The costs of legal risk related to mortgage loans in Swiss francs in the third quarter of 2022 amounted to almost PLN 2.34.336 billion. This means that the total value of provisions created for this legal risk at the end of September 2022 will amount to PLN 6.8 billion. Our estimates show that the coverage of mBank’s franc portfolio with provisions increased to 53%. with 35 percent in June. This is clearly more than the sector average the analyzed nine had such reserves worth a total of PLN 23.9 billion, which was then 33.7 percent. gross active portfolio of Swiss franc mortgages.
The huge increase in mBank’s franc reserves (in addition, in the first quarter of 2022 and the second quarter of 2022, increased by PLN 80 million and PLN 190 million, respectively) and the cost of loan holidays (previously estimated at PLN 1-1.4 billion), the bank expects a negative net result throughout, 2022. After the first six months, the group had a profit of PLN 742 million.
The reason for the increase in CHF reserves is the update of costs related to legal risk. It mainly results from changes in assumptions regarding the forecast court scenarios and the number of borrowers who, in the opinion of the bank, will file a lawsuit or settle arrangements in the future.. “The level of created provisions will allow the bank to properly secure the bank’s situation in the context of CHF disputes,” mBank reported.
mBank declares that it runs a stable and profitable business irrespective of the Swiss franc situation. “The operating results in the third quarter of 2022 were good and did not differ from the trends of the previous quarters (the group will present the financial report for this period on November 8). The bank’s capital and liquidity ratios are above the regulatory requirements. This guarantees safety for customers and the deposits entrusted to the bank.” – emphasizes mBank. The share capital requirement is 10.64%. and 13.17 percent. for the total capital ratio.
At the end of June, mBank had 16,000. individual cases of Swiss francs with the value of the dispute amounting to PLN 5 billion (i.e. now the provisions significantly exceed the value of the dispute). His mortgage portfolio of this type was worth a total of PLN 12.6 billion, which constituted 9.7 percent. of its entire gross loan portfolio and 95 percent. equity capital.
mBank announced today that it will offer settlements to all clients with active CHF mortgage loans. It will be an offer of loan conversion and reduction of outstanding capital. The terms of redemption customers will be able to negotiate individually with regard to the redemption amount. Earlier, mBank launched a pilot of a settlement program, the terms of which were generally based on the division of the cost of converting a Swiss franc loan in half between the bank and the client.
The concept of CHF settlements in Poland failed (few customers took advantage of it) due to rising interest rates and court judgments favorable to franchisees. mBank now informs that it will want to encourage a settlement by offering a periodically fixed interest rate after conversion to zlotys in a more attractive variant compared to the standard offer, but does not reveal any details. Thanks to this, the exchange rate risk and interest rate risk will be eliminated forever in the period of 5 years.
The settlement program will be launched in October and will be carried out in stages. The bank will present details when it starts. Customers should wait for contact from the bank.