One of the bank's main tasks is to ensure an adequate level of capital. As part of the capital management policy, the bank creates a framework and guidelines for the most effective planning and use of the capital base.
The strategic goals of mBank and mBank Group are aimed at maintaining the total capital ratio as well as the Common Equity Tier 1 capital ratio above the levels required by the supervision authority. This allows to maintain business development while meeting the supervisory requirements in the long perspective.
Capital adequacy of mBank
Capital adequacy of mBank Group
The capital ratios of mBank Group in 2020 were driven by the following factors:
- including in Common Equity Tier 1 capital the remaining part (not included earlier) of the net profit of mBank Group for the year 2019 approved by the General Meeting of Shareholders;
- including in Common Equity Tier 1 capital the part of the net profit of mBank Group for the first half of the year 2020, in accordance with the decision of the PFSA;
- including in calculation of own funds the amount of impairment on financial assets not measured at fair value through profit or loss for the second half of the year 2020;
- including in calculation of Tier 2 capital the excess of provisions over the expected losses eligible under the IRB approach.
mBank Group is obligated to maintain own funds on the level exceeding regulatory and supervisory requirements. Consequently the level of the required capital ratios encompasses:
- the basic requirement resulting from CRR provisions to maintain the total capital ratio of 8% and the Tier 1 ratio of 6%;
- the additional capital charge in Pillar II with regard to FX mortgage loan portfolio – 2.82% at the level of total capital ratio and 2.11% at the level of Tier 1 capital on consolidated basis (and on individual basis 3.24% and 2.43% accordingly), according to the PFSA decision of November 25, 2020, and the subsequent communication of December 17, 2020;
- the combined buffer requirement of additional 3.04% (on consolidated basis), which consists of:
- the capital conservation buffer (2.5%);
- the other systemically important institution’s buffer (0.5%) – according to the PFSA decision, in 2016 mBank had been identified as other systemically important institution (O-SII) subject to a capital buffer;
- systemic risk buffer (0.00%) – starting from 1st January 2018 the Regulation of the Minister of Development and Finance with regard to systemic risk buffer entered into force. The Regulation introduced systemic risk buffer of 3% of the total risk exposure amount applied to all exposures located in Poland. Due to the exceptional socioeconomic situation that appeared after the occurrence of the global pandemic COVID-19, this requirement was abolished by repealing the Regulation of the Minister of Finance, which has been in force since 19 March 2020;
- countercyclical capital buffer (0.04%).
On individual basis the value of the combined buffer requirement is 3.04%.
Capital ratios, both on consolidated and individual basis, were above the values. With a considerable surplus of own funds mBank Group comfortably meets the additional own funds requirement and the combined buffer requirement.
The consolidated leverage ratio calculated in accordance with the provisions of the CRR Regulation and the Commission Delegated Regulation (EU) 2015/62 of October 10, 2014, amending Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to the leverage ratio, amounted to 7.85%. The stand-alone leverage ratio amounted to 8.18%.
More details on capital adequacy of mBank Group in the 2020 can be found in the Disclosures regarding capital adequacy.