In this bank, customers are extremely eager to apply for credit holidays. Why?
mBank announced on Tuesday that recorded a net loss of nearly PLN 2.3 billion in the third quarter of 2022, which – despite the increase in interest rates supporting interest income – was the result of an increase in provisions for Swiss franc mortgages and the booking of credit holidays.
This program, available from the end of July, allows for the suspension of payments of a total of eight PLN mortgage installments in 2022 and 2023, mBank cost PLN 1.35 billion in the third quarter (Industry records the total cost of this two-year program at one time). Originally, mBank estimated that the negative impact of credit holidays will amount to PLN 1-1.4bn with a customer participation rate between 60 percent and 80 percent
Now, in its Q3 report, mBank announced that at the end of September, applications for this program were submitted by customers whose loans represented 81.2 percent, respectively. and 77.5 percent the value of the assumed portfolio of mBank and mBank Hipoteczny mortgage loans that meet the statutory criteria (that is, on average, 80 percent.). These clients applied for an average of 6.4 months of credit holidays (now it is possible to submit applications for suspension of eight installments, although some clients apply for them “on a regular basis”, month by month).
A slightly higher participation rate than originally assumed should probably not mean that there is a need to bind provisions for credit holidays. The bank said that in order to calculate the impact of credit holidays, he estimated the participation rates of 88.3%, respectively. and 83.6 percent. values mBank and mBank Hipoteczny’s mortgage loan portfolio (meeting the statutory criteria), i.e. 86.9 percent on average. It is assumed that customers will have an average of 7.5 months of credit holidays.
mBank announced that it will update the estimates of the cost of loan holidays at the end of 2022, when the actual data on half of the installments that can be suspended are known
These data show that mBank clients apply for credit holidays more often than the market average. Listed banks in July estimated that, on average, about 67 percent. their clients mortgage holders choose to take advantage of this program. The higher the participation, the higher the cost for the banking sector. In this text, we summarize how many individual listed banks have set up reserves for this purpose. Credit Information Bureau data indicate that at the end of October loans constituting 52.3 percent of the total in terms of number and 65.5 percent. in terms of the value of loans eligible for the program (more on that here).
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