Commerzbank subsidiary mBank surprises with strong quarterly results

The Polish subsidiary of Commerzbank, mBank, achieved an unexpected profit in the third quarter, after having recorded losses in the previous year. This is due, among other factors, to decreased legal risk costs associated with foreign currency loans and an increased net interest income. The net result amounted to 572.9 million zloty, which corresponds to approximately 142.8 million US dollars, significantly surpassing analyst expectations of 476 million zloty. Compared to the previous year, this profit stands against a loss of 83 million zloty. The mid-sized bank recorded a reduction in legal risk costs in the area of foreign currency loans by 10 percent, reaching a total of 971 million zloty for the quarter. These costs are only slightly above the bank's previous estimate of approximately 953 million zloty. Foreign currency loans in Swiss francs, however, remain a challenge for Polish banks. Initially attractive due to low interest rates in the 2000s, repayment costs have drastically increased due to the depreciation of the zloty against the franc and rising interest rates in Switzerland. This led to legal disputes and forced banks to increasingly resort to settlements. As of September 30, mBank had concluded 19,519 settlements with clients regarding Swiss franc loans. mBank's net interest income rose by almost 13 percent year-over-year to 2.57 billion zloty, supported by continued growth in the retail segment with an increase of 7,400 customers during the quarter and in the corporate sector, which grew by 315 clients.