mBank Soars to Profit Milestones Amid FX Legal Cleanup—Is This a Buy?

Poland’s mBank has delivered a stunning earnings report that investors would be foolish to ignore. In Q1 2025, net profit more than doubled to PLN 705.7 million, up from PLN 262.5 million a year earlier. This isn’t just a bump—it’s a full-blown turnaround, fueled by aggressive cost-cutting, resolution of legacy legal issues, and a banking sector thriving in Poland’s resilient economy. Let’s dive into the numbers and see if this is a stock worth buying.

The Profit Surge: A Legacy Problem Solved

The star of the show is mBank’s 52% reduction in legal provisions tied to its infamous Swiss franc (CHF) mortgage portfolio. These provisions fell from PLN 1.37 billion in Q1 2024 to PLN 662 million in Q1 2025, slashing costs and freeing up capital. By settling 26,079 cases, mBank has nearly eliminated CHF loans from its books—reducing their share to a negligible 0.2% of total loans (down from 23.6% in 2015).

This cleanup isn’t just a one-time win. Management now covers 159% of remaining CHF loans with provisions, ensuring no surprises. With credit rating upgrades from S&P (to BBB+), Moody’s, and Fitch (to BBB), the bank’s borrowing costs will drop, boosting margins further.

Balance Sheet Strength and Growth on the Horizon

mBank’s balance sheet is looking bulletproof:
- Total assets hit PLN 246 billion, up 9.8% year-over-year, fueled by 9% growth in gross loans to PLN 131 billion.
- Corporate loans are booming, expected to grow 4.9% in 2025, while household loans rise 2.9%, supported by Poland’s 3% GDP growth forecast.

The cost-to-income ratio rose slightly to 29.1%, but that’s a small price to pay for ROE soaring to 15.6%—double the Q1 2024 rate—and ROTE at 19.2%. These metrics put mBank in the top tier of European banks for efficiency.

Risks and Regulatory Adjustments

Not everything is rosy. The Tier 1 capital ratio dipped to 14.24% (from 15.71% in 2024) due to stricter CRR3 regulations, which added PLN 4 billion in risk-weighted assets. However, at 14.24%, it’s still comfortably above the 11% regulatory minimum.

ESG Push: A Smart Move for the Long Run

mBank isn’t just cleaning up its past—it’s investing in the future. The bank aims to allocate PLN 10 billion to green financing by year-end 2025 and hit net-zero emissions by 2050. This aligns with EU climate goals and will attract ESG-focused investors, a growing segment of the market.

The Bottom Line: A Buy or a Hold?

The numbers scream BUY. mBank has eliminated its biggest liability, unlocked capital, and is riding Poland’s economic upswing. With rating upgrades unlocking cheaper funding, loan growth in a stable market, and ESG initiatives boosting its reputation, this is a turnaround story that’s paying off.

Final Verdict: mBank is firing on all cylinders. The legal cleanup is done, profitability is soaring, and the bank is primed to capitalize on Poland’s 3% GDP growth. This isn’t just a recovery—it’s a full-blown growth story. Investors should take notice: mBank (WSE: MBK) is a buy.

Conclusion: mBank’s Q1 2025 results are a masterclass in turning liabilities into assets. By slashing CHF-related costs, upgrading credit ratings, and leveraging Poland’s strong economy, the bank has positioned itself for sustained growth. With ROE in the mid-teens, a robust balance sheet, and ESG initiatives to future-proof its business, this stock is a solid bet for investors seeking both profitability and long-term stability. Don’t miss the train—mBank is rolling out of the station.