Issuer Profile - mBank
The bank was founded in 1986 as an institution specialized in financing Poland's export sector. In the meantime it has evolved into Poland's fourth largest universal bank. Of the three main business segments, retail banking contributes the largest share to pre-tax earnings. The regional business focus is on the bank's home market. With a stake of about 69%, Commerzbank ('A-'/'Baa1'/'BBB+') is the listed company's principal shareholder. All three leading rating agencies consider mBank to be a “strategically important” subsidiary of the German entity, and therefore assume a high support probability on the part of the parent company in case of need.
The most important income source of mBank is net interest income. In FY 2017 it increased by 10.7% compared to FY 2016 to PLN 3,136mn. Net commission income rose as well, while the income from investments exhibited a significant decline. In our opinion the latter essentially represents a process of normalization after one-off gains were recognized in 2015 and 2016. The cost base rose slightly and moderate increases in risk provisions were recognized as well. In FY 2017 mBank posted net earnings of PLN 1,095mn. In non-adjusted terms this represents a decline of 10.4% y/y. However, on an adjusted basis (excl. non-recurring effects), earnings improved compared to the previous year.
mBank is rated by all three major credit rating agencies, whereby the rating issued by Moody's is based exclusively on publicly available information. All of them have assigned comparable ratings of 'BBB+'/'Baa1'/'BBB' to the company. Institution-specific credit-positive factors are its strong market position and efficient cost management. Moreover, the bank's asset quality is generally deemed to be stronger than that of its peer group. Weaknesses are considered to consist of the group's large portfolio of legacy FX mortgage loans and the fact that it remains partly dependent on wholesale funding.
mBank Group issues covered bonds through its wholly owned subsidiary mBank Hipoteczny. In its funding efforts it is focused on issuance of mortgage covered bonds. Since a rating upgrade in July 2016 in the wake of the amendment of Poland's legal framework, Fitch has assigned a rating of 'A' to the covered bond program.