 47.6%). Despite a substantial inflow of clients’ deposits, interest rates on deposits dropped after interest rate cuts, which reduced deposit costs. Costs of issue of debt securities went down by PLN 66.6 million or -22.6% due to a decrease in the value of debt securities issued following redemption of covered bonds and EMTN bonds.
Net fee and commission income, accounting for 25.7% of mBank Group’s total income, increased significantly year on year. In the period under review, it stood at PLN 1,508.3 million, which represents an increase by PLN 237.7 million or 18.7%. The primary reason was an increase in fee and commission income.
| PLN M | 2019 | 2020 | Change in PLN M | Change in % |
| Payment cards-related fees | 435.9 | 430.2 | -5.6 | -1.3% |
| Credit-related fees and commissions | 417.9 | 462.8 | 44.9 | 10.7% |
| Commissions from currency transactions | 306.0 | 339.6 | 33.6 | 11.0% |
| Commissions for agency service regarding sale of insurance products of external financial entities | 100.4 | 109.8 | 9.4 | 9.3% |
| Fees from brokerage activity and debt securities issue | 87.0 | 222.3 | 135.3 | 155.5% |
| Commissions from bank accounts | 210.9 | 222.3 | 11.4 | 5.4% |
| Commissions from money transfers | 145.8 | 147.8 | 1.9 | 1.3% |
| Commissions due to guarantees granted and trade finance commissions | 93.0 | 94.3 | 1.3 | 1.4% |
| Commissions for agency service regarding sale of products of external financial entities | 82.2 | 74.5 | -7.7 | -9.4% |
| Commissions on trust and fiduciary activities | 28.0 | 31.5 | 3.4 | 12.2% |
| Fees from portfolio management services and other management-related fees | 14.2 | 23.2 | 9.0 | 63.8% |
| Fees from cash services | 48.6 | 42.6 | -6.0 | -12.3% |
| Other | 40.8 | 43.7 | 2.9 | 7.1% |
| Total fee and commission income | 2,010.7 | 2,244.6 | 233.9 | 11.6% |
Fee and commission income increased by PLN 233.9 million or 11.6% year on year. The largest growth, related to rising interest of retail clients in investments on the Warsaw Stock Exchange, was observed in fees from brokerage activity and debt securities issue (+PLN 135.3 million or 155.5%). mBank Brokerage Bureau reported a significant increase in the number of clients and their activity. Credit-related fees and commissions increased by PLN 44.9 million or 10.7% due to a higher volume of corporate and mortgage loans sold and modifications to the tariff of fees and commissions. Commissions from currency transactions increased by PLN 33.6 million or 11.0% owing to higher volatility on the FX market. Payment cards-related fees decreased modestly (by PLN 5.6 million or -1.3%) compared to the previous year due to a lower number of clients’ non-cash transactions (the value of non-cash transactions grew by 6.3% year on year while the number of transactions dropped by -0.6%). Lower client activity was caused by restrictions imposed to contain the COVID-19 pandemic.
Commission expenses decreased modestly (by PLN 3.8 million or -0.5%) in the period under review and stood at PLN 736.3 million.
Dividend income amounted to PLN 4.9 million in 2020, compared with PLN 4.2 million in 2019.
Net trading income stood at PLN 184.8 million in 2020 and was higher by PLN 50.2 million or 37.3% compared with 2019. The growth was driven mainly by gains or losses on financial assets and liabilities held for trading (+PLN 72.3 million or 142.5%).
Other income, including gains less losses from financial assets and liabilities not measured at fair value through profit or loss and investments in subsidiaries and associates and gains or losses from non-trading equity instruments and debt securities mandatorily measured at fair value through profit or loss, decreased modestly (by PLN 9.3 million or -5.0%). This resulted from the revaluation of shares of Visa Inc. and other companies (among others, Polski Standard Płatności Sp. z o.o., Krajowa Izba Rozliczeniowa S.A., Biuro Informacji Kredytowej S.A.).
Net other operating income (net other operating income/expense) amounted to PLN -16.7 million in 2020 v. PLN -73.2 million in 2019, when provisions were set up against future commitments, including potential costs related to settlements with clients who made early repayments of consumer loans and the provision connected with early termination of lease agreements pertaining to two buildings in Warsaw in connection with the planned relocation.
Result on provisions for legal risk related to foreign currency loans
In 2020, provisions for legal risk related to foreign currency loans grew to PLN 1,021.7 million. The bank’s methodology of calculating the provisions depends on a number of assumptions including mainly the projected population of borrowers who will litigate against the bank, the probability of losing in court in last instance, the distribution of expected court judgments, and losses of the bank in lost cases. The increase in the provision in 2020 alone resulted mainly from the changes in probability of losing in court assumed in the calculation, changes in assumptions regarding the number of the projected cases and changes in level of loss on loan exposure in case of losing the case by the bank. The methodology is described in detail in note 4 to the mBank S.A. Group IFRS Consolidated Financial Statements 2020.
Costs of mBank Group
In 2020, the total overhead costs (including depreciation) of mBank Group stood at PLN 2,411.1 million, which represents a 3.5% increase year on year. The increase was mainly due to higher depreciation, higher contributions to the Bank Guarantee Fund and higher material costs while staff-related expenses decreased.
| PLN M | 2019 | 2020 | Change in PLN M | Change in % |
|---|---|---|---|---|
| Staff-related expenses | -1,019.3 | -974.7 | 44.7 | -4.4% |
| Material costs | -639.1 | -671.3 | -32.2 | 5.0% |
| Taxes and fees | -31.2 | -27.3 | 3.9 | -12.6% |
| Contributions and transfers to the Bank Guarantee Fund | -255.7 | -298.1 | -42.4 | 16.6% |
| Contributions to the Social Benefits Fund | -8.3 | -9.2 | -0.9 | 10.8% |
| Depreciation | -375.5 | -430.6 | -55.1 | 14.7% |
| Total overhead costs and depreciation | -2,329.2 | -2,411.1 | -82.0 | 3.5% |
| Cost / Income ratio | 42.2% | 41.1% | – | – |
| Employment (FTE) | 6,771 | 6,688 | -84 | -1.2% |
In 2020, staff-related expenses decreased by PLN 44.7 million or -4.4% due to reduced variable pay components.
Material costs increased by PLN 32.2 million or 5.0% in the period under review, mainly as a result of higher consulting and IT costs, while marketing costs decreased.
Depreciation rose by PLN 55.1 million in 2020 due to earlier investments.
Another important factor that impacted the cost base in 2020 was the contribution and transfers to the Bank Guarantee Fund, rising by PLN 42.4 million or 16.6% year on year.
That evolution of income and expenses resulted in a year-on-year improvement of the Cost/Income ratio, which stood at 41.1% (42.2% in 2019).
Impairment on and change in the fair value of loans and advances
In 2020, net impairment losses and fair value change on loans and advances of mBank Group (calculated as the sum of two items: impairment or reversal of impairment on financial assets not measured at fair value through profit or loss and gains or losses from non-trading loans and advances mandatorily measured at fair value through profit or loss) stood at PLN -1,292.8 million. Compared to 2019, impairment on and change in the fair value of loans and advances increased by PLN 499.0 million or 62.9%. Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss is related to the part of the portfolio of loans and advances measured at amortised cost, while gains or losses from non-trading loans and advances mandatorily measured at fair value through profit or loss is related to the credit risk of the portfolio of loans and advances measured with the use of that method.
As a result, the cost of risk in 2020 stood at 119 bps, compared with 79 bps in 2019.
| PLN M | 2019 | 2020 | Change in PLN M | Change in % |
|---|---|---|---|---|
| Retail Banking | -510.3 | -685.1 | -174.8 | 34.2% |
| Corporates and Financial Markets | -281.3 | -610.0 | -328.7 | 116.8% |
| Other | -2.1 | 2.3 | 4.4 | -/+ |
| Total impairment on and change in the fair value of loans and advances | -793.8 | -1,292.8 | -499.0 | 62.9% |
Cost of risk in Retail Banking increased significantly, mainly due to the application of a macroeconomic scenario assuming the economic impact of the COVID-19 pandemic in the estimation of portfolio provisions as well as the reclassification of some exposures of retail clients who used credit moratoria to Stage 2 addressing the uncertainty as to full repayment. As a result, additional expected credit loss allowances were booked.
Cost of risk in Corporates and Financial Markets increased among others due to an additional review of sectors and clients, in particular clients on the watch list, as required to test a potentially higher probability of non-implementation of restructuring plans due to changing economic conditions in Poland as a result of the COVID-19 pandemic.
Contribution of business lines and segments to the financial results
A summary of financial results of individual business lines of mBank Group is presented in the table below.
| PLN M | 2019 | 2020 | Change in PLN M | Change in % | Share in profit |
|---|---|---|---|---|---|
| Retail Banking | 808.2 | 62.8 | -745.4 | -92.2% | 10.3% |
| Corporates and Investment Banking | 633.8 | 365.3 | -268.6 | -42.4% | 59.9% |
| Financial Markets | 133.4 | 203.0 | 69.6 | 52.2% | 33.3% |
| Other | -20.4 | -21.4 | -0.9 | 4.4% | -3.5% |
| Profit before tax of mBank Group | 1,555.0 | 609.7 | -945.3 | -60.8% | 100.0% |
Changes in the consolidated statement of financial position of mBank Group
Changes in the assets of mBank Group
The assets of mBank Group increased by PLN 21,415.7 million (+13.5%) to PLN 180,136.3 million as at December 31, 2020.
The table below presents changes in particular items of mBank Group assets.
| PLN million | 31.12.2019 | 31.12.2020 |
Change in PLN million |
Change in % |
|---|---|---|---|---|
| Cash and balances with Central Bank | 7,897.0 | 3,968.7 | -3,928.3 | -49.7% |
| Loans and advances to banks | 4,341.8 | 7,354.3 | 3,012.5 | 69.4% |
| Financial assets held for trading and derivatives held for hedges | 2,693.3 | 2,398.8 | -294,5 | -10.9% |
| Net loans and advances to customers | 105,347.5 | 109,832.0 | 4,484.6 | 4.3% |
| Investment securities | 34,305.2 | 51,728.9 | 17,423.8 | 50.8% |
| Intangible assets | 955.4 | 1,178.7 | 223.3 | 23.4% |
| Tangible assets | 1,262.4 | 1,514.6 | 252.2 | 20.0% |
| Other assets | 1,918.0 | 2,160.3 | 242.3 | 12.6% |
| Total assets of mBank Group | 158,720.6 | 180,136.3 | 21,415.7 | 13.5% |
Loans and advances to customers – the sum of loans and advances to customers recognised in: financial assets measured at amortised cost, non-trading financial assets mandatorily measured at fair value through profit or loss and financial assets held for trading
Investment securities – the sum of debt securities included in financial assets measured at fair value through other comprehensive income, debt securities included in assets measured at amortised cost and non-trading equity and debt securities mandatorily measured at fair value through profit or loss.
Loans and advances to customers remained the largest asset category of mBank Group at the end of 2020. As at December 31, 2020, they accounted for 61.0% of the balance sheet total compared with 66.4% at the end of 2019. The net volume of loans and advances to customers increased by PLN 4,484.6 million (+4.3%) compared with the end of 2019.
| PLN million | 31.12.2019 | 31.12.2020 | Change in PLN million | Change in % |
|---|---|---|---|---|
| Loans and advances to individuals | 60,360.7 | 67,216.3 | 6,855.6 | 11.4% |
| Loans and advances to corporate entities | 47,785.7 | 46,025.4 | -1,760.2 | -3.7% |
| Loans and advances to public sector | 391.4 | 231.2 | -160.2 | -40.9% |
| Total (gross) loans and advances to customers | 108,537.8 | 113,472.9 | 4,935.1 | 4.5% |
| Provisions for loans and advances to customers | -3,190.3 | -3,640.8 | -450.5 | 14.1% |
| Total (net) loans and advances to customers | 105,347.5 | 109,832.0 | 4,484.6 | 4.3% |
In 2020 gross loans and advances to individual customers increased by PLN 6,855.6 million (+11.4%). Net of the FX effect, loans and advances to individuals grew by 8.6% in 2020. The sales of mortgage loans increased by 9.9% (to PLN 8,985.4 million in 2020 against PLN 8,176.4 million a year before), enabling mBank Group to retain its market share in new sales of mortgage loans at a level similar to last year’s figure (over 11%). In addition, in 2020 mBank Group sold PLN 7,094.6 million worth of non-mortgage loans, which represents a drop by -30.9% compared with 2019 caused mostly by reduced demand for non-mortgage loans and stricter lending policy introduced temporarily by the bank in response to the COVID-19 pandemic.
The volume of gross loans and advances to corporate clients decreased by PLN 1,760.2 million (- 3.7%) in 2020 compared with the end of 2019. Excluding reverse repo/buy sell back transactions and the FX effect, the value of loans and advances to corporate customers shrank by -6.4% against the end of 2019.
The volume of gross loans and advances to the public sector decreased by PLN 160.2 million (- 40.9%) in 2020.
Investment securities constituted mBank Group’s second largest asset category (28.7%). During 2020 their value grew considerably by PLN 17,423.8 million (+50.8%), helped mostly by a rise in the portfolio of treasury and municipal bonds. At the same time, the portfolio of debt securities issued by the central bank shrank by PLN 3,034.6 million (-90%) year on year.
The value of financial assets held for trading and derivatives held for hedges decreased throughout 2020 by PLN 294.5 million (-10.9%), driven mainly by a drop in the portfolio of treasury and municipal bonds. At the same time, the portfolio of derivatives rose.
Changes in liabilities and equity of mBank Group
The table below presents changes in the equity and liabilities of the Group in 2020:
| PLN million | 31.12.2019 | 31.12.2020 | Change in PLN million | Change in % |
|---|---|---|---|---|
| Amounts due to other banks | 1,166.9 | 2,399.7 | 1,232.9 | 105.7% |
| Financial liabilities held for trading and derivatives held for hedges | 948.8 | 1,338.6 | 389.8 | 41.1% |
| Amounts due to customers | 116,661.1 | 137,698.7 | 21,037.5 | 18.0% |
| Debt securities in issue | 17,435.1 | 13,996.3 | -3,438.8 | -19.7% |
| Subordinated liabilities | 2,500.2 | 2,578.3 | 78.1 | 3.1% |
| Other liabilities | 3,855.1 | 5,449.6 | 1,594.5 | 41.4% |
| Total liabilities | 142,567.3 | 163,461.2 | 20,893.9 | 14.7% |
| Total equity | 16,153.3 | 16,675.1 | 521.8 | 3.2% |
| Total liabilities and equity of mBank Group | 158,720.6 | 180,136.3 | 21,415.7 | 13.5% |
Amounts due to customers are the principal source of funding of mBank Group. Their share in the Group’s funding structure has been increasing systematically. They accounted for 76.4% of the Group’s equity and liabilities at the end of 2020, compared with 73.5% at the end of 2019.
| PLN million | 31.12.2019 | 31.12.2020 | Change in PLN million | Change in % |
|---|---|---|---|---|
| Individual customers | 77,664.4 | 97,976.4 | 20,312.0 | 26.2% |
| Corporate customers | 38,137.9 | 39,236.1 | 1,098.2 | 2.9% |
| Public sector customers | 858.9 | 486.2 | -372.6 | -43.4% |
| Total amounts due to customers | 116,661.1 | 137,698.7 | 21,037.5 | 18.0% |
Amounts due to customers grew significantly in 2020 to reach PLN 137,698.7 million at the end of the year compared with PLN 116,661.1 million at the end of 2019 (+18.0%). The positive trend in funding cost continued throughout 2020, which was reflected in inflows to current accounts exceeding inflows to term accounts, and was helped by reference rate cuts in early 2020.
Amounts due to individual customers increased by PLN 20,312.0 million (+26.2%) compared with the end of 2019. The changes in the structure of deposits of individual customers continued. Deposits in current and savings accounts increased by 40.0% with term deposits down by -31.8%.
Throughout 2020 amounts due to corporate customers grew by PLN 1,098.2 million (+2.9%), pushed up by a 35.7% rise in current account deposits. Term deposits of corporate customers shrank by – 92.1% annually. The value of repo transactions fell by -46.9% in 2020. The amount of loans and advances received rose by 9.2% year on year, which was triggered almost exclusively by a major depreciation of the Polish złoty against foreign currencies (EUR, CHF) at the end of 2020 compared with the end of 2019.
Amounts due to other banks rose by PLN 1,232.9 million (+105.7%) to PLN 2,399.7 million. The rise was recorded in both current account deposits (and was additionally intensified by the weaker złoty in the case of foreign currency deposits) and repo/sell buy back transactions, which soared fivefold. Loans and advances received fell nearly to zero following the repayment of a USD 50 million loan extended by another bank in September 2020.
The share of debt securities in issue in mBank Group’s funding structure slid from 11.0% at the end of 2019 to 7.8% at the end of 2020. This change is attributable to the maturity and redemption of bonds under the EMTN programme and redemption of covered bonds and bonds by mBank Hipoteczny.
In 2020 subordinated liabilities grew by 3.1% year on year, which was caused by the impact of the PLN depreciation (vis-a-vis the Swiss franc) on the PLN equivalent of the subordinated loan with a nominal value of CHF 250 million.
Total equity grew by PLN 521.8 million (+3.2%) as a consequence of an increase in retained earnings. Its share in equity and liabilities of mBank Group accounted for 9.3% at the end of 2020 (10.2% in 2019).
Changes in off-balance sheet items, changes in guarantees granted to mBank Group subsidiaries and other agreements
More information on significant off-balance sheet items of mBank Group can be found in note 33 to the mBank S.A. Group IFRS Consolidated Financial Statements 2020.
As at December 31, 2020 mBank S.A. did not have any agreements referred to in Article 141t.1 of the Banking Law Act.