Report
mBank Hipoteczny S.A.
for 2025
Selected financial data
The selected financial data presented below are supplementary information to the Financial Statements of mBank Hipoteczny S.A. for 2025.
in PLN `000
in EUR`000
Selected financial data
Year ended 31.12.2025
Year ended 31.12.2024
Year ended 31.12.2025
Year ended 31.12.2024
I.
Interest income
770 040
791 163
181 733
183 812
II.
Revenue from fees and commissions
450
255
106
59
III.
Result on trading activities
(13 858)
3 112
(3 271)
723
IV.
Result on operating activities
37 628
22 126
8 880
5 141
V.
Gross profit
12 465
619
2 942
144
VI.
Net profit/(losses)
6 223
(5 172)
1 469
(1 202)
VII.
Net cash flows from operating activities
136 608
(276 570)
32 240
(64 256)
VIII.
Net cash flows from investing activities
(4 735)
(9 393)
(1 117)
(2 182)
IX.
Net cash flows from financing activities
(427 473)
583 729
(100 886)
135 618
X.
Total net cash flows
(295 600)
297 766
(69 763)
69 180
in PLN `000
in EUR `000
as at
as at
Selected financial data
31.12.2025
31.12.2024
31.12.2025
31.12.2024
I.
Total assets
11 007 296
11 019 975
2 604 229
2 578 978
II.
Amounts due to other banks
4 060 166
3 511 970
960 600
821 898
III.
Amounts due to customers
50
49
12
11
IV.
Equity attributable to shareholders of mBank Hipoteczny S.A.
858 613
824 956
203 140
193 062
V.
Share capital
220 000
220 000
52 050
51 486
VI.
Number of shares
2 200 000
2 200 000
2 200 000
2 200 000
VII.
Total capital ratio (%)
21,45
19,51
21,45
19,51
The following exchange rates were used in translating selected financial data into euro:
 for items of the statement of financial position – exchange rate announced by the National Bank of Poland as at 31 December 2025: 1 EUR = 4.2267 PLN and obligated for 31 December 2024: 1 EUR = 4.2730 PLN,
 for items of the income statement and statement of cash flow – exchange rate calculated as the arithmetic mean of exchange rates announced by the National Bank of Poland as at the end of each month of 2025 and 2024: 1 EUR = 4.2372 PLN and 1 EUR = 1 EUR = 4.3042PLN
Financial Statements of
mBank Hipoteczny S.A.
according to the International Financial Reporting Standards (IFRS) for use in the European Union for 2025
This document is a translation from the original Polish version. In case of any discrepancies between the Polish and English versions, the Polish version shall prevail.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
3
TABLE OF CONTENTS
TABLE OF CONTENTS ........................................................................................................ 3
Income Statement ............................................................................................................ 4
Statement of comprehensive incomes .............................................................................. 5
Statement of changes in equity ........................................................................................ 7
Statement of cash flows ................................................................................................... 8
Explanatory notes to the standalone financial statements ................................................ 9
1. Information on mBank Hipoteczny S.A. ....................................................................... 9
2. Description of the relevant accounting policies ............................................................. 9
3. Financial risk management ...................................................................................... 27
4. Fair value of financial assets and liabilities ................................................................. 41
5. Major estimates and assessments made in connection with the application of accounting principles .............................................................................................................. 46
6. Operating segments ................................................................................................ 48
7. Net interest income ................................................................................................ 50
8. Net fee and commission income ............................................................................... 51
9. Net trading income ................................................................................................. 51
10. Net income on modification ...................................................................................... 52
11. Other operating revenues ........................................................................................ 52
12. General administrative expenses .............................................................................. 53
13. Other operating expenses ........................................................................................ 53
14. Impairment or reversal of impairment on financial assets not measured at fair through net financial income ..................................................................................................... 54
15. Income tax ............................................................................................................ 54
16. Cash and Cash equivalents ...................................................................................... 55
17. Financial assets and liabilities held for trading and derivative hedging instruments .......... 55
18. Financial assets measured at fair value through other comprehensive income ................. 62
19. Financial assets measured at amortised cost .............................................................. 63
20. Intangible assets .................................................................................................... 67
21. Property, plant and equipment ................................................................................. 68
22. Other assets .......................................................................................................... 70
23. Financial liabilities measured at amortised cost ........................................................... 70
Amounts due to other banks and customers ...................................................................... 70
Liabilities from debt securities in issue .............................................................................. 71
24. Provisions .............................................................................................................. 74
25. Other liabilities ....................................................................................................... 75
26. Deferred income tax assets and provision .................................................................. 75
27. Proceedings pending before a court, an authority competent for arbitration proceedings or a public administration authority .............................................................................. 77
28. Off-balance sheet commitments ............................................................................... 78
29. Pledged assets ....................................................................................................... 78
30. Registered share capital .......................................................................................... 79
31. Supplementary capital from the sale of shares above their nominal value ....................... 79
32. Retained earnings ................................................................................................... 79
33. Dividend per share ................................................................................................. 80
34. Notes to the statement of cash flows ......................................................................... 80
35. Incentive plan for the Bank’s Management Board and employees having a material impact on the risk profile of the Bank .................................................................................. 81
36. Related party transactions ....................................................................................... 84
37. Information on the registered audit company ............................................................. 87
38. Capital adequacy .................................................................................................... 87
39. Other information ................................................................................................... 90
40. Post balance-sheet date events ................................................................................ 92
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
4
Income Statement
Year ending December 31
Note
2025
2024
Interest income, including:
7
770 040
791 163
Interest income calculated using the effective interest rate method
747 733
742 278
Income similar to interest - financial assets measured at fair value through profit or loss
22 307
48 885
Interest expense
7
(654 051)
(682 032)
Net interest income
115 989
109 131
Fee and commission income
8
450
255
Fee and commission expenses
8
(7 604)
(6 144)
Net fee and commission income
(7 154)
(5 889)
Net trading income
9
(13 858)
3 112
Net income on modification
10
390
(28 604)
Net income on derecognition of financial instruments not measured at fair value through proft and loss
3 583
322
Other operating income
11
19 750
18 941
Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss
14
(2 941)
(3 253)
Overhead costs
12
(58 743)
(55 214)
Amortisation
20,21
(12 569)
(12 538)
Other operating expenses
13
(6 819)
(3 882)
Operating result
37 628
22 126
Tax on the Bank's balance sheet items
(25 163)
(21 507)
Profit before income tax
12 465
619
Income tax
15
(6 242)
(5 791)
Net profit/(losses)
6 223
(5 172)
Notes presented on pages 9 to 92 constitute an integral part of these Financial Statements
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
5
Statement of comprehensive incomes
Year ended 31 December
2025
2024
Net profit/(losses)
6 223
(5 172)
Other comprehensive income, net, including:
27 434
37 114
Items that may be reclassified to the income statement
27 457
37 162
Change in the valuation of debt financial instruments measured at fair value through other comprehensive income (net)
7 424
8 100
Cash flow hedges (net)
19 412
36 074
Hedge accounting costs (net)
621
(7 012)
Items that will not be reclassified to the income statement
(23)
(48)
Actuarial gains and losses on post-employment benefits (net)
(23)
(48)
Net total income
33 657
31 942
Notes presented on pages 9 to 92 constitute an integral part of these Financial Statements
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
6
Statement of financial position
ASSETS
Note
31.12.2025
31.12.2024
Cash and Cash equivalents
16
60 466
81 177
Financial assets held for trading and derivatives held for hedges
17
954
1 161
Changes in fair value of hedged items in portfolio hedging against interest rate risk
7 642
16 891
Financial assets at fair value through other comprehensive income
18
776 505
1 285 083
Financial assets at amortised cost, including:
19
10 086 059
9 572 231
Loans and advances to banks
8
9 400
Loans and advances to customers
10 086 051
9 562 831
Intangible assets
20
22 281
25 854
Tangible assets
21
18 398
23 319
Current income tax assets
11 246
-
Deferred income tax assets
26
9 576
8 047
Other assets
22
14 169
6 212
TOTAL ASSETS
11 007 296
11 019 975
LIABILITIES AND EQUITY
L i a b i l i t i e s
Financial liabilities held for trading and derivatives held for hedges
17
631
34 193
Financial liabilities measured at amortised cost, including:
23
10 129 687
10 141 889
Amounts due to banks
4 060 166
3 511 970
Amounts due to customers
50
49
Leasing liabilities
13 001
15 085
Debt securities issued
6 056 470
6 614 785
Provisions
24
2 705
2 164
Current income tax liabilities
-
2 741
Other liabilities
25
15 660
14 032
TOTAL LIABILITIES
10 148 683
10 195 019
E q u i t y
Share capital:
727 362
727 362
- Registered share capital
30
220 000
220 000
- Supplementary capital from the sale of shares above the nominal value
31
507 362
507 362
Retained earnings:
32
127 902
121 679
- Profit from the previous years
121 679
126 851
- Result of the current year
6 223
(5 172)
Other components of equity
3 349
(24 085)
TOTAL EQUITY
858 613
824 956
TOTAL LIABILITIES AND EQUITY
11 007 296
11 019 975
Notes presented on pages 9 to 92 constitute an integral part of these Financial Statements
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 4 ( in PLN thousand )
7
Statement of changes in equity
Changes in equity from 1 January 2025 to 31 December 2025
Share capital
Retained earnings
Other equity items
Register ed share capital
Suppleme ntary capital from the sale of shares above the nominal value
Other supplementary capital
General banking risk reserve
Retained profit from the previous years
Result of the current period
Valuation of financial assets at fair value through other comprehensive income
Cash flow hedges
Costs of hedge accounting
Actuarial gains and losses relating to post- employment benefits
Total
As at 1 January 2025
220 000
507 362
361 712
44 800
(279 661)
(5 172)
(4 006)
(19 412)
(621)
(46)
824 956
Carryover of the result from the previous year
-
-
-
-
(5 172)
5 172
-
-
-
-
-
Net profit
-
-
-
-
-
6 223
-
-
-
-
6 223
Other comprehensive income for the period
-
-
-
-
-
-
9 829
23 965
767
(43)
34 518
Deferred tax
-
-
-
-
-
-
(2 405)
(4 553)
(146)
20
(7 084)
Net comprehensive income, total
-
-
-
-
-
6 223
7 424
19 412
621
(23)
33 657
As at 31 December 2025
220 000
507 362
361 712
44 800
(284 833)
6 223
3 418
-
-
(69)
858 613
Changes in equity from 1 January 2024 to 31 December 2024
Share capital
Retained earnings
Other equity items
Registered share capital
Supplem entary capital from the sale of shares above the nominal value
Other
supplementary
capital
General banking risk reserve
Retained profit from the previous years
Result of the current period
Valuation of financial assets at fair value through other comprehensi ve income
Cash flow hedges
Costs of hedge accounting
Actuarial gains and losses relating to post- employment benefits
Total
As at 1 January 2024
220 000
507 362
361 712
44 800
(303 378)
23 717
(12 106)
(55 486)
6 391
2
793 014
Carryover of the result from the previous year
-
-
-
-
23 717
(23 717)
-
-
-
-
-
Net losses
-
-
-
-
-
(5 172)
-
-
-
-
(5 172)
Other comprehensive income for the period
-
-
-
-
-
-
10 000
44 536
(8 657)
(59)
45 820
Deferred tax
-
-
-
-
-
-
(1 900)
(8 462)
1 645
11
(8 706)
Net comprehensive income, total
-
-
-
-
-
(5 172)
8 100
36 074
(7 012)
(48)
31 942
As at 31 December 2024
220 000
507 362
361 712
44 800
(279 661)
(5 172)
(4 006)
(19 412)
(621)
(46)
824 956
Notes presented on pages 9 to 92 constitute an integral part of these Financial Statements
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
8
Statement of cash flows
Year ended 31 December
Note
2025
2024
A. Cash flows from operating activities
136 608
(276 570)
Profit/loss before income tax
12 465
619
Adjustments:
124 143
(277 189)
Income tax paid
(28 193)
33 485
Amortisation
20,21
12 569
12 538
Foreign exchange (gains) losses related to financing activities
(4 213)
(52 650)
(Profits) losses from investing activities
(2 847)
-
Interest income (profit and loss statement)
7
(770 040)
(791 163)
Interest expenses (profit and loss statement)
7
654 051
682 032
Interest received
804 824
769 817
Interest paid
(145 470)
(184 319)
Changes in assets and liabilities held for trading and derivative hedging instruments
(43 287)
(46 861)
Change in loans and advances to customers
(553 259)
(497 048)
Change in financial assets measured at fair value through other comprehensive income
260 794
(140 567)
Change in the status of intangible assets and tangible fixed assets
20,21
661
112
Change in other assets
22
(7 929)
2 132
Change in amounts due to banks
(78 749)
(75 325)
Change in amounts due to customers
271
461
Change in debt securities in issue
22 821
8 785
Change in provisions
511
1 168
Change in other liabilities
1 628
214
Net cash from operating activities
136 608
(276 570)
B. Cash flows from investing activities
(4 735)
(9 393)
Income from investment activities
416
196
Due to the disposal of intangible assets and tangible fixed assets
416
196
Investing activity outflows
5 151
9 589
Due to the purchase of intangible assets and tangible fixed assets
5 151
9 589
Net cash from investing activities
(4 735)
(9 393)
C. Cash flows from financing activities
(427 473)
583 729
Financing activity inflows
4 108 994
2 984 479
Due to the loans and advances from banks
2 106 414
1 782 122
Due to the issue of debt securities
23
2 000 000
1 200 000
Interest received from hedging derivative financial instruments
2 580
2 357
Financing activities outflows
4 536 467
2 400 750
Due to the repayment of loans and advances from banks
1 501 144
1 580 469
Due to the issue of debt securities
2 567 698
417 685
Payments of leasing liabilities
3 077
2 941
Interest paid on loans received and debt securities issued
464 548
399 655
Net cash from financing activities
(427 473)
583 739
Change in net cash and cash equivalents, total (A+B+C) including:
(295 600)
297 766
Cash and cash equivalents as at the beginning of the reporting period
416 020
118 254
Cash and cash equivalents as at the end of the reporting period
120 420
416 020
Notes presented on pages 9 to 92 constitute an integral part of these Financial Statements
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
9
Explanatory notes to the standalone financial statements
1. Information on mBank Hipoteczny S.A.
By the decision of the District Court for the Capital City of Warsaw 16th Commercial Department on 16 April 1999 mBank Hipoteczny S.A. (hereinafter referred to as the “Bank”) was entered into the Commercial Register under registration number 56623.
On 27 March 2001 the District Court in Warsaw issued a decision to enter the Bank in the National Court Register (KRS) under KRS No. 0000003753.
As per the Polish Classification of Activities the Bank business is designated as 64.19.Z “Other monetary intermediation”.
According to the Bank’s Articles of Association, the Bank’s scope of activity is provision of banking services to natural and legal persons, as well as to unincorporated organisational units both in PLN and foreign currencies.
The Bank operates in the territory of the Republic of Poland. Registered office of the Bank is located in Warsaw, at 18 Prosta St. The Bank was established for an indefinite period of time.
The Bank is a specialised mortgage bank whose primary objective is to issue mortgage bonds to provide the main source of long-term financing for loans secured by real estate. The Bank develops its issuance activities on the basis of a portfolio of residential loans for private customers, which is built in close cooperation with mBank. The Bank's activities are carried out in operating segments described in detail in Note 6.
The Bank is not a parent company or significant investor for associates and jointly-controlled entities, both as at 31 December 2025 and as at 31 December 2024, the Bank did not have any subsidiaries and therefore does not prepare consolidated financial statements.
The Bank's ultimate parent is mBank S.A., which prepares the consolidated financial statements of the mBank Group.
The immediate ultimate parent company of mBank S.A. is Commerzbank AG.
At 31 December 2025, the Bank's headcount was 101 FTEs; 119 persons (31 December 2024: 98 FTEs; 120 persons).
The average headcount was 119 in 2025 and 115 in 2024.
These financial statements were approved by the Bank's Board of Directors on 23.02.2026.
2. Description of the relevant accounting policies
The most important accounting principles applied by the Bank in the preparation of these financial statements are presented below. The accounting principles adopted by the Bank were applied in a continuous manner to all the periods presented in the financial statements.
2.1. Accounting basis
Financial Statements of Bank have been prepared for the 12-month period ended 31 December 2025. Comparative data presented in these financial statements relate to the period of 12 months ended on 31 December 2024. Presented financial statements are standalone financial statements.
The Financial statements of Bank has been prepared in accordance with the International Financial Reporting Standards adopted for use in the European Union (IFRS EU), according to the historical cost principle, except for derivative contracts and financial instruments held for trading, financial assets that do not meet the SPPI test, financial assets assigned to a business model that does not assumes holding them in order to obtain contractual cash flows, that are carried at fair value through profit or loss, and except for financial instruments at fair value through other comprehensive income.
The preparation of financial statements in accordance with IFRS requires the use of certain accounting estimates and the adoption of certain assumptions that affect the amounts presented in SF. It also requires the Management Board of the Bank to use its own judgment when applying the accounting policies adopted by the Bank. The issues in relation to which a significant professional judgement is required, more complex issues, or such issues where estimates or judgments are material to the financial statements are disclosed in Note 6. Estimates and assumptions are based on historical experience and other factors, including expectations as to
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
10
future events, are subject to continuous assessment by the Bank's Management Board. Despite the fact that these estimates are based on the best knowledge of the current conditions and actions taken by the Bank, the actual results may differ from these estimates. Changes in estimates are recognized in the reporting period during which the estimate was changed.
The Bank's financial statements have been prepared on the going concern basis. There are no circumstances indicating any threats to continuing as a going concern in the foreseeable future, ie at least for a period of 12 months from the date of approval by the Management Board. The Bank's capital and liquidity position is adequate to its operations. Current and projected capital and liquidity ratios are at safe levels above regulatory and internal limits.
The financial statements are prepared in accordance with the materiality principle. Omissions or misstatements of items in the financial statements are material if they may, individually or jointly, influence economic decisions made by users of the Bank's financial statements. Materiality depends on the size and nature of the omission or misstatement of an item in the financial statements and a combination of both. Each material category of similar items is presented separately by the Bank. Items different in terms of type or function are presented separately by the Bank, unless they are insignificant.
The financial statements are presented in PLN thousand, which is the functional currency and the Bank's presentation currency.
2.2. Interest income and expenses
All interest income on financial instruments carried at amortised cost using the effective interest rate method is recognized in the income statement as well as interest income from financial assets measured at fair value through other comprehensive income and measured at fair value through profit or loss.
The effective interest rate method is a method of calculation of the amortised initial value of financial assets or financial liabilities and allocation of interest income or interest expense to the proper periods. The effective interest rate is the interest rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial assets or financial liability to the gross carrying amount of a financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Bank estimates the expected cash flows taking into account all the contractual terms of the financial instrument, but without taking into account the expected credit losses. This calculation takes into account all the fees and points paid or received between the parties to the contract, which constitute an integral component of the effective interest rate, as well as transaction expenses and any other premiums or discounts.
Interest accrued on receivables for which impairment has been recognized is included in income according to the interest rate used to discount future cash flows for the purposes of impairment measurement. This interest is included in the profit and loss account in the recoverable part, i.e. taking into account the correction of the permanent impairment of interest.
Interest income includes interest and commissions received or due on account of loans, inter-bank deposits or investment securities recognized in the calculation of the effective interest rate.
Interest income, including interest on loans, is recognized in the income statement and on the other side in the statement of financial position as part of receivables from banks or from other customers.
Income and expenses related to the interest component of the result on interest rate derivatives and resulting from current calculation of swap points on currency derivatives classified into banking book are presented in the interest results in the position Interest income/expense on derivatives classified into banking book. The Bank does not conduct commercial activity, all transactions on derivatives are classified in the banking book.
Interest income and interest expenses related to the interest measurement component of derivatives concluded as hedging instruments under fair value and cash flow hedge accounting are presented in the interest result in the position interest income/expense on derivatives under the hedge accounting.
Interest expenses include paid and accrued interests as well as commissions settled over time using effective interest rate from received loans, other financial liabilities with deferred payment term, subordinated loans, debt securities issued (legal costs, rating costs and audit costs) and cash collateral and due to leasing.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
11
2.3. Fee and commission income and expenses
Fee and commission income is recognized in accordance with IFRS 15 using a 5-step model for revenue recognition, which consists of:
Step 1: Identifying the contract’s with a customer
Step 2: Identifying performance obligations in the contract
Step 3: Determining the transaction price
Step 4: Allocating the transaction price to the performance obligation
Step 5: Recognition of revenue when (or as) the Group satisfies a performance obligation
Revenues recognized in accordance with IFRS 15 do not constitute a significant part of the revenues generated by the bank.
Loans and commissions are recognized in the effective interest rate account and classified as interest income. Commissions for contracts that have not been disbursed as at the date of collection or payment of the commission, adjust the value of the effective interest rate on the date of disbursement of funds. Commissions for loan agreements that have not been started are recognized once in the profit and loss account on the expiry date of the loan agreement. Commissions for the loan tranches made available to the customer (for commitment) are calculated evenly over the period of service provision. The commission amount is settled over the period of the commission transaction on a straight-line basis.
Commission income also includes fees and commissions settled over time using the straight-line method, received on loans and advances granted with undetermined schedules of future cash flows, for which the effective interest rate cannot be determined. The linear method for this type of service provides a fair picture of the transfer of goods and services as these services are provided evenly over time.
Commission costs related to amounts paid on loans taken, securities issued, adjust the value of the effective interest rate on the date of disbursement of funds or on the date of payment, if it occurred after the date of disbursement of funds, and are presented in the line of interest expense. Commission costs on other operations, including costs related to the after-sale service of portfolios under outsourcing agreements, as well as costs related to the issue of covered bonds, among others legal costs, costs of ratings and audit costs are charged to the profit and loss account once.
2.4. Segment reporting
An operating segment is a component of an entity that engages in business activities that earn revenues and incur expenses (including revenues and expenses associated with transactions with other components of the same entity) and whose operating results are regularly reviewed by the entity's chief operating decision maker and used in making decisions about resources to be allocated to the segment and in assessing segment performance, and for which separate financial information is available.
Segment reporting is presented on the same basis as used for internal (management) reporting purposes. Management refers to the function that allocates resources to the business segments and conducts assessments of their performance. The Bank has assumed that the role of 'management' as defined in IFRS 8 is performed by the Bank's Board of Directors.
Under IFRS 8, the Bank identifies the following operating segments: "Retail Banking segment", "Treasury (Treasury) segment". A detailed description of the operating segments is presented in Note 6.
2.5. Financial assets/financial liabilities
The Bank classifies its financial assets to the following categories:
■ financial assets at fair value through profit or loss,
■ financial assets at fair value through other comprehensive income,
■ financial assets measured at amortized cost.
The classification of a financial asset into one of the categories is made on initial recognition based on the Bank's business model for managing financial assets and the characteristics of the contractual cash flows of the financial asset.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
12
Standardised purchases and sales of financial assets at fair value through profit or loss and at fair value through other comprehensive income are recognized on the settlement date of the transaction - the date on which the Bank delivers or receives the asset. Changes in fair value between the trade date and the settlement date for assets measured at fair value are recognized in the income statement or in other equity items. Loans are recognized when funds are disbursed or made available to the borrower's account. Derivative financial instruments are recognized from the trade date.
A financial asset is derecognized as a result of a significant modification and transfer of an asset that is classified for derecognition.
Financial liabilities as at the date of their acquisition or creation are classified into the following categories:
■ financial liabilities valued at fair value through profit or loss,
■ other financial liabilities valued at amortized cost.
A financial liability is classified into one of the categories at the time of its acquisition in accordance with the Bank's intention as to its intended use.
As financial assets at fair value through profit or loss, the Bank classifies derivative financial instruments and financial assets (loans and advances granted by the Bank) whose contractual terms and conditions result in cash flows which are not merely repayment of the principal and interest on the outstanding principal (loans that do not meet the SPPI criterion in the category of non-recourse assets). These assets are presented in the statement of financial position under "Non- trading financial assets at fair value through profit or loss".
Financial instruments valued at fair value through the financial result
A financial asset shall be measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income.
The Bank, at the initial recognition, irrevocably designate the financial assets/financial liabilities at fair value through profit or loss when doing so results in more relevant information, because either:
■ it eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as “an accounting mismatch”) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases; or
■ a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management and information about the group is provided internally on that basis to the entity's key management personnel.
Financial assets and financial liabilities classified to this category are valued at fair value upon initial recognition.
Interest income/expense on financial assets/financial liabilities designated at fair value, of which interest profit or loss on derivatives, is recognized in net interest income. The valuation and result on disposal of financial assets/financial liabilities valued at fair value through profit or loss are included as follows:
■ on trading income, in case of financial derivatives,
■ in the item profits or losses on non-trading financial assets mandatorily measured at fair value through profit or loss.
Gains and losses resulting from changes in the fair value of financial assets measured at fair value through profit or loss are recognized in the income statement in the period in which they arise.
Financial assets measured at amortized cost
Financial assets measured at amortized cost are assets that meet both of the following conditions, unless the Bank designated them to fair value through profit or loss: the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flow characteristics and contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding Financial assets at amortized cost are entered into books on the transaction date / at the time of disbursement of cash to the borrower.
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Financial assets measured at amortized cost are recognized at adjusted purchase price (amortized cost) using the effective interest rate.
Financial assets measured at fair value through other comprehensive income
Financial assets measured at fair value through other comprehensive income are assets that meet both of the following conditions, unless the Bank designated them to fair value through profit or loss: the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
In the reporting periods presented in these financial statements, the Bank classified investments in debt securities as financial assets at fair value through other comprehensive investment income.
Interest income and expense from financial assets measured at fair value through other comprehensive income are presented in net interest income. Gains and losses from sale of financial assets measured at fair value through other comprehensive income are presented as a result of investment securities.
Gains and losses arising from changes in the fair value of financial assets measured at fair value through other comprehensive income are recognized in other comprehensive income until the derecognition of the respective debt instrument in the statement of financial position or until its impairment: at such time the aggregate net gain or loss previously recognized in other comprehensive income is now recognized in the income statement. However, interest calculated using the effective interest rate is recognized in the income statement. If the fair value of a debt instrument measured at fair value through other comprehensive income increases in a subsequent period, and such increase can be objectively related to an event occurring after the recording of the impairment loss in the income statement, then the respective impairment loss is reversed in the income statement.
Modification of contractual terms for financial assets
The Bank settles previously recognized financial assets and re-recognizes the financial assets in accordance with the requirements for initial recognition in case of substantial modification of contractual terms of financial assets. As substantial modification the Bank defines such a modification that meets one of the following criteria:
■ increasing the amount of financing by more than 10% compared to the amount before the change,
■ extending the financing period by more than 12 months compared to the financing period before the change,
■ currency conversion that was not provided for in the terms of the contract. Wherein in order for the currency conversion to be considered as provided for in the terms of the contract, it would have to define both the rate at which it would take place as well as the interest rate on the loan after the conversion ,
■ change of the borrower – does not apply when another borrower joins the contract,
■ change of the cash flow criterion from ’SPPI compliance’,
■ change in the object of financing.
In the event of substantial modification the deferred income and expense related to this assets is recognized in the income statement and the provision is released. At the same time there is re-recognition of financial assets in accordance with the requirements for initial recognition. Any other modifications of contractual terms that do not cause derecognition of financial assets are treated as not substantial modifications and the gain or loss on modification is recognized. The effects of all identified insignificant cash flow modifications are recognized in the non-significant modification result. The result on modification is the difference between present value of the modified cash flows discounted using the old effective interest rate and the effective loan exposure. Commissions received related to minor modification are settled over time using effective interest rate. All significant modifications are recognized as related to credit risk. In the event of a significant modification of the exposures in the second stage, for which, as a result of the modification, a transfer to the first stage was made, the adjustment to fair value of such an exposure, as at the initial recognition date, adjusts the net interest income in subsequent periods.
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Purchased or originated credit impaired financial assets (POCI assets)
POCI are financial assets measured at amortized cost that at initial recognition are credit impaired. POCI are also financial assets that are credit impaired at the moment of substantial modification. At the initial recognition POCI assets are recognized at fair value. The fair value of POCI assets at the initial recognition is calculated as present value of estimated future cash flows including credit risk discounted for the risk free rate. After the initial recognition POCI assets are measured at amortized cost. With respect to these financial assets the Bank uses credit adjusted effective interest rate in order to determine the amortized cost of financial asset and the interest income generated by these assets – CEIR. In case of POCI exposures the change of the expected credit losses relative to the estimated credit losses at the date of their initial recognition is recognized as an impairment loss. Its value can both reduce the gross value of POCI exposure and increase it in the event of a decrease of expected losses relative to its value at the date of initial recognition.
Reclassification of financial assets
Financial assets are reclassified when, and only when, the Bank changes its business model for managing financial assets. In such a case the assets affected by the change of business model are subject to reclassification.
Reclassification of financial liabilities
Financial liabilities are not subject to reclassification by the Bank.
2.6. Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The only assets and liabilities that the Bank compensates for are those related to hedge accounting.
2.7. Impairment of financial assets
Financial instruments subject to the requirements to estimate allowances and provisions are: financial assets measured at amortized cost, financial assets measured through other comprehensive income, loan commitments.
Financial assets measured at amortized cost – rules for classifying exposures to stages
The transfer logic is an algorithm used to classify exposures to one of the four Stages: 1, 2, 3, POCI.
 Stage 1 includes exposures for which provisions/write-downs are calculated on a 12-month basis,
 Stage 2 contains exposures for which, as at the reporting date, a significant deterioration in credit quality was identified compared to the date of their initial recognition – provisions/write-downs are calculated on a lifetime period,
 Stage 3 contains exposures identified as credit-impaired,
 POCI contains assets identified as credit-impaired at initial recognition.
Assignment of exposures to Stage 2 is carried out in the Bank according to the algorithm of the so- called Transfer Logic, which determines qualitative and quantitative prerequisites that speak for a significant increase in credit risk, while classification to Stage 3 is determined by impairment prerequisites.
After the cessation of the quantitative premise or qualitative premises, based on which the exposure was classified in Stage 2 as of the reporting date (the customer and the exposure assigned to him does not have any of the qualitative premises of the Logic of Transfer or the quantitative premise active), the exposure will reclassify from Stage 2 to Stage 1. In addition, in the case of loans to which forborne tools have been applied, the condition for reclassification to Stage 1 is the expiration of a period of 24 months, during which the loan is properly serviced (performing).
It is also possible to reclassify a customer from Stage 3 to Stage 2 or Stage 1 if the quarantine period has expired for each default premise assigned to the debtor.
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The quarantine period means the period of time during which the debtor is properly servicing obligations calculated from the moment the impairment premise ceases to exist.
Calculation of the quarantine period is carried out separately for each impairment premise. The quarantine period is also maintained when the liability due to which the impairment premise occurred has been paid off, written off or sold. The quarantine period is:
 in the case of the premise of emergency restructuring - 12 months,
 in the case of other premises - 3 months.
The bank assesses the debtor's credit behavior during the quarantine period, and exit from quarantine is contingent on proper servicing.
Impairment - retail portfolio obtained in cooperation with mBank S.A.
For retail exposures, the Bank distinguishes the following indications of impairment:
 the number of days past due for principal, interest or fees is more than 90 days. The calculation of the number of days past due is made at the debtor level and begins when the absolute and relative thresholds of materiality are exceeded together, where:
□ the absolute threshold refers to the sum of all overdue amounts related to the debtor's obligations to the Bank and is PLN 400,
□ the relative threshold refers to the ratio of all past due amounts related to the debtor's liabilities to the Bank to the total balance sheet liabilities related to the debtor and is 1%;
 emergency restructuring by the Bank (the materiality threshold from which the Bank considers a reduced financial obligation to be characterized by default is 1%);
 termination of the agreement by the Bank in the situation of violation of the terms of the loan agreement by the debtor;
 obtaining information about the filing of a consumer bankruptcy petition by the debtor, the conduct of court proceedings in this case or a court ruling on consumer bankruptcy;
 acquiring information about the debtor's filing of an application for bankruptcy/restructuring proceedings against the debtor, which, in the Bank's opinion, may result in the debtor's delaying or failing to repay the obligation;
 recognition by the Bank of a given transaction as defrauding;
 disposal by the Bank of an exposure at a significant economic loss related to a change in the debtor's creditworthiness;
 determination by the Bank of the uncollectibility of an obligation;
 payment by an insurance company of a benefit under the insurance of low own contribution (LOC);
 occurrence of a default under other contracts (cross default).
Significant deterioration of credit quality
A significant deterioration in credit quality is recognized for the asset concerned on the basis of quantitative and qualitative criteria, with the asset being transferred to Stage 2 once at least one of such qualitative or quantitative criteria is met.
Qualitative criteria
Qualitative criteria are:
 the number of days of delay in repayment of the amount due is greater than or equal to 31 days, taking into account the materiality thresholds:
□ the absolute threshold refers to the overdue amount of the exposure and is PLN 400 for retail exposures,
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□ the relative threshold refers to the ratio of the overdue exposure amount to the total balance sheet exposure amount and is 1%,
 the number of days of delay in repayment of the outstanding amount of the exposure is greater than or equal to 91 days (excluding materiality thresholds),
 the occurrence of a Forborne performing flag (the status of a customer indicating its difficulty in repaying a credit obligation according to the definition of Forborne used by the Bank),
 deterioration of the risk profile of the entire exposure portfolio by product type, industry or distribution channel,
 at least threefold increase in the current PD level compared to the PD level from the date of initial recognition of the exposure. The condition is verified at the exposure level only for contracts with a PD rating of "non-investment grade" (i.e., worse than 2.4),
 expectations regarding the future deterioration of credit quality at the level of a group of exposures with similar characteristics resulting from the analysis of factors affecting this group (i.e. collective approach), which are not reflected in the risk parameters.
Quantitative criteria
The Transfer Logic quantitative criterion uses a measure of material credit deterioration based on the relative and absolute change in the long-run PD determined for exposures as of the reporting date relative to the measure of long-run PD determined as of the initial recognition date. This measure is determined separately within homogeneous segments due to the probability of a default event and the characteristics of the exposure. If the values of the relative and absolute change in long-term PD exceed the so-called transition thresholds, then the exposure in question is placed in Stage 2. Initial date re-recognition is determined for the exposures for which substantial modification of contractual terms took place. Each change of initial recognition date results in recalculation taking into account the new exposure characteristics, initial PD parameter at the new initial recognition date, against which the credit quality deterioration is examined.
Estimating expected credit losses
The determination of expected credit loss (ECL) is done at the individual contract level. In the portfolio approach, expected credit losses are the product of the individual estimated values of the PD, LGD and EAD parameters for each exposure, and the final expected loss value is the sum of the expected losses in each period discounted by the effective interest rate.
In the area of calculating allowances and provisions for the portfolio acquired in cooperation with mBank, group credit risk models are used, of which the Bank is a local user.
In order to estimate the long-term PD parameter, an estimation was used in which the explanatory variable is the cumulative default-rate. In this procedure, a Weibull distribution curve is fitted to the empirical data using linear regression calculated by the least squares method. Estimates are made separately within segments that are homogeneous in terms of customer and exposure characteristics. In order to determine long-term PD values that take into account macroeconomic expectations, a scaling factor, the so-called z-factor, is additionally determined in order to adjust the average observed long-term PD values to values that reflect expectations about the development of future macroeconomic conditions. The scaling factor determines the phase of the business cycle in which the economy will be in future forecast years by comparing expected values of default rates to long-term averages.
For the purpose of calculating the long-term LAG parameter, an explanatory variable was used in the form of a loss ratio calculated using the discounted cash flow method (workout approach). To determine the modeled values, a set of statistical methods consisting of fractional regression, linear regression, mean in pools, or regression trees, among others, was used. Estimates are made separately within segments that are homogeneous in terms of customer and exposure characteristics. Macroeconomic expectations were also used during the estimation, which adjusted the model values based on client-contract variables.
In order to calculate the long-run EAD parameter, a set of two explanatory variables was used in the form of future Limit Utilisation (LU), and Credit Conversion Factor (CCF). The model values were determined by regression trees using client-contract variables. In segments where analyses
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indicated the statistical significance of macroeconomic expectations, these were included in the EAD models.
If, at the reporting date, the credit risk of the exposure has not increased significantly since initial recognition, expected credit losses are calculated at the minimum horizon from the 12-month horizon and the horizon to maturity. If the credit risk of the exposure has increased significantly since initial recognition (the exposure is in stage 2), the Bank calculates expected credit losses over a lifetime horizon (Lt ECL). The parameters used to calculate the expected credit loss in stage 1 are identical to those determined to calculate the long-term credit loss in stage 2 for t=1, where it is the forecast year.
Use of macroeconomics scenarios in ECL estimation
The bank is required to calculate the expected credit loss in a way that reflects the expectations regarding various scenarios for the future macroeconomic situation. In the case of portfolio ECL estimation, the Bank determines the NLF (non-linearity factor) parameter, which is to adjust the value of the expected credit loss (determined every month). The value of the NLF is determined at least annually, separately for each segment of the retail portfolio. The values of the NLF ratio are used as scaling factors for individual ECL values determined at the level of individual exposures in individual segments on the basis of the results of 3 simulation conversions of the expected credit loss value to the identical reporting date, resulting from the adopted macroeconomic scenarios. In particular, the NLF parameter for a given segment is defined as the quotient of:
 weighted by the probability of the scenario realization, the average value of the expected loss from 3 macroeconomic scenarios (the so-called average estimate), which includes: the baseline, optimistic, pessimistic scenario. The weights of these scenarios correspond to the probability of realization of each of them and are respectively 60% for the base one, 20% for the optimistic one and 20% for the pessimistic one,
 the expected loss value determined in the baseline scenario (reference estimate).
Simulation processing, the results of which are used to calculate the NLF factor, is performed on the basis of the same input data on exposure characteristics, but using different vectors of risk parameters where the macroeconomic expectations defined in the scenarios affect the values of these parameters. In addition, the inclusion of forward-looking information takes place in the models for all three credit risk parameters estimated over a lifetime horizon (LtPD, LtEAD, LtLGD). Forward-looking data is used to determine parameter values over 12 months to 6 years. In the estimations, the Bank uses, inter alia, publicly available macroeconomic indicators (GDP, employment in the corporate sector, unemployment rate, level of exports/imports, wages, claims of monetary financial institutions on households), expectations of exchange rate developments, as well as changes in property prices.
Loan receivable write-off
Loan receivable write-off can be partial or total. In case of retail banking, writing off receivables can be done in the case of:
1. Debt recovery is not possible e.g.:
■ the claim limitation,
■ fraud – inability to identify the debtor,
■ limitation of inheritors’ liability,
■ the claim was questioned by the debtor in court.
2. The lack or exhaustion of recovery capacity, in particular:
■ the discontinuance of enforcement proceedings due to its ineffectiveness,
■ rejection of the application for bankruptcy or closure of bankruptcy proceedings on the grounds that the debtor's assets are insufficient to cover the costs of the proceedings,
■ the recognition of the claim as irrecoverable - the costs of recovery exceed the potential recovery.
2.8. Cash and cash equivalents
Cash and cash equivalents comprise items with maturities of up to three months from the date of their acquisition, including: cash in hand and cash held at the Central Bank with unlimited availability for disposal, treasury bills and other eligible bills, loans and, amounts due from other banks and State Treasury securities with the intention of selling them in the short term.
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2.9. Derivative financial instruments and hedge accounting
Derivative financial instruments are recognized at fair value from the date of transaction. Fair value is determined based on prices of instruments listed on active markets, including recent market transactions, and on the basis of valuation techniques, including models based on discounted cash flows and options pricing models, depending on which method is appropriate in the particular case. All derivative instruments with a positive fair value are recognized in the statement of financial position as assets, those with a negative value as liabilities.
The best fair value indicator for a derivative instrument at the time of its initial recognition is the price of the transaction (i.e., the fair value of the paid or received consideration). If the fair value of the particular instrument may be determined by comparison with other current market transactions concerning the same instrument (not modified) or relying on valuation techniques based exclusively on market data that are available for observation, then the Bank recognizes the respective gains or losses from the first day in accordance with the principles described in Note 2.10.
Derivative instruments, which are designated and constitute effective hedging instruments, are subject to the principles of hedge accounting.
The method of recognizing the resulting fair value gain or loss depends on whether the given derivative instrument is designated as a hedging instrument, and if it is, it also depends on the nature of the hedged item.
The Bank designates certain derivatives as either:(1) hedges of the fair value of a recognized asset or liability or a binding contract (fair value hedge), or (2) hedges of future highly probable cash flows of a recognized asset or liability or a forecasted transaction (cash flow hedge).
With regard to derivatives hedging the Bank's positions, hedge accounting is applied, provided that the criteria set out in IFRS 9 are met:
■ at the inception of the hedge there is formal designation and documentation of the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instruments effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk;
■ the hedge is expected to be highly effective in offsetting changes in fair value or cash flows attributable to the hedged risk, consistently with the originally documented risk management strategy for that particular hedging relationship;
■ for cash flow hedges, a forecast transaction that is the subject of the hedge must be highly probable and must present an exposure to variations in cash flows that could ultimately affect profit or loss;
■ the effectiveness of the hedge can be reliably measured, i.e. the fair value hedged item that are attributable to the hedged risk and the fair value of the hedging instrument can be reliably measured;
■ the hedge is assessed on an ongoing basis and determined actually to have been highly effective throughout the financial reporting periods for which the hedge was designated.
The Bank documents the objectives of risk management and the strategy of concluding hedging transactions, as well as at the time of concluding the respective transactions, the relationship between the hedging instrument and the hedged item. The Bank also documents its own assessment of the effectiveness of fair value hedging transactions, measured both prospectively and retrospectively from the time of their designation and throughout the period of duration of the hedging relationship between the hedging instrument and the hedged item.
Fair value hedges
Changes in the fair value of derivative instruments designated and qualifying as fair value hedges are recognized in the income statement together with any changes in the fair value of the hedged liability that are attributable to the hedged risk. The Bank presents the adjustment of balance sheet value of the hedged instrument as the separate line of the statement of financial position.
The gain or loss on hedging a hedged item adjusts the carrying amount of the hedged item. In case a hedge has ceased to fulfil the criteria of hedge accounting, the adjustment to the carrying value
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of the hedged item for which the effective interest method is used is amortised to the income statement over the period to maturity.
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Cash flow hedges
The effective part of the fair value changes of derivative instruments designated and qualifying as cash flow hedges is recognized in other comprehensive income. The gain or loss concerning the ineffective part is recognized in the income statement of the current period.
The amounts recognized in other comprehensive income are transferred to the income statement and recognized as income or cost of the same period in which the hedged item will affect the income statement (e.g., at the time when the forecast sale that is hedged takes place).
In case the hedging instrument has expired or has been sold, or the hedge has ceased to fulfil the criteria of hedge accounting, any aggregate gains or losses recognized at such time in other comprehensive income remain in other comprehensive income until the time of recognition in the income statement of the forecast transaction. When a forecast transaction is no longer expected to occur, the aggregate gains or losses recorded in other comprehensive income are immediately transferred to the income statement.
All derivative transactions are concluded to hedge against currency risk and interest rate risk. The bank does not conduct trading activities, all derivative transactions are included in the banking portfolio .
The IFRS 9 introduces also the option to recognize in a separate component of equity part of the fair value of the hedging derivative instrument related to time value of option, forward element of a forward contract or currency basis spread, and reclassify it to profit or loss in the same periods during which the hedged expected future cash flows affect profit or loss. The Group takes advantage of this option and includes in the line „Other components of equity” fair value changes of hedging CIRS contracts in the amount attributable to currency basis spread, provided that such fair value changes were not designated as part of the hedge relation.
2.10. Gains and losses on initial recognition
The best evidence of fair value of a financial instrument at initial recognition is the transaction price (i.e., the fair value of the payment given or received), unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets.
If the Bank determines that the fair value on initial recognition differs from the transaction price, it recognizes the difference between the two values on that date as follows:
- as profit or loss if the fair value is confirmed by a quoted price in an active market for an identical asset or is based on a valuation technique that uses only data from observable markets,
- in other cases is deferred.
For transactions where the initial value obtained from the valuation model (which takes into account both observed market and non-market data) and the transaction price differ, initial recognition is at the transaction price. The Bank assumes that such price is the best approximation of fair value, despite the fact that the value obtained from the valuation model may be different. The difference between the transaction price and the value obtained from the model, customarily referred to as day one profit and loss, is accounted for over time.
The timing of the recognition of deferred day one gains and losses is assessed on a case-by-case basis. They are amortised over the life of the transaction, deferred until the instrument's value can be determined from observable market inputs, or realised through payments. The financial instrument is henceforth measured at fair value, adjusted for gains and losses on initial recognition. Further changes in fair value are recognized immediately in the income statement without reversing the deferred gains and losses from initial recognition.
2.11. Financial liabilities measured at amortised cost
Financial liabilities measured at amortized cost include borrowings, deposits taken, debt securities issued and subordinated liabilities. These liabilities are initially recognized at fair value reduced by the incurred transaction costs. After the initial recognition, these liabilities are recorded at adjusted cost of acquisition (amortised cost using the effective interest method). Any differences between the amount received (reduced by transaction costs) and the redemption value are recognized in the income statement over the period of duration of the respective agreements according to the effective interest rate method.
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2.12. Intangible assets
Initially the Bank recognizes intangible assets at acquisition cost. Subsequently intangible assets are recognized at their cost of acquisition adjusted by less any accumulated amortization and any impairment losses. Accumulated amortization is accrued by the straight line method taking into account the expected period of economic useful life of the respective intangible assets. Expenditures on an intangible asset are included in costs as they are incurred, unless they constitute an element of the purchase price or cost of creation of an intangible asset that meets the criteria of recognition.
On each balance sheet day the company carries out an assessment whether or not any indications exist for possible value impairment of any asset item. If any such indication exists, the company estimates the recoverable amount of such respective asset.
Computer software
Purchased computer software licences are capitalised in the amount of costs incurred for the purchase and adaptation for use of specific computer software. Capitalised costs are amortised on the basis of the expected useful life of the software (2-10 years). Expenses attached to the development or maintenance of computer software are expensed when incurred. Expenses directly linked to the development of identifiable unique proprietary computer programmes controlled by the Bank, which are likely to generate economic benefits in excess of such costs expected to be gained over a period exceeding one year, are recognized as intangible assets.
Capitalised costs attached to the development of software are amortised over the period of their estimated useful life. Once a year, the Bank verifies the useful lives of intangible assets.
Intangible assets are tested in terms of possible impairment always after the occurrence of events or change of circumstances indicating that their carrying value in the statement of financial position might not be possible to be recovered and at the end of each reporting period.
2.13. Tangible fixed assets
Tangible fixed assets are carried at historical cost reduced by accumulated depreciation and accumulated impairment losses. Historical cost takes into account the expenses directly attached to the acquisition of the respective assets.
Purchase price or cost of production of a given tangible fixed asset is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction. The purchase price or cost of production also consist in all directly attributable costs incurred in order to adjust an asset to place and conditions necessary to begin its functioning, including also costs of demounting, removal of an asset or renovations to which the Bank is obliged. The purchase price or cost of production also cover expenditures incurred at a later date in order to increase the asset’s useful life, change of its component or its renewal.
The value, which is either a purchase price or cost of production of specific assets or fair value established in other way reduced by the residual value of this asset, should be depreciated.
The depreciation is a systematic distribution of value subject to amortisation over the useful life of an asset. Impairment loss is recognized in the amount by which the carrying value of given asset item exceeds its recoverable value. The recoverable value corresponds to the net selling price of an asset or its use value depending on which is higher. The residual value of the asset is the amount, which according to the forecast the company could currently obtain taking into consideration the age and state at the end of its life (after deducting the estimated selling costs).
Depreciation period and annual depreciation rate are determined considering the economic usability period of given tangible fixed assets. Correctness of the applied periods and rates for depreciation is subject to periodical review - not later than at the start of each fiscal year. If the expected useful life of the asset is different from previous estimates, the depreciation period is changed accordingly. The above changes are presented by the Bank as changes in estimates and their effect is taken to profit or loss in the period when the estimate changes.
The Bank depreciates tangible fixed assets using the straight-line method by distributing its initial value or revalued amount reduced by residual value by estimated useful life. The residual value of useful life of an asset is verified at the end of each financial year and in case when expectations differ from previous estimations, the change is recognized as the change of estimated values.
Useful life of an asset is a period in which according to expectations a given asset will be used.
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Useful lives of individual groups of tangible fixed assets amount to:
Technical equipment and machinery
5-10 years
IT equipment
4-5 years
Equipment and vehicles
5 – 10 years
Contractual right of use
in the expected rent period
Office equipment and furniture
5- 12 years
If for a given tangible fixed asset expected useful life is different than the one specified above, the period of depreciation for a given asset may be determined with consideration of this difference.
Depreciable fixed assets are tested for impairment always whenever events or changes in circumstances indicate that the carrying value may not be recoverable and at the end of each reporting period. The value of a fixed asset carried in the statement of financial position is reduced to the level of its recoverable value if the carrying value in the statement of financial position exceeds the estimated recoverable amount. The recoverable value is the higher of two amounts: the fair value of the fixed asset reduced by its selling costs and the value in use. If it is not possible to estimate the recoverable amount of an individual asset, the Bank determines the recoverable amount of the cash-generating unit to which the asset belongs (the asset's cash-generating unit).
The balance sheet value of tangible fixed assets is removed from the statement of financial situation upon disposal of this item or when no future economic benefits resulting from its use or disposal are expected.
The Bank does not increase the balance sheet value of tangible fixed assets by the costs of current maintenance of those assets. Repair and maintenance costs are recognized in the income statement in the period in which they occurred.
In case of replacement of a component of a tangible fixed asset, the Bank recognizes costs of replacement of parts of those items in the balance sheet value of tangible fixed assets as they are incurred. The balance sheet value of components is written off in accordance with conditions of removal from the statement of financial situation.
Profits and losses resulting from the removal of a tangible fixed asset item from the statement of financial situation are established as the difference between net disposal proceeds and the balance sheet value of this item and are recognized in the income statement at the moment of removal of this position from the statement of financial situation.
2.14. Current and deferred income tax
Income tax is recognized as current tax and deferred tax. The current income tax is recognized in the income statement. The deferred income tax is recognized in the income statement or in other comprehensive income depending on the source of origin of temporary differences. The current tax is a tax liability relating to taxable income using a current tax rate, with all adjustments to the tax liability for the previous years. The Bank uses the accounting method to determine exchange rate differences.
Deferred tax liabilities and assets are determined by application of the tax rates in force by virtue of law or of actual obligations at the end of the reporting period. According to expectations such tax rates applied will be in force at the time of realisation of the assets or settlement of the liabilities for deferred corporate income tax. Liabilities or assets for deferred corporate income tax are recognized in their full amount according to the balance sheet method in connection with the existence of temporary differences between the tax value of assets and liabilities and their carrying value. Temporary differences are differences between the carrying amount of an asset or liability and its tax value. Positive net differences are shown in liabilities as “Deferred income tax provision". Negative net differences are recognized as "Deferred income tax assets".
Balance sheet value of deferred income tax assets is subject to review as at each balance sheet date and relevant correction is recognized, by the amount corresponding to the correction of the expected future taxable income that will enable partial or full utilisation of such deferred income tax assets. Unrecognized deferred income tax asset is subject to reassessment for each balance sheet date and is recognized up to the amount reflecting probability of achieving future taxable income which will allow for recovery of this asset.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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The Bank presents the individual deferred income tax assets and liabilities netted in the statement of financial position if the Bank has a legally enforceable right to their simultaneous consideration in calculating the tax liability.
Deferred income tax due to revaluation of available-for-sale financial assets and due to actuarial profits and losses on valuation of pension benefits is recognized in the same manner as revaluation and actuarial profits and losses, directly in the other comprehensive income.
2.15. Prepayments, accruals and deferred income
Prepaid expenses are recognized if the expenses relate to the months following the month in which they were incurred. Active prepayments and accruals are recognized in the statement of financial position in the item "Other assets".
Passive accruals include costs related to services provided to the Bank but not yet constituting its obligations. Deferred revenues include, among others, amounts of future benefits received. Accrued expenses and deferred revenues are presented in the statement of financial position under "Other liabilities".
2.16. Provisions
According to IAS 37, provisions are recognized when the Bank has a present legal or constructive obligation as a result of past events, it is more likely that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
2.17. Retirement benefits and other employee benefits
The Bank creates provisions for future obligations related to retirement, disability, and death benefits based on estimates of such obligations using an actuarial model. Current employment costs and net interest are recognized in the profit and loss account under "General administrative expenses." Actuarial gains and losses are recognized in other comprehensive income, which will not be reclassified to the profit and loss account. Current service costs and net interest on defined benefit obligations are recognized in the profit and loss account under "General administrative expenses".
Phantom share-based benefits
The Bank operates a compensation program for the Bank's Management Board and employees with a significant impact on the Bank's risk profile, based on phantom stocks settled in cash. These benefits are accounted for in accordance with IAS 19. The projected unit entitlement method was used to determine the present value of employee benefit obligations. The basis for calculating the provision for the deferred part of variable remuneration for eligible employees of the Bank is the amount of the bonus that the Bank undertakes to pay on the basis of the Remuneration Policy for employees having a significant impact on the Bank's risk profile.
The valuation of phantom stocks is calculated at the end of each reporting period as the quotient of the Bank's book value and the number of ordinary shares. The payout from phantom stocks depends on the valuation of these stocks in the reporting period in which they are redeemed, adjusted for capital increases above the nominal value during the entire assessment period.
The conversion of phantom stocks into cash for payment is carried out as follows: The number of phantom stocks determined for the Bank's Risk Takers (explanation in Note 36) under the Shares granted under the Non-Deferred Part and respectively under each tranche of the Deferred Part is multiplied by the average value of one phantom stock calculated as the sum of the value of the phantom stock at the end of the two last annual periods preceding the payout date, divided by 2.
The final value of the bonus, which is the product of the number of shares and their expected value as at the balance sheet date preceding the implementation of each of the deferred tranches, is discounted actuarially. The value from the valuation of phantom shares increases the costs of a given period in correspondence with liabilities. Costs are recognized over time throughout the entire period of acquiring rights and are included in the item "General administrative costs". Liabilities related to incentive programs are presented in the statement of financial position under "Other liabilities". A detailed description of the program is presented in Note 35.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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2.18. Issue of securities
The Bank’s liabilities resulting from issue of securities (covered bonds, bonds) upon initial recognition are valuated according to the fair value, taking into account the costs of transaction that may be directly assigned to the issue, and throughout the entire duration of the transaction they are valued to the amount of amortised cost including the effective interest rate. The amount of the reversal is recorded in the income statement in “Interest expense”.
2.19. Loans and advances received
Loans and advances received initially recognized at fair value reduced by the incurred transaction costs. After initial recognition, loans and advances are carried at adjusted cost using the effective interest rate. Any differences between the amount received (reduced by transaction costs) and the redemption value are recognized in the income statement over the period of duration of the respective agreements according to the effective interest rate method.
2.20. Equity
Equity consists of capital and own funds attributable to owners of the Bank, and non-controlling interest created in compliance with the respective provisions of the law, i.e., the appropriate legislative acts, the Bank by-laws.
Registered share capital
Share capital is presented at its nominal value, in accordance with the by-laws and with the entry in the business register.
Share premium
This capital is created from the issue premium obtained from the issue of shares, less the related costs directly incurred.
Costs directly connected with the issue of new shares and options reduce the proceeds from the issue recognized in equity.
Retained earnings
Retained earnings include:
 other supplementary capital,
 general risk reserve,
 undistributed profit for the previous years,
 net profit (loss) for the current year.
Other supplementary capital, other reserve capital and general risk reserve are formed from allocations of profit and they are assigned to purposes specified in the by-laws or other regulations of the law.
Other items of equity
Other equity items are created as a result:
 valuation of financial assets at fair value through other comprehensive income,
 actuarial gains and losses relating to post-employment benefits,
 valuation of derivative instruments under cash flow hedge accounting in relation to the effective part of the hedge.
2.21. Leasing
The Bank acts as the lessee. Leases are recognized as the right to use an asset together with the corresponding lease liability determined at the amount of discounted future payments over the lease term, except for short-term leases of up to 12 months and leases involving insignificant assets.
Expenses related to the use of leased assets are classified as amortization costs and interest costs.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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Assets by virtue of the right of use are depreciated on a straight-line basis, while liabilities by virtue of leasing contracts are settled taking into account the effective interest rate.
Bank as a lessee
Where the definition of a lease is met, the right to use the asset is recognized in the property, plant and equipment group together with the corresponding lease liability. The Bank, as a lessee, applies simplifications and does not apply the recognition, measurement and presentation requirements for short-term leases of up to 12 months for a given class of underlying asset and for leases for which the underlying asset has a low value i.e. less than PLN 20 000 for individual leases. For contracts for which the Bank applies simplifications, lease payments are recognized as expenses on a straight-line basis over the lease term. The right of perpetual usufruct is classified as a lease under IFRS 16 due to the existence of future payments for the use of this right. The Bank has assumed that the lease term for this type of agreement is the remaining term of the granted right from the transition to IFRS 16
The Bank determines the lease term for non-cancellable leases taking into account:
 option to extend the lease if it can be assumed with reasonable certainty that the Bank as lessee will exercise this option, and
 option to terminate the lease if it can be assumed with reasonable certainty that the Bank, as lessee, will not exercise this option.
The Bank shall assess whether it can be assumed with reasonable certainty that the lease extension option will be exercised or that the lease termination option will not be exercised. The Bank takes into account all relevant facts and circumstances that provide an economic incentive to exercise the lease extension option or not to exercise the lease termination option. The Bank reassesses whether it can be assumed with reasonable certainty that it will exercise the option to extend the lease or not exercise the option to terminate the lease in the event of a significant event or a significant change in circumstances that the Bank, as lessee, controls, and that affect whether it can be assumed with reasonable certainty that the Bank will exercise or not exercise an option that was not previously included in the lease term arrangements. The Bank updates the lease term when there is a change in the non-cancelable lease term. At the commencement date of the lease, the Bank, as lessee, measures the right-of-use asset at cost. The cost of the right-of-use asset should include:
 the amount of the initial measurement of the lease liability,
 any lease payments made at or before the commencement date, less any lease incentives received,
 initial direct costs incurred by the Group as a lessee in connection with the conclusion of the leasing contract and,
 an estimate of the costs to be incurred by the Group as a lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.
After the commencement date, the Group as a lessee shall measure the right-of-use asset at cost:
 less any accumulated depreciation and any accumulated impairment losses and,
 adjusted for any remeasurement of the lease liability.
The Bank applies the depreciation requirements in IAS 16 Property, Plant and Equipment in depreciating the right-of-use asset and requirements in IAS 36 Impairment of Assets to determine whether the rightof-use asset is impaired. At the commencement date, the Group shall measure the lease liability at the present value of the lease payments that are not paid at that date. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments:
 fixed lease payments less any lease incentives,
 variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date,
 amounts expected to be payable by the lessee under residual value guarantees ,
 the exercise price of a purchase option if the lessee is reasonably certain to exercise that option and,
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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 payment of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
Variable lease payments that depend on an index or a rate include, for example, payments linked to a customer price index, payments linked to a benchmark interest rate or payments that vary to reflect changes in market rental rates.
After the commencement date, the Group shall measure the lease liability by:
 increasing the carrying amount to reflect interest on the lease liability,
 reducing the carrying amount to reflect the lease payments made and,
 remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
The Bank discounts lease payments using the lease interest rate if this rate can be easily determined. Otherwise, the Bank uses the lessee's marginal interest rate. The Bank uses the mBank discount rate to measure lease liabilities due to the immaterial difference in discount rates and the elimination of the double calculation of leases for separate and consolidated purposes.
Total lease expenses recognized in accordance with IFRS 16 and other types of lease, i.e. short- term lease fees, lease fees for low-value assets and variable lease payments as at December 31, 2025 amounted to TPLN 3 912, while as at December 31, 2024 they amounted to TPLN 3 771.
2.22. Valuation of items denominated in foreign currencies
Functional currency and presentation currency
The financial statements are presented in T PLN, with PLN being the functional and presentation currency of the Bank.
Transactions and balances
Transactions denominated in foreign currencies are converted to the functional currency at the exchange rate of the National Bank of Poland. Foreign exchange gains and losses on such transactions as well as balance sheet revaluation of monetary assets and liabilities denominated in foreign currency are recognized in the income statement.
Foreign exchange differences arising on account of such monetary items as financial assets measured at fair value through profit or loss are recognized under gains or losses arising in connection with changes of fair value.
At the end of each reporting period non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction, and non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured.
When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.
2.23. Tax from the balance sheet positions of the Bank
The Bank presents the tax from the balance sheet positions of the Bank in the separate line of the income statement, below the operating result.
2.24. New standards, interpretations and amendments to published standards
These financial statements include the requirements of all the International Accounting Standards and the International Financial Reporting Standards endorsed by the European Union, and related interpretations which have been endorsed and binding for annual periods starting on 1 January 202 4 .
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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Standards and interpretations endorsed by the European Union
Published Standards and Interpretations which have been issued and are binding for the first time
in the reporting period covered by the financial statements.
Standards and
interpretations
Description of the changes
The beginning of the binding period
Impact on the Bank’s financial statements in the period of initial application
Amendments to IFRS 9, IFRS 7 – classification and measurement of financial instruments
Amendments to IFRS 9 and IFRS 7 concern the accounting for financial liabilities using an electronic payment system and the assessment of the contractual cash flow characteristics of financial assets, including those linked to environmental, social, and governance (ESG) aspects. The disclosure requirements for investments in equity instruments measured at fair value through other comprehensive income have also been amended.
1 January 2026
The application of the amended standards will have no significant impact on the financial statements.
Amendments to IFRS 9, IFRS 7 – contracts related to electricity dependent on natural conditions
The changes regarding contracts for electricity dependent on natural conditions relate to the requirements for the eligibility of own use exemption and hedge accounting, along with the associated disclosures. The scope of the amendments is narrow and applies only when the contracts meet specific characteristics.
1 January 2026
The application of the amended standards will have no significant impact on the financial statements.
Amendments to various standards resulting from the annual review of International Financial Reporting Standards
The amendments cover IFRS 1, IFRS 7 (including implementation guidance), IFRS 9, IFRS 10 and IAS 7 and consist of improving readability, accessibility and consistency with other standards and eliminating ambiguities in selected paragraphs.
1 January 2026
The application of the amended standards will have no significant impact on the financial statements.
Standards and interpretations not yet endorsed by the European Union
These financial statements do not include standards and interpretations listed below which await endorsement of the European Union.
Standards and interpretations
Description of the changes
The beginning of the binding period
Impact on the Bank’s financial statements in the period of initial application
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 aims to improve financial reporting by requiring additional defined subtotals in the statement of profit or loss, requiring disclosures about management-defined performance measures and adding new principles for grouping (aggregation and disaggregation) of information. IFRS 18 replaces IAS 1 Presentation of Financial Statements. Requirements in IAS 1 that are unchanged have been transferred to IFRS 18 and other Standards.
1 January 2027
The application of the new standard will have no significant impact on the financial statements.
IFRS 19 Subsidiaries without Public Accountability: Disclosures
IFRS 19 permits eligible subsidiaries to use IFRS Accounting Standards with reduced disclosures. Applying IFRS 19 will reduce the costs of preparing subsidiaries’ financial statements while maintaining the usefulness of the information for users of their financial statements. A subsidiary is eligible if it does not have public accountability and its ultimate or any intermediate parent produces consolidated financial statements available for public use that comply with IFRS Accounting Standards.
1 January 2027
The standard will not apply for the purpose of preparing the Bank's financial statements.
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Translation to a Hyperinflationary Presentation Currency
The amendments aim to standardise the principles for translating financial statements into a presentation currency in hyperinflationary environments. They apply to situations where there is a difference between the presentation currency and the functional currency, with one of them belonging to a hyperinflationary economy. The changes enhance the usefulness of information, eliminate diversity in practice, and improve the comparability of financial statements presented in hyperinflationary currencies.
1 January 2027
The application of the new standard will have no significant impact on the financial statements.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures
The amendments reduce disclosure requirements for eligible subsidiaries providing reduced disclosure requirements that align with recent changes in the standards, such as IFRS 18 and amendments to IAS 7 and IFRS 7.
1 January 2027
The standard will not apply for the purpose of preparing the Bank's financial statements.
3. Financial risk management
3.1. Credit risk
The Bank is exposed to credit risk, which is the risk that a counterparty will not fulfill its obligations to the Bank in full and on time. In order to limit credit risk, from the stage of acquiring assets through the pooling of retail loans from mBank to mBank Hipoteczny, through monitoring and servicing the loan portfolio, the Bank operates in accordance with its credit policy and internal regulations concerning the principles of credit decision-making and credit risk assessment.
3.1.1. Collaterals
The Bank’s Policy in terms of loan collaterals and their valuation includes regulation of acts: on covered bonds and mortgage banks, banking law, Act on registered pledge and pledge register, Act on land and mortgage, provisions of the Commercial Companies Code, provisions of the Civil Code and other Acts. Additionally, the issues of legal safeguard cover Guidelines and Recommendations of the Banking Supervision Commission (currently Polish Financial Supervision Authority - PFSA), including Recommendation S and J as well as provisions of internal banking regulations.
The Bank has and applies the Regulations for determining the mortgage lending value of real estate, approved by the Polish Financial Supervision Authority, taking into account the provisions of Recommendation F concerning the basic criteria applied by the Polish Financial Supervision Authority when approving regulations for determining the mortgage lending value of real estate issued by mortgage banks. Thus, the Bank ensures that the value of collateral for mortgage-backed credit exposure is sufficient throughout the term of the agreement.
The Bank may conduct or order conducting revaluation of collaterals, including the real estate constituting mortgage collateral, provided that in the period from the last valuation events occurred that could have significant influence on the value of a given collateral or in case of real estate which constitutes collateral of loans for which the loss of value was recognized.
As a mandatory legal collateral of repayment of a granted loan the Bank accepts:
■ mortgage on real estate that is subject to lending, entered into mortgage and land register in the first place,
■ assignment of rights from insurance policy against fire and other random events of a real estate mortgaged to the Bank.
3.1.2. Description of the rating system and credit risk management
The Bank uses rating models to analyse the quality of its loan portfolio, which are updated annually. The rating systems currently cover more than 99.9% of total risk-weighted exposures using the standardised approach and relate to a portfolio of retail exposures acquired in cooperation with mBank S.A., which are currently included in the plan for the gradual implementation of the IRB approach accepted by the Financial Supervision Commission, and the Bank intends to apply in the future for approval from the competent supervisory authorities to use statistical methods to calculate regulatory capital requirements for credit risk for this portfolio.
The Bank uses rating models:
■ for the purposes of credit risk management, including credit decision-making, assessment of transaction credit risk, determination of expected credit losses (ECL), ultimately also for the purposes of capital adequacy - for exposures within the retail portfolio acquired in cooperation with mBank S.A.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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Retail portfolio obtained in cooperation with mBank S.A.
For the purposes of assessing the credibility of a client holding a retail mortgage-backed loan product and monitoring/reporting credit risk for this portfolio, group credit risk models are used, of which the Bank is a local user. The detailed principles and scope of cooperation between the Banks with regard to group risk models are set out in the provisions of a separate risk management cooperation agreement. The credit risk capital requirement for this part of the portfolio is calculated using the standardised approach. The described retail portfolio is included in the plan for gradual implementation of the AIRB approach.
In the retail banking area, the following models are in place as part of the rating system:
■ loss given default (LGD) model. The final loss level is determined by integrating three components:
□ the recovery level for cured cases (based on average achieved recovery levels for cured cases),
□ recovery level for unhealed cases (based on contractual factors relating to the client's relationship with the contract and collateral characteristics),
□ probability of recovery (based on socio-demographic factors and the full product structure of the contract owner).
The estimation of the level of LGD loss proceeds in homogeneous segments that take into account product type and collateral type. Separate models are in place for cases characterised by and not characterised by default;
■ the probability of default (PD) model, which is a modular model that integrates application, behavioural and external data from the Credit Information Bureau (CIB).
Additional information
Loans to individuals are monitored monthly for timely repayments and the validity of effective mortgage collateral. During the same period, the fulfillment of all contractual obligations of the customer (including property insurance and assignment of rights under the policy) is also monitored.
3.1.3. The policy of Bank in terms of forbearance
The Bank offers customers who are temporarily in financial difficulty and unable to meet the original loan repayment terms, more lenient debt service terms to maintain their ongoing servicing, without which the customers' financial problems would make it impossible to repay the loan within the timeframe specified in the loan agreement.
Amendments to loan agreements can be initiated by the customer or the Bank and include such as debt restructuring, a new repayment schedule, deferral of principal instalments while maintaining interest payments.
The type of relief offered should be appropriate to the nature and expected duration of the customer's financial difficulties. In order to reach an agreement with the customer, it is necessary to convince the Bank of the customer's willingness and ability to repay the loan. Before any relief is granted, an assessment of its impact on improving the customer's ability to repay is carried out.
The Bank renegotiates loan agreements with customers in financial difficulties in order to maximise the possibility of recovering loan receivables and minimise the risk of customer default.
The analysis carried out for the above reporting periods showed a negligible proportion of exposures that leave forbearance status within one year and then return to it.
The structure of the portfolio of loans measured at amortised cost in the forbearance category in the Bank as at 31 December 2025 is as follows:
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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31.12.2025
Gros value
Of which defaulted
Write- downs created
Net value
Loans and advances to customers
116 135
46 409
10 654
105 481
As at 31 December 2025 and 31 December 2024, the Bank did not have any loans mandatorily valued at fair value through the financial result in the forbearance category.
The structure of the loan portfolio measured at amortized cost in the forbearance category in Bank as at 31 December 2024 is as follows:
31.12.2024
Gros value
Of which defaulted
Write- downs created
Net value
Loans and advances to customers
137 088
48 727
10 853
126 235
The size of the Bank's forbearance portfolio as at 31 December 2025 remains small compared to the total size of the Bank's loan portfolio. The share of the forbearance portfolio represents 1.15% (1.43% as at 31.12.2024) of the total portfolio. The portfolio of forbearance exposures in the default category amounted to 39.96% of the forbearance portfolio as at 31.12.2025 (35.54% as at 31.12.2024). The portfolio of exposures measured at amortised cost in the default category was covered by expected credit losses of 21.32% (20.50% as at 31.12.2024).
The risk of default on the forbearance portfolio is mitigated by the collateral accepted in the form of a mortgage on real estate with a banking-mortgage value of TPLN 162 118 (TPLN 186 588 as at 31.12.2024), including in the default category TPLN 61 490 (TPLN 68 765 as at 31.12.2024).
Changes in the carrying amount of the forbearance exposures measured at amortized cost in 2025:
31.12.2025
Gros value
Of which defaulted
Write- downs created
Net value
Balance 01.01.2025
137 088
48 727
10 853
126 235
Outputs from forbearance
(54 360)
(6 237)
(2 023)
(52 337)
Change in exposure
(1 385)
(8 448)
165
(1 550)
New forbearance
34 792
12 367
1 659
33 133
Balance 31.12.2025
116 135
46 409
10 654
105 481
In 2025, there were 112 new exposures in the forbearance category (in 2024: 111), all relating to the retail portfolio.
Changes in the carrying amount of the forbearance exposures measured at amortized cost in 2024:
31.12.2024
Gros value
Of which defaulted
Write- downs created
Net value
Balance 01.01.2024
153 215
43 457
9 867
143 348
Outputs from forbearance
(48 800)
(4 299)
(584)
(48 216)
Change in exposure
(2 407)
(704)
171
(2 578)
New forbearance
35 080
10 273
1 399
33 681
Balance 31.12.2024
137 088
48 727
10 853
126 235
Forbearance exposures measured at amortized cost by type of concession as at 31 December 2025:
31.12.2025
Gros value
Of which defaulted
Write- downs created
Net value
Refinancing
2 762
1 816
316
2 446
Modifications of conditons
113 373
44 593
10 338
103 035
Total
116 135
46 409
10 654
105 481
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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Forbearance exposures measured at amortized cost by type of concession as at 31 December 2024:
31.12.2024
Gros value
Of which defaulted
Write- downs created
Net value
Refinancing
1 439
1 048
47
1 392
Modifications of conditons
135 649
47 679
10 806
124 843
Total
137 088
48 727
10 853
126 235
Forbearance exposures measured at amortized cost without recognized loss impairment per length of overdue period as at 31 December 2025:
31.12.2025
Gross value
Of which defaulted
Write downs created
Net value
Not overdue
66 909
-
602
66 307
Up to 30 days
2 073
-
71
2 002
31 to 90 days
158
-
12
146
Total
69 140
-
685
68 455
Forbearance exposures measured at amortized cost without recognized loss impairment per length of overdue period as at 31 December 2024:
31.12.2024
Gross value
Of which defaulted
Write downs created
Net value
Not overdue
85 618
-
724
84 894
Up to 30 days
2 250
-
103
2 147
31 to 90 days
493
-
38
455
Total
88 361
-
865
87 496
Forbearance exposures measured at amortized cost with recognized loss impairment per length of overdue period as at 31 December 2025:
31.12.2025
Gross value
Of which defaulted
Write downs created
Net value
Not overdue
25 643
25 338
2 724
22 919
Up to 30 days
2 968
2 968
396
2 572
31 to 90 days
3 315
3 034
527
2 788
more than 90 days
15 069
15 069
6 322
8 747
Total
46 995
46 409
9 969
37 026
Forbearance exposures measured at amortized cost with recognized loss impairment per length of overdue period as at 31 December 2024:
31.12.2024
Gross value
Of which defaulted
Write downs created
Net value
Not overdue
27 910
27 910
3 153
24 757
Up to 30 days
4 366
4 366
510
3 856
31 to 90 days
2 352
2 352
552
1 800
more than 90 days
14 099
14 099
5 773
8 326
Total
48 727
48 727
9 988
38 739
Interest income related to forbearance exposures at the end of 2025, amounted to TPLN 7 734 (for the period ended 31 December 2024: TPLN 9 832 ) .
Retail Banking
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The bank does not treat loans with changed terms and conditions as subject to the forbearance policy in cases where changes result from the client's request and do not occur on an ongoing basis
or the client's financial difficulties are not anticipated, and furthermore, modifications to the terms of the contract meet the criteria of a decision-making policy for a healthy portfolio. In the normal course of cooperation with the client, the client who is not in a difficult financial situation applies to change the terms of the contract, for example, to renegotiate the price conditions due to changes in market conditions or to increase your ability to service another loan. If such an application meets all decision-making criteria and is granted on market terms, such a loan is not classified as forbearance.
If the client requests an extension of the repayment deadline, a reduction in the amount of installments paid or other relaxation of the terms and this is due to the client's financial difficulties, the modified contracts are treated as aid products subject to the forbearance policy. And are appropriately reported in the financial statements.
Assistance products (forbearance) available in retail banking are offered only to customers in a difficult financial situation. The type of aid product offered depends on the scale and nature of the client's financial difficulties.
The following list of forborne activities does not exhaust all possible actions that are subject to forbearance policy, but it includes the most common:
■ individual repayment schedule,
■ maturity extension/ extension of loan duration,
■ restructuring,
■ interest deferrals,
■ principal deferrals,
with assumption that the failure to apply changes could result with no repayment of loan and in consequence the loss on the side of the Bank.
Short-term assistance measures focus on temporarily reducing installment amounts and may take the form of suspending principal repayments while maintaining interest payments.
For customers under long term financial distress extension of contractual repayment schedule or refinancing of debt, which can be evidence for classification of the customer to the default category, may be offered.
The necessity to grant another forborne product causes reclassification of the product to non-performing category, and in case of lack of regular servicing, when overdue exceeds 90 days, the customer is reclassified to the default category.
This portfolio is subject to regular reviews and reporting to the management of the Risk Division. The effectiveness of undertaken actions, regularity of restructured products service in respect of types of product and client’s segment are subject to assessment.
The Bank ceases to recognize the product as forbearance in the following cases:
■ repayment of the loan is considered not at risk (performing),
■ at least 2 years have passed since the exposure was recognized as non-performing (performing), or the contract was not in the non-performing category at the time the relief was granted,
■ there were regular receipts of receivables or interest (delays in repayment on the contract not exceeding DPD 30 in a significant amount), at least from half of the trial period,
■ none of the debtor's exposures are more than 30 days past due at the end of the probation period.
Exposures for which statutory credit holidays were activated were therefore not classified as restructured.
3.1.4. Counterparty risk arising from transactions in derivatives
The bank enters into derivative transactions only for the purpose of hedging currency risk and interest rate risk. The bank does not conduct commercial activities, all transactions on derivative instruments are included in the banking portfolio. The bank has instruments in its portfolio derivatives for interest rate risk (IRS), exchange rate risk (FX SWAP contracts) and CIRS. The Bank
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
33
has credit exposure limits for derivative transactions, approved by the Bank's Management Board. The size of the applicable credit exposure limits for individual banks are reviewed and verified at least once a year. The bank determines limits for:
■ banks with which an ISDA (International Swaps and Derivatives Association) agreement with a CSA (Credit Support Annex) was signed, none of the debtor's exposures are past due for more than 30 days at the end of the sample period;
■ banks with which it signed framework agreements according to the recommendations of the Polish Bank Association along with the agreement securing;
■ central clearing houses through which the Bank will settle derivative transactions.
The counterparty risk is limited by choosing the individual segregated account structure in the clearing house billing. The amount of credit exposure limits used is controlled in day mode. Both in 2025 and 2024, there were no cases of exceeding the limits. As at December 31, 2025, derivative transactions were concluded with mBank S.A. and with the central clearing house. Accordingly, it is assumed that derivatives transactions at the Bank have a limited credit risk profile.
3.1.5. Debt securities - financial assets at fair value through other comprehensive income
The value of debt securities (financial assets at fair value through other comprehensive income) as at 31 December 2025 amounted to TPLN 776 505, of which: treasury bonds amounted to TPLN 716 551 and NBP money bills in the amount of TPLN 59 954. As at 31 December 2024 the value of treasury bonds amounted to TPLN 1 285 083, of which: treasury bonds amounted to TPLN 950 240 and NBP money bills in the amount of TPLN 334 843. Both as at 31 December 2025 and 31 December 2024, the debt instruments were rated A- on the scale of the Standard & Poor's (S&P) rating agency.
As at December 31 2025 the Bank created an allowance for expected credit losses (ECL) on treasury bonds in the amount of TPLN 229 (as at December 31 2024 TPLN 141) and money bills TPLN 19 (as at December 31 2024 TPLN 50).
Both as at 31 December 2025 and 31 December 2024 all investment securities were not past due instruments.
3.2. Concentration of assets, liabilities and off-balance sheet items
Risk of geographical concentration
Assets, liabilities and off-balance sheet items are not presented according to geographical areas in the Bank due to insignificance of geographical differentiation of risks. The Bank operates only in the territory of the Republic of Poland.
The risk of concentration of large exposures, the risk of concentration of exposures
Concentration risk is the risk that the stability and security of the Bank's operations may be materially affected by the failure of a single entity to meet an obligation, where the probability of default depends on common factors.
In the scope of concentration risk management the Bank identifies risk, measures, monitor and report it.
Measurement of concentration risk in the Bank is performed through establishing of the size of an exposure that generates the risk of concentration and relate this amount to established limits resulting from provisions of law and internal limits.
The Bank limits credit risk using internal exposure concentration limits, specified in internal procedures.
While establishing proposal of the level of internal exposure concentration limits, the Bank takes into account the following issues:
■ the macroeconomic situation in the country,
■ situation on the real estate market in the country,
■ situation on financial markets in the country,
■ implementation of credit policy of the Bank in previous years,
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
34
■ results of restructuring and debt collection actions of the Bank,
■ information from reliable sources (academic centres) on economic situation of entities, branches, industry sectors, according to the recommendations of Resolution No. 384/2008 PFSA,
■ factors resulting from other types of risk associated with identified exposures from which the risk of concentration arises (e.g. of interest rate, liquidity, operational and political) that may negatively influence an increase of concentration risk,
■ stress test results.
Internal exposure limits are specified in relation to the amount of own funds of the Bank and in relation to the sum of exposures of the Bank.
■ The Bank conducts monthly reporting of monitored concentration risk in relation to:
■ exposures concentration limit monitoring,
■ large exposures limit monitoring,
As at 31 December 2025 and 31 December 2024 no exceeding of exposure limit against an entity or a group of affiliated clients specified in Art. 395.1 of the CRR Regulation occurred in the Bank.
3.3. Strategy for use of financial instruments
The Bank in its activity uses financial instruments including also derivative instruments. The Bank issues covered bonds and bonds. The Bank’s liabilities bear both variable and fixed interest rates. The Bank invests raised funds in assets of acceptable level of risk in order to increase interest margin. In order to secure currency risk and interest rate risk the Bank concludes transactions on derivative instruments.
While concluding the above mentioned transactions the Bank maintains the level of liquidity sufficient to settle all arising liabilities.
Derivative instruments
The Bank strictly controls open net derivative items, i.e. difference between purchase and sale contracts, both in terms of the nominal value of the contract and the period of validity. The amount subject to credit risk at any time is limited to current fair value of instruments which valuation is positive (i.e. assets), which, in relation to derivative instruments, constitutes only small fraction of value of agreement or nominal values used to express the volume of existing instruments.
Off-balance sheet liabilities of credit nature
Off-balance sheet liabilities of credit nature relate to not used part of granted loans. The Bank reserves the possibility to non-payment of unused part of loan in case of deterioration of the client’s creditworthiness. Therefore, the probable amount of resulting loss is significantly lower than the entire amount of unused liabilities from loans.
The Bank has organisational solutions that ensure formal and factual separation of credit risk assessment processes from processes of credit decision-making. Credit decisions are taken collectively, according to the decision-making powers, after consideration of recommendation presented by the director of department responsible for the credit risk analysis.
3.4. Market risk
The Bank is exposed to market risk understood as risk of changes of current valuation of financial instruments that constitute the portfolios of the Bank which result from changes in pricing and value of market parameters. Market risk exposure of the Bank results from open items on interest, currency instruments that are exposed to market change of value of appropriate risk factors, and in particular to change of value of interest rates, exchange rates and credit spread.
The risk profile results from the Bank’s operational strategy. The Bank offers products based on variable and fixed interest rate, wherein the products based on variable interest rate are preferred. The Bank offers products in foreign currencies EUR and USD. The Bank does not perform operations at its own account for trade purposes, it only has the bank portfolio. The main method of market risk management in the Bank is application of natural security, that is obtaining of funds for
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
35
financing in currencies and of interest rates directly adjusted to corresponding assets. Due to the nature of the Bank’s activity, the exposure to market risk should be maintained at the lowest possible level. The Bank aims to limit the exposure to market risk resulting from the structure of assets and liabilities through concluding hedging transactions, the catalogue of which is approved by the Management Board of the Bank. Identification of market risks and liquidity takes into account internal and external factors.
Internal factors include factors such as: the specificity of lending activity and the specificity of refinancing structure. External factors include factors constituting the surroundings of the Bank: interbank market, behaviour of financial markets, strategy and policy of shareholder against the Bank. The market risk is identified in all types of products and types of activities. Widely recognized methods are applied in the process of identification. The Bank specified the level of risk through measurement of the value exposed to risk (Value at Risk - VaR) and through stress tests.
VaR is a statistical measurement of the market risk level which expresses a potential loss to which a portfolio is exposed during specified period of time, for a given level of confidence, in normal market conditions, due to changes of risk factors (foreign exchange rates, interest rates, credit spreads). The potentiality of a loss means that with previously established large probability (confidence level), at which fair value is determined, within a specified time period a loss lower than determined VaR value may be expected.
Value at risk in the Bank is determined using historical simulation method. This method consists in determination of distribution of changes in the value of portfolio on the basis of historical distribution of changes of risk factors, observed over a specified period of time. VaR is determined in one day time horizon on the basis of 254 historical observations and is monitored at confidence level of 97.5%.
As at 31 December 2025, VaR amounted to TPLN 601,1 compared with TPLN 1 791,9 as at 31 December 2024.
The list below presents the value of average and maximum VaR of the Bank during the period from 1 January 2025 until 31 December 2025 and from 1 January 2024 until 31 December 2024.
12 months until 31.12.2025
12 months until 31.12.2024
average
maximum
average
maximum
Credit spread risk
1 342
1 727
1 094
1 541
Interest rate risk
1 389
1 915
1 739
2 645
Currency risk
15
38
37
68
VaR Total
1 325
1 825
2 027
3 289
3.5. Currency risk
Exchange rate risk results from exposure of current value of exposures of the Bank in assets, liabilities and off-balance sheet items expressed in PLN to adverse effect of changes of market exchange rates.
The Bank is exposed to currency risk to a small degree, as it does not maintain significant currency mismatch of assets and liabilities (currency positions) through adaptation of currency structure of conducted lending action and sources of refinancing as well as closing of open currency positions with derivative contracts (Note 17). The risk of influence of changes of exchange rates to the financial result of the Bank is limited, and existing in the Bank procedures for control and reporting significantly eliminate possibility of its arising. In the scope of currency risk management, the Bank assesses the scale and structure of currency risk only on the basis of current currency position of the Bank. Monitoring also covers currency position including expected repayments and payment of loans that influence currency risk. The Bank manages currency position by performing currency purchase/sale transactions with immediate or future terms and by concluding transaction of the SWAP type.
The table below presents an analysis of the sensitivity of assets, liabilities and off-balance sheet items to changes in exchange rates to which the Bank was exposed as at 31.12.2025 and as at 31.12.2024. The analysis shows the impact of a 10% increase in the currency exchange rate against the PLN profit and loss. A 10% drop in odds causes the same change, but with the opposite sign.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
36
A negative amount in the table reflects a potential decline in the income statement, while a positive amount reflects a potential growth.
Impact on the income statement duo to changes in exchange rates
currency
scenario
31.12.2025
31.12.2024
EUR
+10%
(357 811)
(865 422)
USD
+10%
20 112
11 781
The following table presents exposures of the Bank to currency risk as at 31 December 2025 and 31 December 2024. The table presents assets and liabilities of the Bank according to balance sheet amount broken down by particular currencies of transactions.
31.12.2025
PLN
EUR
USD
Total
Assets
Cash and Cash equivalents
43 002
17 286
178
60 466
Financial assets held for trading and derivatives held for hedges
49
905
-
954
Changes in fair value of hedged items in portfolio hedging against interest rate risk
7 642
-
-
7 642
Financial assets at fair value through other comprehensive income
776 505
-
-
776 505
Financial assets at amortised cost:
10 084 638
1 399
22
10 086 059
Loans and advances to banks
8
-
-
8
Loans and advances to customers
10 084 630
1 399
22
10 086 051
Intangible assets
22 281
-
-
22 281
Tangible assets
18 398
-
-
18 398
Current income tax receivables
11 246
-
-
11 246
Deferred income tax assets
9 576
-
-
9 576
Other assets
14 169
-
-
14 169
TOTAL ASSETS
10 987 506
19 590
200
11 007 296
Liabilities
Financial liabilities held for trading and derivatives held for hedges
349
282
-
631
Financial liabilities measured at amortised cost, including:
9 730 752
398 935
-
10 129 687
Amounts due to banks
4 060 166
-
-
4 060 166
Amounts due to customers
50
-
-
50
Leasing liabilities
3 695
9 306
-
13 001
Debt securities issued
5 666 841
389 629
-
6 056 470
Provisions
2 705
-
-
2 705
Other liabilities
15 660
-
-
15 660
TOTAL LIABILITIES
9 749 466
399 217
-
10 148 683
Net balance sheet position
1 238 040
(379 627)
200
858 613
31.12.2024
PLN
EUR
USD
Total
Assets
Cash and Cash equivalents
63 702
17 395
80
81 177
Financial assets held for trading and derivatives held for hedges
249
912
-
1 161
Changes in fair value of hedged items in portfolio hedging against interest rate risk
16 891
-
-
16 891
Financial assets at fair value through other comprehensive income
1 285 083
-
-
1 285 083
Financial assets at amortised cost:
9 576 381
6 064
37
9 582 482
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
37
Loans and advances to banks
9 400
-
-
9 400
Loans and advances to customers
9 566 981
6 064
37
9 573 082
Intangible assets
25 854
-
-
25 854
Tangible assets
23 319
-
-
23 319
Deferred income tax assets
6 099
-
-
6 099
Other assets
6 212
-
-
6 212
TOTAL ASSETS
11 003 790
24 371
117
11 028 278
Liabilities
Financial liabilities held for trading and derivatives held for hedges
7 163
27 030
-
34 193
Financial liabilities measured at amortised cost, including:
7 127 667
3 014 216
6
10 141 889
Amounts due to banks
3 511 970
-
-
3 511 970
Amounts due to customers
-
43
6
49
Leasing liabilities
3 888
11 197
-
15 085
Debt securities issued
3 611 809
3 002 976
-
6 614 785
Provisions
2 164
-
-
2 164
Current income tax liabilities
2 741
-
-
2 741
Other liabilities
14 032
-
-
14 032
TOTAL LIABILITIES
7 153 767
3 041 246
6
10 195 019
Net balance sheet position
3 850 023
(3 016 875)
111
833 259
3.6. Interest rate risk
Interest rate risk is a risk resulting from exposure of current and future financial result and capital of the Bank to adverse impact of changes in interest rates. The Bank manages the interest rate gap through matching of terms of revaluations of assets and liabilities. In case of such mismatch appropriate hedging instruments are applied (IRS derivative instruments, Basic Swap, CIRS). Derivative transactions to interest rate are concluded exclusively in order to secure positions resulting from lending activity and its financing.
The measure of interest rate risk are revaluation terms mismatch gap and specified on its basis interest income exposed to risk (“EaR”). The EaR measure reported in previous years has been renamed dNII 100 bps.
A sudden change of interest rates by 100 BP for all maturity dates if it had a permanent nature and adverse direction and would cause reduction of annual interest income by:
EaR (in PLN )
31.12.2025
31.12.2024
For items expressed in PLN
3 767
4 068
For items expressed in USD
-
1
For items expressed in EUR
134
793
When calculating those values it was assumed that the structure of assets and liabilities recognized in financial statements as at 31 December 2025 and as at 31 December 2024 will not change in the course of next year and that the Bank will not take any action in order to change exposure at risk.
Maintaining of interest rate risk level in 2025 on similar level as in 2024 is a result of current adjustment of revaluation terms of granted loans and corresponding financing sources. Additionally, the Bank concludes hedging transaction of IRS type in order to limit interest rate risk and CIRS.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
38
The Bank’s exposures to interest rate risk are presented below. Data in the table present financial assets and financial liabilities per balance sheet value, sorted according to terms of interest rate change arising from agreement or relates to their maturity date.
31.12.2025
Up to 1 month
From 1 to 3 months
From 3 to 12 months
From 1 to 5 years
Not- interest rate items
Total
Assets
Cash and Cash equivalents
60 466
-
-
-
-
60 466
Financial assets held for trading and hedging derivatives
506
448
-
-
-
954
Financial assets measured at fair value through other comprehensive income
262 196
-
231 943
282 366
-
776 505
Receivables from banks
8
-
-
-
-
8
Loans and advances granted to customers
682 673
8 900 067
142 375
360 936
-
10 086 051
TOTAL ASSETS
1 005 849
8 900 515
374 318
643 302
-
10 923 984
Liabilities
Financial liabilities held for trading and hedging derivatives
28
335
268
-
-
631
Liabilities to other banks
700 576
2 877 259
251 214
231 117
-
4 060 166
Liabilities to customers
-
-
-
-
50
50
Leasing liabilities
-
-
-
-
13 001
13 001
Liabilities arising from the issuance of debt securities
-
5 671 087
203 279
182 104
-
6 056 470
TOTAL LIABILITIES
700 604
8 548 681
454 761
413 221
13 051
10 130 318
Balance sheet gap
305 245
351 834
(80 443)
230 081
(13 051)
793 666
31.12.2024
Up to 1 month
From 1 to 3 months
From 3 to 12 months
From 1 to 5 years
Not- interest rate items
Total
Assets
Cash and Cash equivalents
81 177
-
-
-
-
81 177
Financial assets held for trading and hedging derivatives
555
606
-
-
-
1 161
Financial assets measured at fair value through other comprehensive income
537 124
-
496 966
250 993
-
1 285 083
Receivables from banks
9 400
-
-
-
-
9 400
Loans and advances granted to customers
1 303 635
7 765 143
45 794
458 510
-
9 573 082
TOTAL ASSETS
1 931 891
7 765 749
542 760
709 503
-
10 949 903
Liabilities
Financial liabilities held for trading and hedging derivatives
5 958
27 969
266
-
-
34 193
Liabilities to other banks
594 519
2 685 689
-
231 762
-
3 511 970
Liabilities to customers
-
-
-
-
49
49
Leasing liabilities
-
-
-
-
15 085
15 085
Liabilities arising from the issuance of debt securities
-
4 893 099
1 331 951
389 735
-
6 614 785
TOTAL LIABILITIES
600 477
7 606 757
1 332 217
621 497
15 134
10 176 082
Balance sheet gap
1 331 414
158 992
(789 457)
88 006
(15 134)
773 821
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
39
3.7. Liquidity risk
Liquidity risk is a threat of losing the ability to finance the assets and discharge the liabilities on a timely basis in the course of the Bank’s ordinary operations or in other conditions that can be predicted, which makes it necessary to incur unacceptable losses.
Strategic objective in terms of liquidity risk management is ensuring the ability of the Bank to timely repayment of liabilities and financing of steadily growing assets and minimisation of impact of this risk to the financial result of the Bank.
The Bank manages liquidity risk so as to ensure that intraday, short-term, mid-term and long-term liquidity is maintained. The Bank lays down the principles for identifying, measuring, assessing, monitoring and reporting risk. As part of managing market liquidity risk, the Bank diversifies the sources of financing mainly as part of cooperation with mBank S.A. The Bank finances its long-term assets primarily with mortgage bonds with long maturities and credit lines, and it satisfies its current cash needs on the interbank market and by issuing short-term bonds.
The Bank has emergency plan in case of liquidity crisis. The plan specifies cases of crisis situations that cause risk of liquidity loss or arising of another hazard for currency and interest risk management, identifies reserve funding sources of the Bank, indicates general procedures for the Bank in crisis situations.
The Bank ensures intraday liquidity by maintaining a liquidity portfolio which consists of instruments which can be liquidated quickly.
Bank to manage and monitor liquidity risk using cumulative liquidity gap limits, check digits (MAT) and statutory limits, in particular the liabilities limit (referred to in Article 15, clause 2 of the Act on Mortgage Bonds and Mortgage Banks) as well as the limits on supervisory measures of short-term and long-term liquidity specified in the PFSA Resolution and the Regulation.
In 2025, the Bank monitored liquidity measures:
■ LCR (Liquidity Coverage Ratio) - in accordance with the Delegated Act (Commission Delegated Regulation (EU) No. 2015/61 supplementing Regulation (EU) No. 575/2013 of the European Parliament and of the Council with regard to the liquidity coverage requirement for credit institutions, which regulation was amended by Commission Delegated Regulation (EU) No. 2018/1620). This is the liquidity coverage ratio, which defines the ratio of the liquidity hedge to its net liquidity outflows for a period of stress of 30 calendar days,
■ NSFR (Net Stable Funding Ratio) - in accordance with Regulation (EU) No. 575/2013 of the European Parliament and of the Council of June 26, 2013 (CRR) and Regulation (EU) 2019/876 of the European Parliament and of the Council of May 20, 2019 (CRR II). NSFR is a ratio defining the ratio of the bank's own funds and stable liabilities, which ensure stable financing, to non-liquid assets and receivables, which require stable financing.
The tables below present the values of the LCR and NSFR measure as at December 31, 2025 and December 31, 2024, their average and minimum values and maximum:
Liquidity norm
Value as at 31.12.2025
average
minimum
maximum
LCR
2 405%
1 333%
137%
2 782%
NSFR
125%
120%
108%
132%
Liquidity norm
Value as at 31.12.2024
average
minimum
maximum
LCR
1 945%
919%
155%
2 353%
NSFR
108%
115%
107%
123%
In 2025 and 2024 no exceeding of liabilities limit and any form of liquidity took place.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
40
3.7.1. Cash flows from transactions in non-derivative financial instruments
The table below includes not discounted values of cash flows required to pay or receive by the Bank. The cash flows have been presented as at the year-end date, categorised by the remaining contractual maturities. The amounts denominated in foreign currencies were converted to Polish zloty at the average rate of exchange announced by the National Bank of Poland at the year-end date.
31.12.2025
Up to 1 month
From 1 to 3 months
From 3 to 12 months
From 1 to 5 years
Over 5 years
Total
Assets (by expected dates of maturity)
Cash and Cash equivalents
60 707
-
-
-
-
60 707
Financial assets measured at fair value through other comprehensive income
259 967
-
150 000
360 000
-
769 967
Receivable from banks
8
-
-
-
-
8
Loans and advances granted to customers
60 903
61 346
281 251
1 614 767
7 822 893
9 841 160
TOTAL ASSETS
381 585
61 346
431 251
1 974 767
7 822 893
10 671 842
Liabilities (by contractual dates of maturity)
Liabilities to other banks
-
1 490 544
2 550 000
4 040 544
Commitments to customers
50
-
-
-
-
50
Lease liabilities
255
511
2 284
10 007
460
13 517
Liabilities arising from the issuance of debt securities
-
60 000
1 002 882
4 981 748
-
6 044 630
TOTAL LIABILITIES
305
60 511
1 005 166
6 482 299
2 550 460
10 098 741
Net liquidity gap
381 280
835
(573 915)
(4 507 532)
5 272 433
573 101
31.12.2024
Up to 1 month
From 1 to 3 months
From 3 to 12 months
From 1 to 5 years
Over 5 years
Total
Assets (by expected dates of maturity)
Cash and Cash equivalents
81 392
-
-
-
-
81 392
Financial assets measured at fair value through other comprehensive income
334 840
-
350 000
595 000
-
1 279 840
Receivable from banks
9 400
-
-
-
-
9 400
Loans and advances granted to customers
47 876
49 096
226 479
1 334 652
7 674 592
9 332 695
TOTAL ASSETS
473 508
49 096
576 479
1 929 652
7 674 592
10 703 327
Liabilities (by contractual dates of maturity)
Liabilities to other banks
-
-
-
3 485 273
-
3 485 273
Commitments to customers
49
-
-
-
-
49
Lease liabilities
239
476
2 136
10 149
2 085
15 085
Liabilities arising from the issuance of debt securities
-
1 281 900
1 328 903
3 988 843
-
6 599 646
TOTAL LIABILITIES
288
1 282 376
1 331 039
7 484 265
2 085
10 100 053
Net liquidity gap
473 220
(1 233 280)
(754 560)
(5 554 613)
7 672 507
603 274
A negative liquidity gap of up to three months will be closed by issuing mortgage bonds and by raising funds under the available revolving lines.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
41
The amounts disclosed in the maturity analysis are contractual undiscounted cash flows used in the liquidity risk management process, in accordance with the model applied in the Group (hence the change in presentation in 2024). Lease liabilities are included in the item Liabilities at amortized cost – liabilities to customers and liabilities to banks. The maturity structure of lease liabilities is presented in Note 23.
3.7.2. Cash flows from transactions in derivative financial instruments
Derivative financial instruments settled in net amounts
Derivative financial instruments settled by the Bank on the net basis include interest rate swap contracts (IRS).
The following table presents derivative financial liabilities of the Bank which will be settled on the net basis, broken down by particular maturity dates as at balance sheet date. The amount in foreign currencies has been converted to PLN according to average exchange rate of NBP from balance sheet date. Amounts recognized in the table are not discounted contractual cash outflows.
As at December 31, 2025
Derivatieves financial instruments to be settled on a net basis
within 1 month
From 1 to 3 months
From 3 months to 1 year
From 1 to 5 years
Total
Interest rate swaps (IRS)
527
(6 223)
923
(6 642)
(11 415)
Total net valuation
527
(6 223)
923
(6 642)
(11 415)
As at December 31, 2024
Derivatieves financial instruments to be settled on a net basis
within 1 month
From 1 to 3 months
From 3 months to 1 year
From 1 to 5 years
Total
Interes rate swaps (IRS)
899
(3 496)
1 892
(6 653)
(7 358)
Total net valuation
899
(3 496)
1 892
(6 653)
(7 358)
Derivative financial instruments settled in gross amounts
Derivative financial instruments settled by the Bank on the gross basis include derivative currency financial instruments: SWAP currency contracts on the date of SPOT and FORWARD currency and CIRS.
The table below presents derivative financial instruments of the Bank which will be settled on the gross basis, broken down by particular maturity periods as at balance sheet date. The amounts in foreign currencies have been converted to PLN according to average exchange rate of NBP as at balance sheet date.
As at December 31, 2025
Derivatieves financial instruments to be settled on gross basis
within 1 month
From 1 to 3 months
From 3 months to 1 year
Total
Currency SWAP contracts:
- outflows
-
373 665
-
373 665
- inflows
-
371 950
-
371 950
As at December 31, 2024
Derivatieves financial instruments to be settled on gross basis
within 1 month
From 1 to 3 months
From 3 months to 1 year
Total
Currency SWAP contracts:
- outflows
209 478
647 014
-
856 492
- inflows
209 377
640 950
-
850 327
Intrest-rate contracts CIRS:
- outflows
-
893 585
1 319 887
2 213 472
- inflows
-
860 632
1 285 002
2 145 634
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
42
4. Fair value of financial assets and liabilities
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date . A fair value measurement assumes that the transaction of selling the asset or transferring a liability occurs either:
■ on the main market of a given element of assets or liability,
■ in the absence of a main market, for the most advantageous market for the asset or liability.
In line with IFRS 9, for accounting purposes, the Bank measures financial assets and liabilities at amortized cost or at fair value. Moreover, for items measured at amortized cost accounting for the needs of disclosures in the financial statements - in accordance with the requirements of IFRS 7 - measurement at fair value.
In line with market practices, the Bank measures financial instruments in which it maintains open positions using market prices (valuation to the market) or valuation models recognized in market practice (valuation from the model) fed with prices or market parameters, and in few cases with parameters estimated internally by the Bank. All material open positions in derivative instruments are valued using market models that are fed with prices or parameters observable by the market.
For the purposes of disclosures, the Bank assumed that the fair value of short-term financial liabilities (less than 1 year) was equal to their book value. For financial liabilities over 1 year, the fair value is estimated on the basis of discounted cash flows using appropriate interest rates.
Items valued at amortized cost
The table below summarizes the book values and fair values for each group of financial assets and liabilities not measured in the statement. from the financial position of the Bank at fair value.
31.12.2025
31.12.2024
Financial assets and liabilities
Carrying value
Fair value
Carrying value
Fair value
Financial assets valued at amortised cost
Amounts due from banks
8
8
9 400
9 400
Loans and advances to customers, including:
10 086 051
10 117 209
9 562 831
9 576 335
Individual customers
10 083 741
10 114 899
9 558 483
9 571 987
Corporate customers
2 310
2 310
4 348
4 348
Financial liabilities at amortised cost
Amounts due from other banks
4 060 166
4 060 166
3 511 970
3 511 970
Amounts due to the customers, including:
50
50
49
49
Corporate customers
50
50
49
49
Leasing liabilities
13 001
13 001
15 085
15 085
Liabilities arising from the issuance of debt securities
6 056 470
6 010 628
6 614 785
6 484 342
Total financial assets
10 086 059
10 117 217
9 572 231
9 585 735
Total financial liabilities
10 129 687
10 083 845
10 141 889
10 011 446
The main assumptions and methods used by the Bank when managing the fair value of a financial instrument are presented below:
Receivables due to loans and advances granted to clients
The fair value of receivables from banks and loans and advances to customers was calculated as the value of estimated future cash flows (taking into account the effect of prepayments) using current interest rates, taking into account the amount of the credit spread, liquidity cost and cost of capital. The credit spread level was determined based on the market quotation of the median credit spreads for Moody's rating system. The credit spread was assigned to a given credit exposure by mapping Moody's rating system with the Bank's internal rating system. In order to reflect the fact that a large part of the Bank's exposure is secured, while the median of market quotes is concentrated around unsecured issues, the Bank made an adjustment on this account.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
43
The value of expected future cash flows takes into account potential losses resulting from credit risk. Input data for the model are principal installments schedules, forward rate curves, PD and LGD parameter curves and components of the discount rate related to the financing cost margin, fixed costs and capital, as well as the calibration margin.
Financial instruments representing liabilities include the following:
■ loans received,
■ other financial liabilities with deferred payment term,
■ subordinated loans received,
■ liabilities in respect of cash collateral,
■ liabilities due to issued by the Bank covered bonds and bonds,
■ other liabilities due to customers.
Liabilities arising from issuing of securities (covered bonds and bonds)
The bank estimated the fair value for the issued high-rated covered bonds using the credit spread. For the previously issued tranches subject to secondary trading, it was assumed that the value of the credit spread is the same as for issues on the primary market with the same maturity period. The clean price of individual tranches of covered bonds in circulation was estimated taking into account the remaining maturity period, the value of the expected credit spread for issues on the secondary market and quotations from the swap curve.
Liabilities from the issue of debt securities are presented at level 3 in the fair value hierarchy.
Based on the methods used by the Bank to determine the fair value, financial assets and liabilities are classified into the following categories:
■ Level 1: quoted prices in active markets for the same instrument (without modification);
■ Level 2: quoted prices in active markets for similar instruments, or other valuation methods for which all relevant inputs are based on observable market data;
■ Level 3: valuation methods for which at least one significant input is not based on observable market data.
The table below presents the fair value hierarchy for financial assets and liabilities measured for the purposes of disclosures at fair value in accordance with the assumptions and methods described above, solely for the purpose of disclosure, as at December 31, 2025 and December 31, 2024.
Level 1
Level 2
Level 3
31.12.2025
including
Quoted prices in active markets
Valuation techniques based on observable market data
Other valuation techniques
VALUATION FOR DISCLOSURE ONLY
Financial assets
Amounts due from banks
8
-
-
8
Loans and advances to customers, including:
10 117 209
-
-
10 117 209
Individual customers
10 114 899
-
-
10 114 899
Other financial institutes
2 310
-
-
2 310
Financial liabilities
Amounts due from other banks
4 060 166
-
-
4 060 166
Amounts due to the customers, including:
50
-
-
50
Corporate customers
50
-
-
50
Leasing liabilities
13 001
-
-
13 001
Liabilities arising from the issuance of debt securities
6 010 628
-
-
6 010 628
Total financial assets
10 117 217
-
-
10 117 217
Total financial liabilities
10 083 845
-
-
10 083 845
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
44
Level 1
Level 2
Level 3
31.12.2024
including
Quoted prices in active markets
Valuation techniques based on observable market data
Other valuation techniques
VALUATION FOR DISCLOSURE ONLY
Financial assets
Amounts due from banks
9 400
-
-
9 400
Loans and advances to customers, including:
9 576 335
-
-
9 576 335
Individual customers
9 571 987
-
-
9 571 987
Other financial institutes
4 348
-
-
4 348
Financial liabilities
Amounts due from other banks
3 511 970
-
-
3 511 970
Amounts due to the customers, including:
49
-
-
49
Corporate customers
49
-
-
49
Individual customers
-
-
-
-
Leasing liabilities
15 085
-
-
15 085
Liabilities arising from the issuance of debt securities
6 484 342
-
-
6 484 342
Total financial assets
9 585 735
-
-
9 585 735
Total financial liabilities
10 011 446
-
-
10 011 446
Items valued at fair value
The tables below present the fair value hierarchy of financial assets and liabilities recognized in the statement of financial position of the Bank at their fair values as of 31 December 2025.
Level 1
Level 2
Level 3
31.12.2025
including
Quoted prices in active markets
Valuation techniques based on observable market data
Other valuation techniques
Recurring fair value measurements
Financial assets
Financial assets held for trading and hedging derivatives
954
-
954
-
Derivative financial instruments, including:
954
-
954
-
Derivative financial instruments held for trading:
49
-
49
-
- Currency instruments
49
-
49
-
Derivative hedging instruments
905
-
905
-
- Derivatives designated as fair value hedges
905
-
905
-
Financial assets measured at fair value through other comprehensive income
776 505
716 551
59 954
-
- Treasury bonds
716 551
716 551
-
-
- Money bills
59 954
-
59 954
-
TOTAL FINANCIAL ASSETS
777 459
716 551
60 908
-
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
45
Level 1
Level 2
Level 3
31.12.2025
including
Quoted prices in active markets
Valuation techniques based on observable market data
Other valuation techniques
FINANCIAL LIABILITIES
Derivative financial instruments, including:
631
-
631
-
Derivative financial instruments held for trading:
349
-
349
-
- Currency instruments
349
-
349
-
Derivative financial instruments held for hedging:
282
-
282
-
-Derivatives designated as fair value hedges
282
-
282
-
TOTAL FINANCIAL LIABILITIES
631
-
631
-
RECURRING FAIR VALUE MEASUREMENTS
TOTAL FINANCIAL ASSETS
777 459
716 551
60 908
-
TOTAL FINANCIAL LIABILITIES
631
-
631
-
The tables below present the fair value hierarchy of financial assets and liabilities recognized in the statement of financial position of the Bank at their fair values as of 31 December 2024.
Level 1
Level 2
Level 3
31.12.2024
including
Quoted prices in active markets
Valuation techniques based on observable market data
Other valuation techniques
Recurring fair value measurements
Financial assets
Financial assets held for trading and hedging derivatives
1 161
-
1 161
-
Derivative financial instruments, including:
1 161
-
1 161
-
Derivative financial instruments held for trading:
249
-
249
-
- Currency instruments
249
-
249
-
Derivative hedging instruments
912
-
912
-
- Derivatives designated as fair value hedges
912
-
912
-
Financial assets measured at fair value through other comprehensive income
1 285 083
950 240
334 843
-
- Treasury bonds
950 240
950 240
-
-
- Money bills
334 843
-
334 843
-
TOTAL FINANCIAL ASSETS
1 285 083
950 240
334 843
-
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
46
Level 1
Level 2
Level 3
31.12.2024
including
Quoted prices in active markets
Valuation techniques based on observable market data
Other valuation techniques
FINANCIAL LIABILITIES
Derivative financial instruments, including:
34 193
-
10 126
24 067
Derivative financial instruments held for trading:
9 565
-
9 565
-
- Currency instruments
9 565
-
9 565
-
Derivative financial instruments held for hedging:
24 628
-
561
24 067
-Derivatives designated as fair value hedges
561
-
561
-
-Derivatives designated as cash flow hedges
24 067
-
-
24 067
TOTAL FINANCIAL LIABILITIES
34 193
-
10 126
24 067
RECURRING FAIR VALUE MEASUREMENTS
TOTAL FINANCIAL ASSETS
1 285 083
950 240
334 843
-
TOTAL FINANCIAL LIABILITIES
34 193
-
10 126
24 067
With regard to financial instruments repeatedly measured at fair value, classified at levels 1 and 2 of the fair value hierarchy, any potential transfer between these levels is monitored by the relevant departments of the Bank based on internal rules.
In 2025 and 2024, there were no transfers of financial instruments between individual levels of the fair value hierarchy.
If there is no market price for direct valuation, the valuation method for this instrument is changed for a period of more than 5 business days, i.e. the transition from direct valuation to model valuation, if an approved valuation method from the model for this instrument is available. The return to the direct valuation method takes place after a period of at least 10 business days in which the market price has been continuously available. In the absence of a market price for Treasury debt securities, the above periods are 2 and 5 business days, respectively.
Level 1
As at 31 December 2025, at level 1 of the hierarchy of values, the Bank presents the fair value of government bonds measured at fair value through other comprehensive income in the amount of TPLN 716 551 (31 December 2024: TPLN 950 240 ).
These instruments were classified to level 1 because their valuation consists in direct use of the current market prices of these instruments from active and liquid financial markets.
Level 2
Level 2 of the hierarchy covers the fair value of money bills issued by NBP in the amount of TPLN 59 954 (December 31, 2024: TPLN 334 843 ), the valuation of which is based on the NPV model (discounting future cash flows), which is fed with interest rate curves determined by transformation of quotations derived directly from active and liquid financial markets.
In addition, to level 2, the Group includes the valuation of derivative financial instruments for which models are used, in accordance with market standards and practices in this respect, which are supplied with parameters directly from the markets (e.g. exchange rates, implied volatilities of currency options, stocks) or parameters that transform quotes directly from active and liquid financial markets (e.g. interest rate curves).
Level 3
Derivatives designated as cash flow hedges
The derivative instrument designated as a cash flow hedge was CIRS (Cross-Currency Interest Rate Swap), which was classified at level 3 of the fair value hierarchy, where the Bank paid a variable rate determined based on the WIBOR rate and received a fixed rate in EUR. In the event of the Bank's announced bankruptcy, the CIRS transaction would not be completed and would continue until the transaction completion date in accordance with the parameters established on the transaction date. Moreover, the transaction in question was characterized by a high nominal value and a unilateral obligation to submit a security deposit, where the Bank was exempt from the obligation to provide it.
On September 15, 2025, the only CIRS transaction classified at level 3 of the fair value hierarchy with a nominal value of PLN 300,000 matured EUR.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
47
At the end of 2025, the Bank did not have any CIRS transactions and did not continue to apply cash flow hedge accounting.
5. Major estimates and assessments made in connection with the application of accounting principles
The Bank applies estimates and adopts assumptions which impact the values of assets and liabilities presented in the subsequent period. Estimates and assumptions, which are continuously subject to assessment, rely on historical experience and other factors, including expectations concerning future events, which seem justified under the given circumstances.
Impairment of loans and advances
The amount of loan portfolio write-offs changed due to changes in the models used to calculate expected losses due to credit risk.
In 2025, the Bank made the following significant changes to the models used to calculate expected credit risk losses:
■ recalibration of the default probability model over a 12-month horizon, which is the basis for calculating the PD parameter in the long term. The estimated impact of this change on the level of expected credit loss in 2025 is close to 0 (due to the possibility of estimating the impact of these changes with high accuracy and the high probability of their implementation, the allocation of the additional ECL cost for the need for this recalibration took place in the 4th quarter of 2024);
■ updating macroeconomic forecasts in long-term models, recalibrating the long-term default probability model, updating the forecast non-linearity coefficient and rebuilding the Transfer Logic model. The estimated impact of these changes on the level of expected credit loss in June 2025 was approximately PLN 0.4 million (negative impact on the result);
■ updating of macroeconomic forecasts in long-term models combined with their recalibration and update of the forecast non-linearity coefficient. The estimated impact of these changes on the level of expected credit loss was approximately PLN -1.2 million (positive impact on the result).
The impact of forecasts of future macroeconomic conditions on expected credit losses:
■ in the first and second half of 2025, work was carried out on updating forecasts of future macroeconomic conditions, which are used in risk parameter models used to calculate the Group's expected credit loss. The adopted forecasts take into account the current development of the economic situation in the country and are consistent with the forecasts used in the planning process;
■ in order to assess the sensitivity of the expected credit loss to future macroeconomic conditions, the Group determined the value of the allowance separately for each of the scenarios used to calculate expected losses due to credit risk. The impact of the optimistic and pessimistic scenarios is presented below as the deviation of the value of provisions in a given scenario from the expected credit losses calculated for the base path.
The table below presents forecasts of the main macroeconomic indicators adopted in the parameter models used to calculate expected losses due to credit risk.
Scenario for 31.12.2025
base
optimistic
pessimistic
Probability
60%
20%
20%
First year of forecast
The second year of the forecast
First year of forecast
The second year of the forecast
First year of forecast
The second year of the forecast
GDP
y/y
3,8%
3,6%
6,8%
6,6%
1,1%
1,6%
Unemployment rate
end of the year
2,6%
2,6%
0,6%
0,6%
3,6%
3,6%
Real estate price change index
y/y
107,4
106,4
108,9
106,9
105,5
105,0
WIBOR 3M
end of the year
4,05%
4,05%
5,55%
5,55%
3,05%
3,05%
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
48
Scenario for 31.12.2024
base
optimistic
pessimistic
Probability
60%
20%
20%
First year of forecast
The second year of the forecast
First year of forecast
The second year of the forecast
First year of forecast
The second year of the forecast
GDP
y/y
4,2%
3,0%
4,8%
4,1%
1,7%
2,3%
Unemployment rate
end of the year
2,8%
2,6%
2,2%
2,5%
4,2%
4,1%
Real estate price change index
y/y
108,4
108,4
110,1
111,3
100,0
103,4
WIBOR 3M
end of the year
4,40%
3,90%
5,65%
4,90%
3,25%
2,00%
The value of write-offs is the result of the presented macroeconomic scenarios and the weights assigned to them. The impact of individual scenarios on the costs of credit risk is presented in the table below (weight of a given scenario 100%).
Change in the write-off level
31.12.2025
Scenario
Stage 1
Stage 2
Stage 3
Total
optimistic
221
1 205
10
1 436
pessimistic
(160)
(872)
(3)
(1 035)
The above result was estimated taking into account the allocation to the second basket determined individually for each macroeconomic scenario.
A significant modification
Material modification - a change in the contractual terms of a financial instrument, which leads to the removal of the modified asset from the balance sheet and the recognition of a new one. Modified assets are derecognized in the net amount, i.e. taking into account previously recognized expected credit losses due to credit risk (in the case of assets with recognized impairment). The new asset is recognized at fair value (possibly adjusted for new commissions relating to the newly created asset) and a new effective interest rate is calculated for it. The assessment of whether a given modification of financial assets is a significant or immaterial modification depends on meeting the qualitative and quantitative criteria described in Note 2.7.
Credit holidays
In the comparative period in 2024, the Bank recognized a negative impact of credit holidays in the total amount of MPLN 29.
Fair value of derivatives and other financial instruments
The fair value of financial instruments not quoted on active markets is determined using valuation techniques. All models are approved and calibrated before use to ensure that the results obtained reflect actual data and comparable market prices. Whenever possible, the models use only observable data from an active market. The methods for determining the fair value of financial instruments are described in Note 4.
Early repayment of retail loans
In its judgment of September 11, 2019 in a case concerning a consumer loan repaid in full early, the CJEU ruled that "the consumer's right to a reduction in the total cost of the loan in the event of early repayment of the loan covers all costs that have been imposed on the consumer." The balance of provisions as at December 31, 2025 is presented in the line loans and advances granted to customers as a reduction of financial assets measured at amortized cost and amounted to TPLN 13 721. PLN (as at December 31, 2024: TPLN 8 787).
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
49
The above estimates are subject to significant uncertainty as to the number of clients who will apply to the Bank for the reimbursement of commissions related to early repayments made before the judgment of the CJEU, as well as the expected rate of prepayment of loans in the future.
6. Operating segments
In accordance with the requirement of IFRS 8 "management approach", segment information is presented in accordance with the principles of internal reporting provided to the Bank's Board of Directors, whose task is to allocate resources to business segments and to carry out an assessment of their performance.
mBank Hipoteczny S.A. is a specialist mortgage bank whose primary goal is to issue covered bonds, which are to be the main source of long-term financing for loans secured by real estate. In 2025, the Bank operated a retail business line based on strategic cooperation with mBank S.A. (mBank) and obtaining mortgage loans from it for individuals (Retail Loans, Retail Pooling).
In the continuing operations, 2 business segments were separated by specific customer groups and products according to homogeneous transaction characteristics:
1. The Retail Banking Segment – is a segment of the Bank’s business that includes the loans to natural persons, those that may form a basis for the issue of mortgage bonds:
■ loans granted for housing purposes in PLN, the sale of which was under an agency agreement with mBank S.A. – agency model,
■ loans in PLN, secured with a mortgage on a housing property, acquired from mBank S.A. – pooling,
■ loans to natural persons granted not in cooperation with mBank S.A. The Bank discontinued the sales in this segment in 2004.
2. Treasury Segment – a segment of Bank's activities, which includes the Bank's financing activities, particularly the issuance of mortgage bonds, liquidity management, interest rate risk and foreign exchange risk. Segment income is derived from the maintenance of the liquidity portfolio and the reallocation of internal interest costs from the retail banking segment. Segment costs relate to the acquisition of funding and also include some administrative expenses.
The main assumption of the segment division within the profit and loss account is the most accurate presentation of the profitability of a given segment in the Bank's operations (with the exception of the Treasury Segment, which finances the activities of other segments in a mortgage bank and by definition does not generate a positive financial result). For this purpose, the Bank assigns at the level of each loan agreement all direct income, such as interest income, commission income and determines the level of expected credit losses.
The Bank does not allocate to individual income tax segments, therefore information in terms of profit / loss, they are disclosed at the level of profit before tax. Information on segments is measured according to the same principles as those presented in the accounting policy.
The separation of the segment's assets and liabilities as well as revenues and costs was made on the basis of internal information prepared at the Bank for management purposes. The individual segments of the Bank have been assigned assets and liabilities and related to these assets and liabilities, income and expenses. There are related assets and liabilities in the Treasury segment with hedging derivatives and liabilities due to external financing. The segment result takes into account all revenue items that can be allocated and costs.
Other assets not allocated to segments include intangible assets, tangible fixed assets, deferred tax assets and other assets.
Gross result for each operating segments of the Bank is presented with the reconciliation to the positon of the income statements, prepared for the purposes of the audited financial statements.
Business segment reporting on the activities of Bank – positions from income statement:
Period from 01.01.2025 to 31.12.2025
Retail Banking
Treasure Segment
Total
Net interest income
131 894
(15 905)
115 989
Interest income
692 275
77 765
770 040
Interest expenses
(560 381)
(93 670)
(654 051)
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
50
Including internal interest
(560 289)
560 289
-
Net fee and commission income
(3 707)
(3 447)
(7 154)
Fee and commission income
450
-
450
Fee and commission expenses
(4 157)
(3 447)
(7 604)
Other operating income/expenses
14 510
(1 579)
12 931
Net trading income
-
(13 858)
(13 858)
Result from modification
390
-
390
Result on derecognition of financial instruments not measured at fair value through profit or loss
736
2 847
3 583
Impairment or derecognition of values assigned to non-measured values at fair value through profit or loss
(2 892)
(49)
(2 941)
Overhead costs
(40 790)
(17 953)
(58 743)
Depreciation
(7 004)
(5 565)
(12 569)
Tax on other financial institutions
(25 163)
-
(25 163)
Segment result (gross)
67 974
(55 509)
12 465
Income tax
(6 242)
Net losses
6 223
Period from 01.01.2024 to 31.12.2024
Retail Banking
Treasure Segment
Total
Net interest income
128 305
(19 174)
109 131
Interest income
691 159
100 004
791 163
Interest expenses
(562 854)
(119 178)
(682 032)
Including internal interest
(562 807)
562 807
-
Net fee and commission income
(3 116)
(2 773)
(5 889)
Fee and commission income
255
-
255
Fee and commission expenses
(3 371)
(2 773)
(6 144)
Other operating income/expenses
14 737
-
14 737
Net trading income
-
3 112
3 112
Result from modification
(28 604)
-
(28 604)
Result on derecognition of financial instruments not measured at fair value through profit or loss
322
-
322
Impairment or reversal of impairment on financial assets not
measured at fair value through financial result
(2 881)
(50)
(2 931)
Overhead costs
(39 298)
(15 916)
(55 214)
Depreciation
(6 987)
(5 551)
(12 538)
Tax on other financial institutions
(21 507)
-
(21 507)
Segment result (gross)
40 971
(40 352)
619
Income tax
(5 791)
Net losses
(5 172)
Business segment reporting on the activities of Bank – positions from statement of financial position
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
51
31.12.2025
Retail Banking
Treasure Segment
Other assets
Total
Segment Assets
10 083 741
847 885
75 670
11 007 296
Segment Liabilities
18 413
10 130 267
-
10 148 680
31.12.2024
Retail Banking
Treasure Segment
Other assets
Total
Segment Assets
9 558 483
1 398 060
63 432
11 019 975
Segment Liabilities
18 985
10 176 034
-
10 195 019
Other assets not allocated to segments include intangible assets, tangible assets, deferred tax assets and other assets.
7. Net interest income
Year ended 31 December
2025
2024
Interest income
Interest income calculated using the effective interest rate method
747 733
742 278
Interest income of financial assets at amortised cost, including:
698 497
697 849
- Loans and advances
692 275
691 159
- Cash and short-term placements
5 382
3 975
- Interest income from cash collateral
840
2 715
Interest income on financial assets at fair value through other comprehensive income
49 236
44 429
- Debt securities
49 236
44 429
Income similar to interest on financial assets at fair value through profit or loss, including:
22 307
48 885
Total interest income
770 040
791 163
Year ended 31 December
2025
2024
Interest expense
Financial liabilities valued at amortized cost, including:
(546 189)
(455 434)
-Due to the issue of debt securities
(282 714)
(238 597)
-Loans received
(181 907)
(184 904)
-Leasing contracts
(184)
(96)
-Other financial liabilities
(81 384)
(31 837)
Interest expense on derivatives classified in the banking book
(48 359)
(92 400)
Interest expense on derivatives under hedge accounting - fair value
(3 059)
(51 112)
Interest expense on derivatives under cash flow hedge accounting
(56 444)
(83 086)
Total interest expense
(654 051)
(682 032)
In 2025, interest income related to impaired financial assets measured at amortised cost, stood at TPLN 7 315 (for the period ended on 31 December 2024: TPLN 6 881).
Net interest income broken down by individual sectors is as follows:
Year ended 31 December
2025
2024
Interest income
From banking sector
16 765
48 036
From other entities including:
753 275
743 127
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
52
- From corporate customers
18 496
18 945
- From individual customers
694 919
689 907
- From public sector
39 860
34 275
Total interes income
770 040
791 163
Interest expense
From banking sector
(263 475)
(216 797)
From other entities including:
-
(40)
- From corporate customers
-
(40)
Liabilities from the issue of debt securities
(282 714)
(238 597)
Interest expense on derivatives classified in the banking book
(48 359)
(92 400)
Interest expense on derivatives under hedge accounting - fair value
(3 059)
(51 112)
Interest expenses on derivatives concluded under the cash flow hedge
(56 444)
(83 086)
Total Interest expense
(654 051)
(682 032)
Interest income generated on monetary bills is presented in the item “Interest income from the banking sector”, whereas interest income from treasury bonds in the item “Interest income from the public sector”.
8. Net fee and commission income
Year ended 31 December
2025
2024
Fee and commission income
Credit-related fees and commissions
450
255
Total fee and commission income
450
255
Fee and commission expenses
Fee and commission expenses
(4 157)
(3 370)
Commission expense from loan received and stand-by credit line
(544)
(460)
Costs related to the debt securities issue program (covered bonds and bonds)
(2 462)
(1 781)
Transfer commission, account maintenance
(441)
(533)
Total fee and commission expense
(7 604)
(6 144)
Total fee and commission income
(7 154)
(5 889)
All fees and commission income and expenses presented in the table above relate to items not measured at fair value through profit or loss.
9. Net trading income
31.12.2025
31.12.2024
Foreign exchange result
193
748
Net exchange differences on translation
(5 069)
6 413
Valuation of foreign currency derivatives
5 262
(5 665)
Other net trading income and result on hedge accounting
(14 051)
2 364
Interest rate risk instruments
6 276
770
Hedge accounting, including:
(20 327)
1 594
- the result of the hedged items
(17 563)
(46 302)
- the result on the valuation of hedging instruments
(2 212)
47 107
- the result on the valuation of hedging instruments CF - the ineffective part of the security
(552)
789
Total result on trading activity
(13 858)
3 112
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
53
Foreign exchange result covers realised and unrealised, positive and negative exchange rate differences, as well as profits and losses on spot transactions and futures contracts. The result on operations on interest-bearing instruments covers the result on interest rate swap contracts which have not been designated as hedging instruments.
The Bank applies fair value hedge accounting, fair value hedge accounting for a portfolio of fixed- rate loans and cash flow hedge accounting. The results on hedged item and hedging instruments are presented in the Note 17. The hedge is assessed on an ongoing basis and determined to have been highly effective. The Bank documents its own assessment of the effectiveness of fair value hedging transactions, measured both prospectively and retrospectively from the time of their designation and throughout the period of duration of the hedging relationship between the hedging instrument and the hedged item.
The change in hedge accounting concerns the use of linear depreciation of the initial value, resulting in a one-off charge to the current financial result of a proportional part of the accumulated depreciation of the hedged portfolio from the date of establishing the hedging relationship in the amount of TPLN 14 835 (description Note 17).
10. Net income on modification
In 2025 and 2024, the result on modification was calculated only for assets measured at amortized cost (the Bank did not hold any instruments measured at fair value through other comprehensive income). The negative result on significant modification in 2024 resulted from the creation of a provision for credit holidays.
31.12.2025
Stage 1
Stage 2
Stage 3
Total
Financial assets modified during the period
Amortized cost of financial assets before modification
27 739
25 152
15 037
67 928
Net income on modification
54
172
164
390
31.12.2024
Stage 1
Stage 2
Stage 3
Total
Financial assets modified during the period
Amortized cost of financial assets before modification
1 204 279
225 868
30 653
1 460 800
Net income on modification
(23 217)
(5 003)
(384)
(28 604)
11. Other operating revenues
Year ended 31 December
2025
2024
Uncompensated pooling
16 760
18 206
Other
2 990
735
Total other operating income
19 750
18 941
On December 30, 2022, the Bank concluded an Agreement with mBank to provide pooling. Pursuant to the Agreement, the Bank receives non-refundable compensation payable by mBank in connection with unrealized pooling volume. In 2025, compensation for pooling amounted to TPLN 16 760 (in 2024 it was TPLN 18 206).
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
54
12. General administrative expenses
Year ended 31 December
2025
2024
Staff-related costs
(28 522)
(24 820)
Material costs, including:
(21 821)
(20 412)
- logistic cost
(5 433)
(5 948)
- IT cost
(13 301)
(11 526)
- marketing cost
(287)
(253)
- consulting services cost
(2 271)
(2 143)
- other overheads cost
(529)
(542)
Contributions and transfers to the Bank Guarantee Fund
(6 246)
(7 576)
Taxes and fees
(1 867)
(2 161)
Contributions to the Social Benefits Fund
(287)
(245)
Total overhead costs
(58 743)
(55 214)
In the item "real estate administration and service costs" item presents costs related to short-term leasing agreements, costs related to leasing agreements for low-value assets and costs related to variable remuneration elements (not included in the leasing liability). The total leasing cost included in general administrative costs in 2025 amounted to TPLN 206 (for the period ended December 31, 2024: TPLN 210).
In accordance with the Resolution of the Council of the Bank Guarantee Fund of April 18,2024 on determining the amount of contributions to the bank resolution fund for 2025, in the current reporting period the Bank recognized the contribution in the profit and loss account in the amount of TPLN 6 246 (for 2024 in TPLN 7 576).
Staff-related expenses
Year ended 31 December
2025
2024
Wages and salaries
(23 047)
(20 430)
Social security expenses
(3 941)
(3 275)
Costs of retirement benefits
(26)
(16)
Remuneration payment in the form of phantom shares settled in cash
(363)
(515)
Other benefits for employees
(1 145)
(584)
Staff-related costs, total
(28 522)
(24 820)
13. Other operating expenses
Year ended 31 December
2025
2024
Costs of enforcement proceedings
(21)
(387)
Provision for disputes
(914)
(1 177)
Investment write-off
(21)
(830)
Loss on sales or liquidation of tangible fixed assets and intangible assets
(3 157)
(1 460)
Other
(2 706)
(28)
Total other operating expenses
(6 819)
(3 882)
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
55
14. Impairment or reversal of impairment on financial assets not measured at fair through net financial income
Year ended 31 December
2025
2024
Financial assets at amortised cost, including:
(2 884)
(3 206)
Loans and advances
(2 884)
(3 206)
Individual clients
(2 884)
(3 206)
Stage 1
1 131
565
Stage 2
(664)
1 687
Stage 3
(2 454)
(5 345)
POCI
(897)
(113)
Financial assets measured at fair value through other comprehensive income, including:
(57)
(47)
Debt securities
(57)
(47)
Stage 1
(57)
(47)
Net impairment losses on financial assets not measured at fair value through profit or loss
(2 941)
(3 253)
15. Income tax
Year ended 31 December
2025
2024
Current income tax
(14 856)
(8 682)
Deferred income tax (Note 26)
8 614
2 891
Total income tax
(6 242)
(5 791)
Profit before tax
12 465
619
Income tax calculated at the rate applicable in a given fiscal year (19%)
(2 368)
(118)
Costs that do not constitute tax deductible costs, including:
(7 125)
(5 670)
- tax on financial institutions
(4 781)
(4 086)
- value of write-down on receivables
(298)
(401)
- contribution and payments to the Bank Guarantee Fund
(1 189)
(1 439)
- NKUP on purchased receivables
(468)
(438)
- other
(389)
694
Tax effect of changes in CIT rates in subsequent years
3 251
(3)
Total income tax expense
(6 242)
(5 791)
Effective tax rate calculation
Profit before income tax
12 465
619
Income tax
(6 242)
(5 791)
Effective tax rate
50.08%
935.48%
Nominal tax rate
19%
19%
Current income tax is calculated on the basis of gross accounting profit adjusted for revenues that, in accordance with tax regulations, are not included in tax revenues, tax revenues that are not accounting revenues, costs that are not tax deductible costs and tax costs that are not accounting costs, in accordance with the provisions of tax law.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
56
16. Cash and Cash equivalents
As at December 31, 2025, the Bank has a current account with the National Bank of Poland, the balance of which was TPLN 206, in other banks TPLN 42 504(as at December 31, 2024: TPLN 588 in other banks TPLN 62 810). As at December 31, 2024, the Bank have ON deposits in the amount of TPLN 17 756 (as at December 31, 2024, the Bank have ON deposits in the amount of TPLN 17 779 ).
On the basis of the National Bank of Poland Act dated 29 August 1997, Bank maintains a mandatory reserve deposit. The arithmetic mean of daily balances of the mandatory reserve which the Bank is required to maintain during a given period in the current account with NBP amounted to:
 PLN 0 thousand for the period from 8 December 2025 to 11 January 2026,
 PLN 0 thousand in the period from 2 December 2024 to 30 December 2024.
As at December 31, 2025 and as at December 31, 2024, the Bank did not have any restricted funds.
17. Financial assets and liabilities held for trading and derivative hedging instruments
The Bank has the following derivative instruments in its portfolio:
Interest rate risk instruments:
 Interest Rate Swap (IRS),
Currency risk instruments
 Currency forward transactions (FX SWAP),
Instrument for interest rate risk and exchange rate risk
 Cross Currency Interest Rate Swap (CIRS)
All derivative transactions are concluded for the purpose of hedging against currency risk and interest rate risk. The Bank is not engaged in trading; all derivative transactions are included in the banking portfolio.
Nominal amount
Fair value
As at 31 December 2025
purchase
disposal
assets
liabilities
Derivative financial instruments held for trading
Currency derivatives
- Contracts FX SWAP
371 950
373 665
49
334
Total OTC derivatives
371 950
373 665
49
334
Interest rate derivatives
- IRS contracts
300 000
300 000
7 735
8 729
Total interest rate derivatives
300 000
300 000
7 735
8 729
Total assets / liabilities held for trading
671 950
673 665
7 784
9 063
Hedging derivatives
- IRS contracts
634 629
634 630
1 247
11 365
Total derivatives held for hedging
634 629
634 630
1 247
11 365
Total recognized derivative assets /liabilities held for trading and hedging derivatives
1 306 579
1 308 295
9 031
20 428
Net-off effect
-
-
(8 077)
(19 797)
Total recognized derivative assets /liabilities held for trading and hedging derivatives
1 306 579
1 308 295
954
631
Short-term (up to 1 year)
624 831
626 547
49
334
Long-term (over 1 year)
681 748
681 748
905
297
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
57
As at December 31, 2025, the offsetting effect, apart from the valuation of derivative transactions, includes TPLN 8 077 of collaterals accepted in connection with concluded transactions on derivative instruments subject to compensation.
As at 31 December 2024
Nominal amount
Fair value
purchase
disposal
assets
liabilities
Derivative financial instruments held for trading
Currency derivatives
- FX SPOT
427
428
-
-
- Contracts FX SWAP
850 327
856 492
249
2 685
- Contracts CIRS
854 600
858 540
-
6 659
Total OTC derivatives
1 705 354
1 715 460
249
9 344
Interest rate derivatives
- IRS contracts
300 000
300 000
4 926
6 360
Total interest rate derivatives
300 000
300 000
4 926
6 360
Total assets / liabilities held for trading
2 005 354
2 015 460
5 175
15 704
Hedging derivatives
- IRS contracts
1 967 746
1 967 746
5 594
11 125
- CIRS
1 281 900
1 278 930
-
24 067
Total derivatives held for hedging
3 249 646
3 246 676
5 594
35 192
Total recognized derivative assets/liabilities held for trading and hedging derivatives
5 255 000
5 262 136
10 769
50 896
Net-off effect
-
-
(9 608)
(16 703)
Total recognized derivative assets/liabilities held for trading and hedging derivatives
5 255 000
5 262 136
1 161
34 193
Short-term (up to 1 year)
4 316 157
4 323 293
249
33 412
Long-term (over 1 year)
938 843
938 843
912
781
As at December 31, 2024, the offsetting effect, apart from the valuation of derivative transactions, includes TPLN 9 608 of collaterals accepted in connection with concluded transactions on derivative instruments subject to compensation.
Hedge accounting
The Bank applies fair value hedge accounting for fixed-rate covered bonds issued by the Bank, fair value hedge accounting for a portfolio of fixed-rate loans, fair value hedge accounting for a portfolio of fixed-rate loans and cash flow hedge accounting. Detailed information on hedge accounting is presented below.
a) Hedge accounting for the fair value of fixed-rate covered bonds issued by the Bank
The Bank applies fair value hedge accounting where the only type of hedged risk is the interest rate risk.
At the end of each month, the Bank assesses the effectiveness of the applied hedge by analyzing the changes in the fair value of the hedged instrument and the hedging instrument due to the hedged risk in order to confirm that the hedging relationships are effective in line with the accounting policy described in Note 2.9.
Description of the hedging relationship
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
58
The Bank hedges against the risk of change in fair value of fixed-interest rate mortgage covered bonds issued by the Bank. The hedged risk results from changes in interest rates.
Hedged items
The hedged items are fixed-interest rate mortgage covered bonds with the nominal value of TEUR 91 000.
The hedged item and the hedging item have exactly the same nominal amounts, start and end dates. As at the reporting dates, the Bank assesses the existence of an economic relationship.
The assessment of the existence of an economic link is made using a two-step approach:
■ In the first step, the existence of an economic link is assessed using a qualitative assessment - the critical terms match method. If the method indicates the existence of an economic relationship between the hedged item and the hedging instrument, then the assessment is considered complete,
■ Otherwise, unless there are qualitative grounds to question the existence of an economic relationship between the hedged item and the hedging instrument, the Bank conducts a prospective test based on the linear regression analysis method.
Sources of ineffectiveness
Sources of ineffectiveness for hedging relationships for which ineffectiveness occurs are cash flow mismatches, credit risk of the hedged instrument, and mismatch due to the initial measurement of derivatives, if a derivative that was entered into before the relationship was included in the hedging relationship.
Hedging instruments
Interest Rate Swap transactions are the hedging instruments swapping the fixed interest rate for a variable interest rate.
Presentation of the result from hedged and hedging transactions
Fair value adjustment of the hedged liabilities as well as valuation of the hedging instruments is recognized in the income statement as the income from trading operation, except for interest income and expenses related to the interest measurement component of hedging instruments, which are presented in the position of interest income/expenses on derivatives concluded under the hedge accounting.
The tables below present hedged items as at December 31, 2025 and December 31, 2024.
The nominal value is in EUR thousands, while the value of the liability measured at amortized cost, fair value differences from hedge accounting, the carrying amount of the liability and the change in fair value due to hedge accounting in PLN thousands. The item "Differences from hedge accounting relating to fair value" relates to the adjustment to the fair value of covered bonds that are hedged items under the applied hedge accounting.
As at December 31, 2025
Debt financial instruments by type
Nominal value
Interest rate
Redemption date
The value of the liability is measured at amortized cost
The change in the value of the hedged item from the date of designation used as the basis for recognizing the hedge ineffectiveness in a given period gain/(loss)
Carrying amount of the liability
Differences
from hedge accounting on fair value gain/(loss)
Mortgage covered bonds (EUR)
13 000
1,18%
20.09.2026
53 580
(762)
54 342
(1 114)
Mortgage covered bonds (EUR)
35 000
1,18%
20.09.2026
144 551
(1 909)
146 460
(2 799)
Mortgage covered bonds (EUR)
8 000
3,50%
28.02.2029
34 099
(260)
34 359
140
Mortgage covered bonds (EUR)
15 000
3,50%
15.03.2029
63 854
(496)
64 350
276
Mortgage covered bonds (EUR)
20 000
3,20%
30.05.2029
84 128
(769)
84 897
443
Total hedged items
380 212
(4 196)
384 408
(3 054)
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
59
As at December 31, 2024
Debt financial instruments by type
Nominal value
Interest rate
Redemption date
The value of the liability is measured at amortized cost
The change in the value of the hedged item from the date of designation used as the basis for recognizing the hedge ineffectiveness in a given period gain/(loss)
Carrying amount of the liability
Differences
from hedge accounting on fair value gain/(loss)
Mortgage covered bonds (EUR)
300 000
1,07%
05.03.2025
1 293 159
4 924
1 288 235
(33 869)
Mortgage covered bonds (EUR)
11 000
1,29%
24.04.2025
47 405
336
47 069
(1 303)
Mortgage covered bonds (EUR)
13 000
1,18%
20.09.2026
55 686
1 876
53 810
(1 629)
Mortgage covered bonds (EUR)
35 000
1,18%
20.09.2026
149 939
4 707
145 232
(4 179)
Mortgage covered bonds (EUR)
8 000
3,50%
28.02.2029
34 949
120
34 829
(375)
Mortgage covered bonds (EUR)
15 000
3,50%
15.03.2029
65 483
221
65 262
(702)
Mortgage covered bonds (EUR)
20 000
3,20%
30.05.2029
86 477
326
86 151
(933)
Total hedged items
1 733 098
12 510
1 720 588
(42 990)
The following table presents hedged items as at 31 December 2025 and 31 December 2024. In the following table, the nominal value is presented in EUR thousands, while the fair value and the change of fair value resulting from hedge accounting, in PLN thousands.
As at 31.12.2025
Derivatives
Nominal value
End of transaction
Fair value of the liability
Differences from hedge accounting on fair value gain/(loss
IRS (EUR)
13 000
20.09.2026
(667)
1 171
IRS (EUR)
35 000
20.09.2026
(1 654)
2 969
IRS (EUR)
8 000
28.02.2029
347
(121)
IRS (EUR)
15 000
15.03.2029
558
(224)
IRS (EUR)
20 000
30.05.2029
(257)
(203)
Total hedging items
(1 673)
3 592
As at 31.12.2024
Derivatives
Nominal value
End of transaction
Fair value of the liability
Differences from hedge accounting on fair value gain/(loss
IRS (EUR)
300 000
05.03.2025
2 616
34 564
IRS (EUR)
11 000
24.04.2025
(313)
1 352
IRS (EUR)
13 000
20.09.2026
(1 851)
1 668
IRS (EUR)
35 000
20.09.2026
(4 659)
4 306
IRS (EUR)
8 000
28.02.2029
318
340
IRS (EUR)
15 000
15.03.2029
594
665
IRS (EUR)
20 000
30.05.2029
(85)
1 198
Total hedging items
(3 380)
44 093
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
60
Total result on fair value hedge accounting recognized in the profit and loss account in 2025 and 2024
Year ended 31 December
2025
2024
Interest income on derivatives as part of fair value hedge accounting
(5 370)
(54 693)
Result from the valuation of the hedged
(8 314)
(42 990)
Result on the valuation of hedging instruments
3 592
44 093
Total result on fair value hedge accounting
(10 092)
(53 590)
b) Accounting for the fair value hedge of the loan portfolio for the provision of interest
IFRS 9 introduces changes in hedge accounting, which the Bank decided to apply from July 1, 2022. The changes introduced in IFRS 9 are aimed at increasing the consistency of accounting for risk management activities. At the same time, IFRS 9 does not introduce a new standard for hedging the fair value of a portfolio (assets and/or liabilities) against interest rate risk. Therefore, for this type of hedging, IFRS 9 introduces the option of applying the principles of IAS 39 instead of the requirements of IFRS 9. The Bank decides to use this option to hedge the fair value of loan portfolios against interest rate risk.
The Bank applies fair value hedge accounting, where the only hedged risk is the interest rate risk, in particular:
■ Risk related to the mismatch of the frequency and dates of changes in interest rates on balance sheet items - risk of mismatch of repricing dates,
■ Risk related to changes in the shape and slope of the market yield curve,
■ Risk resulting from an imperfect transmission mechanism of changes in market rates to interest rates on banking products.
The Bank tests the effectiveness of the hedge by analyzing changes in the fair value of the hedged risk of the hedging instrument and the hedged item at the end of each month. For this purpose, the Bank uses linear regression of daily changes in the value of the hedging instrument against daily changes in the value of the hedged item. Efficiency tests include the valuation of hedging transactions less the value of accrued interest. By means of effectiveness tests, the Bank confirms that the applied hedging relationships comply with its accounting policy and meet the requirements of high efficiency specified in the accounting standard.
By the Bank's decision, in the discussed type of hedge accounting, at the end of 2025, amortization of the fair value adjustment of the hedged item was introduced, the cumulative value of which since the beginning of all relationships amounted to PLN 14.8 million. The change was aimed at achieving greater transparency for the market when the fair value of loan portfolios converges to their nominal value. The introduction of systematic depreciation will reduce the variability of the income statement in the future. The amount of accumulated depreciation is included in the "fair value hedge accounting differences" and in the "change in the value of the hedged item since designation used as the basis for recognizing the ineffectiveness of the hedge during the period."
Hedged item
The Bank hedges against changes in the fair value of 4 portfolios of fixed interest rate loans denominated in PLN with a total nominal value of PLN 250 million. The criteria for allocating assets to individual portfolios are defined and described in the documentation of individual relationships and are based on the dates of revaluation of the interest rate on loans.
Portfolios of secured loans as at 31 December, 2025
Hedged portfolio of financial instruments
Nominal value of the portfolio
Nominal value of the hedged item
The value of the valuation item at amortized cost
Differences
from hedge accounting regarding fair value
Change in the value of the hedged item since designation, used as the basis for recognizing hedge ineffectiveness in a given period
Credit portfolio HA_PKS_1
50 000
50 000
74 621
(3 478)
1 079
Credit portfolio HA_PKS_2
25 000
25 000
36 707
(1 009)
662
Credit portfolio HA_PKS_3
75 000
75 000
97 030
(2 605)
2 392
Credit portfolio HA_PKS_4
100 000
100 000
118 772
(2 157)
3 509
Total
250 000
250 000
327 130
(9 249)
7 642
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
61
Portfolios of secured loans as at 31 December, 2024
Hedged portfolio of financial instruments
Nominal value of the portfolio
Nominal value of the hedged item
The value of the valuation item at amortized cost
Differences
from hedge accounting regarding fair value
Change in the value of the hedged item since designation, used as the basis for recognizing hedge ineffectiveness in a given period
Credit portfolio HA_PKS_1
50 000
50 000
81 770
212
4 557
Credit portfolio HA_PKS_2
25 000
25 000
41 322
(338)
1 671
Credit portfolio HA_PKS_3
75 000
75 000
107 935
(1 068)
4 998
Credit portfolio HA_PKS_4
100 000
100 000
145 408
(2 118)
5 665
Total
250 000
250 000
376 435
(3 312)
16 891
Hedging instrument
As a hedging instrument, the Bank uses interest rate swaps in which it pays a fixed interest rate and receives payments from the counterparty at a variable rate.
Balance of hedging instruments as at 31 December, 2025
Hedging derivative
Nominal value
% The value of the item constituting a hedging instrument designated in hedge accounting
Termin zakończenia transakcji
Fair value of the asset
Change in the value of the hedging item since designation, used as the basis for recognizing hedge ineffectiveness in a given period
IRS/21/0001
50 000
100%
01.12.2026
342
(5 386)
IRS/22/0001
25 000
100%
28.01.2027
(746)
(2 206)
IRS/22/0002
75 000
100%
14.03.2027
(3 497)
(5 298)
IRS/22/0003
100 000
100%
01.04.2027
(4 543)
(5 740)
Razem
250 000
(8 444)
(18 630)
Balance of hedging instruments as at 31 December, 2024
Hedging derivative
Nominal value
% The value of the item constituting a hedging instrument designated in hedge accounting
Termin zakończenia transakcji
Fair value of the asset
Change in the value of the hedging item since designation, used as the basis for recognizing hedge ineffectiveness in a given period
IRS/21/0001
50 000
100%
01.12.2026
2 063
(3 743)
IRS/22/0001
25 000
100%
28.01.2027
3
(1 531)
IRS/22/0002
75 000
100%
14.03.2027
(1 779)
(3 653)
IRS/22/0003
100 000
100%
01.04.2027
(2 438)
(3 954)
Razem
250 000
(2 151)
(12 881)
Sources of potential inefficiency
The source of potential hedge ineffectiveness may be one or more of the following factors:
■ change in market circumstances between the moment of determining the terms of the contract for the hedged item and the moment of determining the terms of the hedging instrument,
■ incompatibility of the dates of cash flows of the hedged item and the hedging instrument,
■ incompatibility between the nominal values of the hedged item and the hedging instrument.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
62
Presentation of the result on hedged and hedging transactions
The adjustment to the fair value of the hedged assets and liabilities and the valuation of hedging instruments is recognized in the profit and loss account.
The table below presents the total result on fair value hedge accounting of the fixed interest rate loan portfolio recognized in the income statement:
31.12.2025
31.12.2024
Interest income on derivatives under fair value hedge accounting for a portfolio of fixed rate loans
2 311
3 581
Result on valuation of fair value hedges
(9 249)
(3 312)
Result on valuation of hedged items
(5 804)
3 014
Total result on fair value hedge accounting of the fixed rate loan portfolio
(12 742)
3 283
c) Cash flow hegde accounting
The Bank applied hedge accounting in the scope of cash flows of the portfolio of mortgage loans denominated in PLN and covered bonds issued by the Bank denominated in EUR. The aim of the hedging strategy was to eliminate the risk of variability of cash flows generated by mortgage loans in PLN due to changes in reference interest rates and mortgage bonds denominated in a convertible currency due to changes in exchange rates using currency interest rate swaps (CIRS).
As part of hedge accounting, the Bank designated a hedged item consisting of:
■ arts of the portfolio of housing loans for retail customers, entered in the register of collateral for mortgage covered bonds, denominated in PLN with interest rates indexed to the 3M WIBOR rate, the loan margin is excluded from the collateral;
■ mortgage bonds issued by the Bank denominated in EUR with a fixed interest rate.
As hedging instruments, the Bank used CIRS derivative transactions in which, as a party to the transaction, it paid variable interest flows in PLN plus a margin and received interest flows at a fixed rate in EUR, and the nominal values were exchanged at the beginning and at the end of the transaction. As transactions concluded by a mortgage bank, CIRS transactions were subject to entry in the Covered Bond Security Register. Moreover, if the court declared the Bank's bankruptcy, they would not be terminated immediately, they would last until the end of the original maturity date on the terms specified on the transaction date (they would not be extended beyond the original maturity date).
In accordance with the adopted methodology, the Bank hedged the interest rate risk and currency risk as part of one economic connection between the concluded CIRS transactions and part of the loan portfolio in PLN and the covered bonds in EUR financing them. For the purposes of cash flow hedge accounting, the Bank established two hedging relationships at the same time:
■ by decomposing the real part of the CIRS transaction securing a portfolio of loans in PLN with variable interest rates (hedging against interest rate risk) - relation A and
■ by decomposing the actual part of the CIRS transaction securing the liability in EUR (hedging against currency risk) - relation B.
For the purposes of calculating changes in the fair value of future cash flows of the hedged items, the Bank used the "hypothetical derivative" method, which assumes the possibility of reflecting the hedged item and the characteristics of the hedged risk in the form of a derivative instrument. The valuation principles are analogous to the principles of valuation of interest rate derivatives, however, in accordance with the requirements of IFRS 9, they do not include features, such as the currency base spread, that are not characteristic of the hedged item.
IFRS 9 introduced changes to hedge accounting, which the Bank decided to apply from July 1, 2022. As part of the changes, the currency base spread was separated from the financial instrument designated as a hedging instrument. The Bank recognized changes in the value of the base currency spread (to the extent related to the hedged item) in a separate component of equity in other comprehensive income, with these amounts then transferred or removed from equity and recognized in the profit and loss account or included directly in the initial cost of hedging or other carrying amount of the asset or liability. The currency base spread as at the designation date (to the extent it applies to the hedged item) was amortized in a systematic and rational manner over
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
63
the period to which it related. What is considered a systematic and rational basis for amortizing the amount of the underlying currency spread from equity to the profit and loss account meant straight- line amortization (over the life of the hedging relationship).
Hedged items - cash flow hedging
Nominal value of the hedged items
Change in the fair value of CIRS since its recognition
Loans in PLN with variable interest rates
1 278 930
35 524
Covered bonds issued in convertible currency with a fixed interest rate
1 281 900
(13 569)
Hedging items - securing cash flows
Nominal value of hedging items
The effect of exchange rate valuation and CIRS fair value - used to analyze the effectiveness of the security
Change in fair value of CIRS - effective part of the hedge
CIRS variable leg PLN
1 278 930
(33 647)
(34 565)
CIRS fixed leg EUR
1 281 900
9 854
10 599
Cash flow hedge accounting was completed on September 15, 2025.
18. Financial assets measured at fair value through other comprehensive income
31.12.2025
Carrying value
Debt securities
776 505
- Central banks
59 954
- General governments, including::
716 551
- pledged securities
172 123
Total financial assets at fair value through comprehensive income
776 505
Short-term (up to 1 year)
414 703
Long-term (over 1 year)
362 050
Based on fixed interest rate
716 780
Based on floating interest rate
59 973
Financial assets in the form of money bills and treasury bonds are recognized by the Bank as financial assets with low credit risk due to the fact that these assets are characterized by a low risk of default. As at 31.12.2025 and 31.12.2024, all debt securities were classified in stage 1.
Change in financial assets at fair value through other comprehensive income
Change in the period from 01.01.2025 to 31.12.2025
As at the beginning of the period
1 285 083
Additions
9 691 571
Disposals (sale, redemption and forfeiture)
(10 200 092)
Gains / losses from changes in fair value
(57)
As at the end of the period
776 505
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
64
31.12.2024
Carrying value
Debt securities
1 285 083
- Central banks
334 843
- General governments, including::
950 240
- pledged securities
299 192
Total financial assets at fair value through comprehensive income
1 285 083
Short-term (up to 1 year)
685 310
Long-term (over 1 year)
599 964
Based on fixed interest rate
794 227
Based on floating interest rate
491 047
Change in financial assets at fair value through other comprehensive income
Change in the period from 01.01.2024 to 31.12.2024
As at the beginning of the period
845 733
Additions
9 939 081
Disposals (sale, redemption and forfeiture)
(9 499 684)
Gains / losses from changes in fair value
(47)
As at the end of the period
1 285 083
Both as at 31 December 2025 and as at 31 December 2024, debt instruments had a rating of AAA on the scale of Standard & Poor’s (S&P) rating agency. Pledged assets are not subject to resale or further pledging.
19. Financial assets measured at amortised cost
Gross carrying amount
Accumulated impairment
31.12.2025
Carrying value
Stage 1
Stage 2
Stage 3
POCI
Stage 1
Stage 2
Stage 3
POCI
Loans and advances to banks
8
8
-
-
-
-
-
-
-
Loans and advances to customers
10 086 051
8 817 332
1 185 594
126 709
3 672
(2 122)
(11 582)
(33 187)
(365)
Individual customers
10 083 741
8 815 022
1 185 594
126 709
3 672
(2 122)
(11 582)
(33 187)
(365)
Financial institutions
2 310
2 310
-
-
-
-
-
-
-
Financial assets at amortised cost, total
10 086 059
8 817 340
1 185 594
126 709
3 672
(2 122)
(11 582)
(33 187)
(365)
Short-term (up to 1 year)
676 955
Long-term (over 1 year)
9 409 104
In 2025 and 2024, the Bank did not sell loan receivables.
Loan structure by past due days:
Loan structure by past due days 31.12.2025
Loans and advances to banks
Other Financial institutions
Individual customers
Total
Not overdue or up to 30 days
8
2 310
10 018 437
10 020 755
31 to 60 days
-
-
21 964
21 964
61 to 90 days
-
-
8 384
8 384
Over 90 days
-
-
34 956
34 956
Total
8
2 310
10 083 741
10 086 059
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
65
Gross carrying amount
Accumulated impairment
31.12.2024
Carrying value
Stage 1
Stage 2
Stage 3
POCI
Stage 1
Stage 2
Stage 3
POCI
Loans and advances to banks
9 400
9 400
-
-
-
-
-
-
-
Loans and advances to customers
9 562 831
8 727 317
761 234
115 144
2 403
(3 210)
(10 251)
(29 614)
(192)
Individual customers
9 558 483
8 722 969
761 234
115 144
2 403
(3 210)
(10 251)
(29 614)
(192)
Financial institutions
4 348
4 348
-
-
-
-
-
-
-
Financial assets at amortised cost, total
9 572 231
8 736 717
761 234
115 144
2 403
(3 210)
(10 251)
(29 614)
(192)
Short-term (up to 1 year)
589 236
Long-term (over 1 year)
8 982 995
Loan structure by past due days:
Loan structure by past due days 31.12.2024
Loans and advances to banks
Other Financial istitutions
Individual customers
Total
Not overdue or up to 30 days
9 400
4 348
9 498 917
9 512 665
31 to 60 days
-
-
22 125
22 125
61 to 90 days
-
-
6 416
6 416
over 90 days
-
-
31 025
31 025
Total
9 400
4 348
9 558 483
9 572 231
As at December 31, 2025, in the Bank's valued loan portfolio at amortized cost, the gross carrying amount of loans granted to individual customers based on a variable interest rate amounted to TPLN 9 799 715, based on a fixed interest rate TPLN 327 610 (in 2024 based on a floating interest rate was: TPLN 9 184 315, based on a fixed interest rate TPLN 374 168).
The item "Other financial institution" includes cash collateral (Initial margin) placed by the Bank as a security for derivative transactions with the central clearing house.
Gross carrying amount of the retail portfolio acquired in cooperation with mBank S.A. as at December 31, 2025, it amounted to TPLN 7 769 235 (in 2024: TPLN 8 104 321), including agency sales of TPLN 5 858 061 (in 2024: TPLN 5 895 150 ) and as part of retail pooling TPLN 1 911 174 (in 2024: TPLN 2 209 171).
Credit quality of financial assets measured at amortized cost according to internal rating as at December 31, 2025 and December 31, 2024
31.12.2025
Stage 1
Stage 2
Stage 3
POCI
Total
1
3 517 102
167 623
-
485
3 685 210
2
4 620 227
470 498
-
703
5 091 428
3
457 403
220 993
-
-
678 396
4
200 520
149 178
-
189
349 887
5
20 335
84 643
-
-
104 978
6
113
10 356
-
-
10 469
7
1 632
82 303
-
-
83 935
default
-
-
126 709
2 295
129 004
Gross carrying amount
8 817 332
1 185 594
126 709
3 672
10 133 307
Accumulated impairment
(2 122)
(11 582)
(33 187)
(365)
(47 256)
Net carrying amount
8 815 210
1 174 012
93 522
3 307
10 086 051
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
66
31.12.2024
Stage 1
Stage 2
Stage 3
POCI
Total
1
807 772
2 475
-
-
810 247
2
7 348 117
364 627
-
795
7 713 539
3
452 507
134 148
-
-
586 655
4
114 414
130 804
-
-
245 218
5
4 507
56 932
-
-
61 439
6
-
10 917
-
-
10 917
7
-
61 331
-
-
61 331
default
-
-
115 144
1 608
116 752
Gross carrying amount
8 727 317
761 234
115 144
2 403
9 606 098
Accumulated impairment
(3 210)
(10 251)
(29 614)
(192)
(43 267)
Net carrying amount
8 724 107
750 983
85 530
2 211
9 562 831
The rating system generates the borrower’s probability of default directly in the form of a PD ratio, expressed as a percentage (continuous scale). Rating classes are calculated on the basis of procedures of dividing percentage PD into groups based on geometric stepladder. In external reporting, the Bank maps the internal PD rating scale onto external ratings.
The table below presents the mapping system.
Sub- portfolio
1
2
3
4
5
6
7
8
PD rating
1,0- 1,2
1,4
1,6
1,8
2
2,2
2,4- 2,6
2,8
3
3,2- 3,4
3,6- 3,8
4
4,2- 4,6
4,8
5
5,2- 5,8
No rating
6,1-6,5
AAA
AA+
AA, AA-
A+, A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
B-
CCC+ do C
Not applicable
D
S/P
Investment Grade
Sub-investment Grade
Non-investment Grade
Default
Change in expected credit losses as of December 31, 2025
Opening balance
Transfered to stage 1
Transfered to stage 2
Transfered to stage 3
Acquisitions
Repayments
Model changes
Transcripts
Closing balance
Loans and advances granted to customers
(43 267)
-
-
-
(1 159)
(2 742)
(102)
15
(47 255)
Stage 1
(3 210)
(2 554)
315
13
(487)
4 073
(272)
-
(2 122)
Stage 2
(10 251)
2 415
(2 906)
1 187
(419)
(1 094)
(514)
-
(11 582)
Stage 3
(29 614)
139
2 591
(1 200)
(145)
(5 649)
676
15
(33 187)
POCI
(192)
-
-
-
(108)
(72)
7
-
(365)
Provision related to financial assets, total
(43 267)
-
-
-
(1 159)
(2 742)
(103)
15
(47 256)
Changes in the gross carrying amount of financial instruments as at December 31, 2025
Opening balance
Transfered to stage 1
Transfered to stage 2
Transfered to stage 3
Acquisitions
Repayments*
Transcripts
Security deposit and others
Closing balance
Receivables from banks
9 400
-
-
-
-
-
-
(9 392)
8
Stage 1
9 400
-
-
-
-
-
-
(9 392)
8
Loans
9 606 098
-
-
-
1 924 903
(1 395 822)
(15)
(1 857)
10 133 307
Stage 1
8 727 317
297 898
(767 687)
(15 833)
1 850 903
(1 273 409)
-
(1 857)
8 817 332
Stage 2
761 234
(296 565)
789 038
(28 005)
71 781
(111 889)
-
-
1 185 594
Stage 3
115 144
(1 333)
(21 351)
43 838
929
(10 503)
(15)
-
126 709
POCI
2 403
-
-
1 290
(21)
-
-
3 672
Gross carrying amount of financial assets measured at amortized cost
9 615 498
-
-
-
1 924 903
(1 395 822)
(15)
(11 249)
10 133 315
*including accrued interest
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
67
Change in expected credit losses as of December 31, 2024
Opening balance
Transfered to stage 1
Transfered to stage 2
Transfered to stage 3
Acquisitions
Repayments
Model changes
Transcripts
Closing balance
Loans and advances granted to customers
(38 739)
-
-
-
(2 484)
(3 736)
1 640
52
(43 267)
Stage 1
(3 752)
(2 480)
309
30
(1 315)
2 693
1 305
-
(3 210)
Stage 2
(11 761)
2 028
(1 269)
1 541
(1 062)
561
(289)
-
(10 251)
Stage 3
(22 876)
452
960
(1 571)
(97)
(7 152)
618
52
(29 614)
POCI
(350)
-
-
-
(10)
162
6
-
(192)
Provision related to financial assets, total
(38 739)
-
-
-
(2 484)
(3 736)
1 640
52
(43 267)
Changes in the gross carrying amount of financial instruments as at December 31, 2024
Opening balance
Transfered to stage 1
Transfered to stage 2
Transfered to stage 3
Acquisitions
Repayments*
Transcripts
Security deposit and others
Closing balance
Receivables from banks
12 596
-
-
-
-
-
-
(3 196)
9 400
Stage 1
12 596
-
-
-
-
-
-
(3 196)
9 400
Loans
9 087 622
-
-
-
1 679 770
(1 153 852)
(52)
(7 390)
9 606 098
Stage 1
8 385 392
161 770
(318 566)
(16 878)
1 612 990
(1 090 001)
-
(7 390)
8 727 317
Stage 2
608 627
(159 200)
324 954
(21 642)
65 790
(57 295)
-
-
761 234
Stage 3
91 760
(2 570)
(6 388)
38 520
613
(6 739)
(52)
-
115 144
POCI
1 843
-
-
-
377
183
-
-
2 403
Gross carrying amount of financial assets measured at amortized cost
9 100 218
-
-
-
1 679 770
(1 153 852)
(52)
(10 586)
9 615 498
*including accrued interest
Financial effect of collaterals
As at 31 December 2025
Gross amount
Established impairment write downs
impairment write downs without the collateral cash flows
Financial effect of collaterals
Balance sheet data
Amounts due from banks
8
-
-
-
Loans and advances to customers, including:
10 133 307
(47 256)
(62 975)
15 719
Individual customers
10 130 997
(47 256)
(62 975)
15 719
Other receibles
2 310
-
-
-
Total balance sheet data
10 133 315
(47 256)
(62 975)
15 719
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
68
As at 31 December 2024
Gross amount
Established impairment write downs
impairment write downs without the collateral cash flows
Financial effect of collaterals
Balance sheet data
Amounts due from other banks
9 400
-
-
-
Loans and advances to customers, including:
9 606 098
(43 267)
(53 239)
9 972
Individual customers
9 601 750
(43 267)
(53 239)
9 972
Other receibles
4 348
-
-
-
Total balance sheet data
9 615 498
(43 267)
(53 239)
9 972
The table below presents information on financial assets that were modified without derecognition from the balance sheet and for which expected credit losses were calculated as credit losses over the life of the exposure.
31.12.2025
31.12.2024
Financial assets that were subject to modification in the period
Gross carrying amount of financial assets at amortized cost vefore modification, for which the write-down for expected credit losses as calculated in the lifetime horizon
40 189
256 521
Net profit / loss due to modification
336
(5 386)
Financial assets modified from the moment of initial recognition
Gross carrying amount of financial assets whose valuation horizon of the write-off for exected credit losses during the period changed from lifetime to 12-month
-
-
20. Intangible assets
31.12.2025
31.12.2024
Concessions, patents, licences and similar assets, including:
16 797
21 638
computer software
16 797
21 638
Intangible assets under development
5 484
4 216
Intangible assets, total
22 281
25 854
Movements in intangible assets
Movements in the period
from 01.01.2025 to 31.12.2025
Acquired computer software
Intangible assets
under development
Total
Gross value of intangible assets
as at the beginning of the period: 01.01.2025
61 157
4 216
65 373
Increase (due to)
3 930
4 239
8 169
-purchase
980
2 988
3 968
-transfer from intangible assets under development
2 950
-
2 950
-other increase
-
1 251
1 251
Decrease (due to)
(6 093)
(2 971)
(9 064)
-transfer from intangible assets under development
-
(2 950)
(2 950)
-liquidation
(6 093)
-
(6 093)
-other decrease
-
(21)
(21)
Gross value of intangible assets
as at the end of the period 31.12.2025
58 994
5 484
64 478
Accumulated amortisation
as at the beginning of the period: 01.01.2025
(39 519)
-
(39 519)
Amortisation for the period (due to):
(2 678)
-
(2 678)
-amortisation
(6 857)
-
(6 857)
-liquidation
4 179
-
4 179
Accumulated amortisation
as at the end of the period : 31.12.2025
(42 197)
-
(42 197)
Net value of intangible assets
as at the end of the period: 31.12.2025
16 797
5 484
22 281
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
69
Movements in the period
from 01.01.2024 to 31.12.2024
Acquired computer software
Intangible assets
under development
Total
Gross value of intangible assets
as at the beginning of the period: 01.01.2024
59 459
2 970
62 429
Increase (due to)
5 009
4 835
9 844
-purchase
1 420
4 793
6 213
-transfer from intangible assets under development
3 589
-
3 589
-other increase
-
42
42
Decrease (due to)
(3 311)
(3 589)
(6 900)
-transfer from intangible assets under development
(3 589)
(3 589)
-liquidation
(3 311)
-
(3 311)
Gross value of intangible assets
as at the end of the period 31.12.2024
61 157
4 216
65 373
Accumulated amortisation
as at the beginning of the period: 01.01.2024
(34 615)
-
(34 615)
Amortisation for the period (due to):
(4 904)
-
(4 904)
-amortisation
(6 752)
-
(6 752)
-liquidation
1 848
-
1 848
Accumulated amortisation
as at the end of the period : 31.12.2024
(39 519)
-
(39 519)
Net value of intangible assets
as at the end of the period: 31.12.2024
21 638
4 216
25 854
21. Property, plant and equipment
31.12.2025
31.12.2024
Technical equipment and machinery
4 762
6 757
Other fixed assets
338
1 120
The right to use under leasing contracts:
13 298
15 442
buildings
12 635
14 660
vehicals
663
782
Tangible fixed assets, total
18 398
23 319
On June 8, 2021, the Bank concluded with mBank S.A. a sublease agreement for space in the Mennica Tower GGH MT building located at 18 Prosta St. in Warsaw, to which the seat of the Bank has been transferred. The agreement was concluded for a fixed period from June 8, 2021 to February 28, 2031. The value of the rights to use due to the above-mentioned the agreement was shown under the right of use under leasing agreements, where as at December 31, 2025 it amounted to TPLN 10 321 (as at 31 December 2024 it was TPLN 12 073). On September 30, 2018, the Bank entered into a sublease agreement with mBank S.A. for space in the Przystanek mBank building located at 74 Kilińskiego Street in Łódź, to which the Bank's registered office was moved. The agreement was concluded for a fixed period from November 27, 2017 to October 15, 2029. The value of the right of use under the aforementioned agreement was disclosed under right of use under lease agreements, where it amounted to TPLN 2 314 as at December 31, 2025 and TPLN 2 587 as at December 31, 2024.
Movements in tangible fixed assets
Right to use under leasing contracts
Movements in the period from 01.01.2025 to 31.12.2025
Equipment
Other fixed assets
Building
Vehicles
Total
Gross value of tangible fixed assets as at the beginning of the period: 01.01.2025
22 886
3 478
24 283
1 270
51 917
Increase (due to)
819
364
789
243
2 215
- purchase
819
364
-
-
1 183
- other increase
-
-
789
243
1 032
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
70
Decrease (due to)
(1 205)
(2 551)
(159)
(138)
(4 053)
- sale
(161)
(255)
-
-
(416)
- liquidation
(1 044)
(2 296)
-
-
(3 340)
- other decrease
-
-
(159)
(138)
(297)
Gross value of tangible fixed assets as at the end of the period: 31.12.2025
22 500
1 291
24 913
1 375
50 079
Accumulated amortisation as at the beginning of the period: 01.01.2025
(16 129)
(2 358)
(9 623)
(488)
(28 598)
Amortisation for the period (due to):
(1 609)
1 405
(2 655)
(224)
(3 083)
- amortisation
(2 248)
(450)
(2 655)
(359)
(5 712)
- sale
130
254
-
-
384
- liquidation
509
1 601
-
-
2 110
- other changes
-
-
-
135
135
Accumulated amortisation as at the end of the period: 31.12.2025
(17 738)
(953)
(12 278)
(712)
(31 681)
Impairment charge as at the beginning of the period: 01.01.2025
-
-
-
-
-
Impairment charge as at the end of the period: 31.12.2025
-
-
-
-
-
Net value of tangible fixed assets as at the end of the period: 31.12.2025
4 762
338
12 635
663
18 398
Right to use under leasing contracts
Movements in the period from 01.01.2024 to 31.12.2024
Equipment
Other fixed assets
Building
Vehicles
Total
Gross value of tangible fixed assets as at the beginning of the period: 01.01.2024
19 940
3 524
23 600
1 032
48 096
Increase (due to)
3 314
62
683
449
4 508
- purchase
3 314
62
-
-
3 376
- other increase
-
-
683
449
1 132
Decrease (due to)
(368)
(108)
-
(211)
(687)
- sale
(189)
(7)
-
-
(196)
- liquidation
(179)
(101)
-
-
(280)
- other decrease
-
-
-
(211)
(211)
Gross value of tangible fixed assets as at the end of the period: 31.12.2024
22 886
3 478
24 283
1 270
51 917
Accumulated amortisation as at the beginning of the period: 01.01.2024
(14 034)
(2 024)
(7 027)
(395)
(23 480)
Amortisation for the period (due to):
(2 095)
(334)
(2 596)
(93)
(5 118)
- amortisation
(2 452)
(440)
(2 596)
(298)
(5 786)
- sale
183
5
-
-
188
- liquidation
174
101
-
-
275
- other changes
-
-
-
205
205
Accumulated amortisation as at the end of the period: 31.12.2024
(16 129)
(2 358)
(9 623)
(488)
(28 598)
Impairment charge as at the beginning of the period: 01.01.2024
-
-
-
-
-
Impairment charge as at the end of the period: 31.12.2024
-
-
-
-
-
Net value of tangible fixed assets as at the end of the period: 31.12.2024
6 757
1 120
14 660
782
23 319
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
71
22. Other assets
31.12.2025
31.12.2024
Other, including:
14 169
6 212
-other prepayments
6 159
1 040
-receivables from the portfolio of retail loans acquired as part of cooperation with mBank S.A.
3 802
4 947
-income receivable
279
132
-debtors
3 909
77
-other
20
16
Total other assets
14 169
6 212
Short-term (up to 1 year)
14 169
6 212
As at December 31, 2025 and December 31, 2024, the bank did not have any assets taken over for debts.
23. Financial liabilities measured at amortised cost
Amounts due to other banks and customers
31.12.2025
Liabilities to banks
Total amounts due to customers
Corporate customers
Loans received
2 786 708
-
-
Other financial liabilities, including:
1 285 769
740
740
Liabilities with deferred payment term
1 273 458
-
-
Leasing liabilities
12 311
690
690
Other liabilities
-
50
50
Total
4 072 477
740
740
Short-term (up to 1 year)
22 264
427
Long-term (over 1 year)
4 050 213
313
31.12.2024
Liabilities to banks
Total amounts due to customers
Corporate customers
Loans received
2 799 240
-
-
Other financial liabilities, including:
727 018
846
846
Liabilities with deferred payment term
712 730
-
-
Leasing liabilities
14 288
797
797
Other liabilities
-
49
49
Total
3 526 258
846
846
Short-term (up to 1 year)
29 256
363
Long-term (over 1 year)
3 497 002
483
In the item other financial liabilities with deferred payment dates, they relate to the liabilities resulting from the agreement concluded with mBank S.A. on November 30, 2018, an agreement to
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
72
transfer the retail mortgage-backed loan portfolio. Other financial liabilities with deferred payment terms were subject to a floating interest rate. The transactions are described in Note 37.
Deferred liabilities act as a bridge financing for the portfolio of credit receivables taken over from mBank S.A. The value of this category of liabilities will increase after taking over subsequent tranches of pooling and decrease after issuance of mortgage covered bonds or in the case of repayment of tranches from excess liquidity. The original maturity of the deferred liability is 24 months until the date of the pooling.
In 2025, the Bank took over 6 tranches of pooling, which resulted in a deferred liability for the total amount of TPLN 2 106 414. At the same time, the Bank repaid tranches of liabilities for the total amount TPLN 1 551 144 from excess liquidity.
As at December 31, 2025, the Bank had liabilities due to loans received based on a variable interest rate for a nominal amount of TPLN 2 550 000 and loans based on a fixed interest rate for a nominal amount of TPLN 230 000.
Bank it failed to provide collateral to its creditors. The Bank did not register any breaches of contractual terms related to liabilities under contracted loans.
In the above table, the item “Other liabilities” mainly presents funds that were not yet cleared after the closing of escrow accounts and remained in the transitory account until the account holder made relevant instructions as to the balance settlement.
Leasing liabilities
The lease liabilities item presents the value of liabilities under the agreement concluded with mBank S.A. for the sublease of space in the Mennica Tower GGH MT building in Warsaw and Przystanek in Łódź.
Below are the liabilities due to leasing by maturity dates.
31.12.2025
31.12.2024
Up to 3 months
764
724
3-12 months
2 254
2 150
1-5 years
9 582
10 024
Over 5 years
401
2 187
Total
13 001
15 085
Liabilities from debt securities in issue
The basis for the issue of mortgage covered bonds is the Bank's receivables secured by mortgages.
The basis for the issue of mortgage bonds may also be the funds of the mortgage bank:
■ deposited in securities referred to in Article 16(1)(3), provided that they do not constitute underlying assets
■ deposited with the National Bank of Poland
■ deposited with domestic banks within the meaning of Article 4 (1) item 1 of the Act of 29 August 1997. - Banking Law or a credit institution within the meaning of Article 4 (1) item 17 of the Act of 29 August 1997. - Banking Law, meeting the requirements set out in Article 129(1)(c) of Regulation (EU) No 575/2013.
Rules on the permissible amount of Alternative Security
A mortgage bank is obliged to maintain, for mortgage bonds, a surplus created from assets meeting the conditions set out in Article 18 (3c) of the Mortgage Bills and Mortgage Banks Act, in an amount not lower than the maximum cumulative net liquidity outflow over a consecutive period of 180 days. The net liquidity outflow shall be the outflows of payments due on a given payment date, including payments of the amount of the nominal value of and interest on mortgage bonds and payments on derivatives under the mortgage bond programme, after deducting the inflows of payments due on the same date on assets pledged as collateral for mortgage bonds. For the
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
73
calculation of the payment of the amount of the nominal value of the mortgage bonds referred to in Article 18(3a) of the Act , the maturity of the mortgage bonds extended by 12 months shall be used.
The amount of replacement assets that remains after deducting the surplus referred to above constitutes Replacement Assets from the pool of assets constituting security for covered bonds.
Rules on the statutory oversecuring of mortgage bonds
The sum of the nominal amounts of the mortgage bank's mortgage-backed claims and the rights and funds referred to in Article 18 para. 3 and 4 of the Act on Mortgage Bills and Mortgage Banks, entered in the mortgage bond security register, which are the basis for the issuance of mortgage bonds, may not be lower than 105% of the total amount of the nominal values of the mortgage bonds traded, whereby the sum of the nominal amounts of the mortgage bank's mortgage-backed receivables, which are the basis for the issuance of mortgage bonds, may not be lower than 85% of the total amount of the nominal values of the mortgage bonds traded.
Rules on the refinancing of loans with the proceeds of covered bond issues
Pursuant to the Act on mortgage bonds and mortgage banks, from the proceeds of the from the issue of mortgage bonds, the Bank may refinance mortgage-secured loans and acquired receivables of other banks from mortgage-secured loans granted by them; however, refinancing in respect of a single loan or a single receivable may not exceed an amount equivalent to 60% of the bank- mortgage value of the property, and in the case of residential property 80% of the bank-mortgage value of the property.
The tables below present data related to the issue of covered bonds as at 31 December 2025 and as at 31 December 2024.
Mortgage covered bonds
31.12.2025
31.12.2024
1. Trading covered bonds
5 984 630
6 599 646
2. Underlying assets from the collateral pool
8 918 890
8 250 312
3. Replacement assets from the collateral pool
170 000
300 000
4. Derivatives from the pool of assets pledged as collateral
-
2 970
The mortgage bonds traded as at 31 December 2025 were listed on three markets: the regulated market operated by BondSpot S.A., regulated parallel market operated by the Warsaw Stock Exchange S.A. and on the regulated market operated by the Luxembourg Stock Exchange, with the exception of mortgage bonds offered in a private placement (series A PLN 100 million and B PLN 500 million - issued in 2021, series C PLN 500 million and D PLN 200 million - issued in 2022, series E PLN 1.000 million- issued in 2023, series F PLN 500 million, series G PLN 200 million, series H PLN 500 million- issued in 2024 and series I PLN 500milion issued in 2025.
Debt financial instruments by type as at 31.12.2025
Nominal value
Interest rate as at 31.12.2025
Guarantee / collateral
Redemption date
Liability amount measured at amortised cost
The change in the value of the hedged item from the date of designation used as the basis for recognizing the hedge ineffectiven ess in a given period gain/(loss)
Carrying amount of liability
Long-term issues (with original maturity of over 1 year)
Mortgage covered bonds (PLN)
100 000
4.74%
Mortgage register of covered bonds
03.09.2026
100 352
-
100 352
Mortgage covered bonds (EUR)
35 000
1.18%
Mortgage register of covered bonds
20.09.2026
148 369
(1 909)
146 460
Mortgage covered bonds (EUR)
13 000
1.18%
Mortgage register of covered bonds
20.09.2026
55 104
(762)
54 342
Mortgage covered bonds (PLN)
500 000
4.61%
Mortgage register of covered bonds
10.12.2026
501 373
-
501 373
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
74
Mortgage covered bonds (PLN)
200 000
4.58%
Mortgage register of covered bonds
22.06.2027
200 243
-
200 243
Mortgage covered bonds (PLN)
500 000
4.61%
Mortgage register of covered bonds
10.09.2027
501 366
-
501 366
Mortgage covered bonds (PLN)
100 000
4.84%
Mortgage register of covered bonds
20.12.2028
100 027
-
100 027
Mortgage covered bonds (EUR)
8 000
3.50%
Mortgage register of covered bonds
28.02.2029
34 619
(260)
34 359
Mortgage covered bonds (EUR)
15 000
3.50%
Mortgage register of covered bonds
15.03.2029
64 846
(496)
64 350
Mortgage covered bonds (EUR)
20 000
3.20%
Mortgage register of covered bonds
30.05.2029
85 666
(769)
84 897
Mortgage covered bonds (PLN)
1 000 000
4.77%
Mortgage register of covered bonds
12.09.2028
1 002 153
-
1 002 153
Mortgage covered bonds (PLN)
500 000
4.89%
Mortgage register of covered bonds
05.09.2029
501 766
-
501 766
Mortgage covered bonds (PLN)
200 000
4.54%
Mortgage register of covered bonds
21.09.2026
200 241
-
200 241
Mortgage covered bonds (PLN)
500 000
4.66%
Mortgage register of covered bonds
13.09.2029
501 042
-
501 042
Mortgage covered bonds (PLN)
500 000
4.84%
Mortgage register of covered bonds
04.03.2030
501 806
-
501 806
Mortgage covered bonds (PLN)
750 000
4.80%
Mortgage register of covered bonds
12.06.2028
751 343
-
751 343
Mortgage covered bonds (PLN)
750 000
4.81%
Mortgage register of covered bonds
17.09.2029
750 833
-
750 833
Bonds (PLN)
60 000
4.37%
Unsecured
03.03.2026
59 517
-
59 517
Liabilities arising from the issuance of debt securities (carrying amount)
6 060 666
(4 196)
6 056 470
Debt financial instruments by type as at 31.12.2024
Nominal value
Interest rate as at 31.12.2024
Guarantee / collateral
Redemption date
Liability amount measured at amortised cost
The change in the value of the hedged item from the date of designation used as the basis for recognizing the hedge ineffectiven ess in a given period gain/(loss)
Carrying amount of liability
Long-term issues (with original maturity of over 1 year)
Mortgage covered bonds (EUR)
300 000
1.07%
Mortgage register of covered bonds
05.03.2025
1 293 159
(4 924)
1 288 235
Mortgage covered bonds (EUR)
11 000
1.29%
Mortgage register of covered bonds
24.04.2025
47 405
(336)
47 069
Mortgage covered bonds (EUR)
300 000
0.24%
Mortgage register of covered bonds
15.09.2025
1 282 387
-
1 282 387
Mortgage covered bonds (PLN)
100 000
6.37%
Mortgage register of covered bonds
03.09.2026
100 450
-
100 450
Mortgage covered bonds (EUR)
35 000
1.18%
Mortgage register of covered bonds
20.09.2026
149 939
(4 707)
145 232
Mortgage covered bonds (EUR)
13 000
1.18%
Mortgage register of covered bonds
20.09.2026
55 686
(1 876)
53 810
Mortgage covered bonds (PLN)
500 000
6.39%
Mortgage register of covered bonds
10.12.2026
501 900
-
501 900
Mortgage covered bonds (PLN)
200 000
6.40%
Mortgage register of covered bonds
22.06.2027
200 302
-
200 302
Mortgage covered bonds (PLN)
500 000
6.39%
Mortgage register of covered bonds
10.09.2027
501 894
-
501 894
Mortgage covered bonds (PLN)
100 000
6.66%
Mortgage register of covered bonds
20.12.2028
100 081
-
100 081
Mortgage covered bonds (EUR)
8 000
3.50%
Mortgage register of covered bonds
28.02.2029
34 949
(120)
34 829
Mortgage covered bonds (EUR)
15 000
3.50%
Mortgage register of covered bonds
15.03.2029
65 483
(221)
65 262
Mortgage covered bonds (EUR)
20 000
3.20%
Mortgage register of covered bonds
30.05.2029
86 476
(325)
86 151
Mortgage covered bonds (PLN)
1 000 000
6.55%
Mortgage register of covered bonds
12.09.2028
1 002 779
-
1 002 779
Mortgage covered bonds (PLN)
500 000
6.60%
Mortgage register of covered bonds
05.09.2029
502 384
-
502 384
Mortgage covered bonds (PLN)
200 000
6.35%
Mortgage register of covered bonds
21.09.2026
200 399
-
200 399
Mortgage covered bonds (PLN)
500 000
6.45%
Mortgage register of covered bonds
13.09.2029
501 621
-
501 621
Liabilities arising from the issuance of debt securities (carrying amount)
6 627 294
(12 509)
6 614 785
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
75
Movements in the balance of debt securities issued
Year ended 31 December
2025
2024
As at the beginning of the period
6 614 785
5 874 096
Increase (due to)
2 351 091
1 481 640
-issue
2 060 000
1 200 000
-accured interest, interest non-linearity adjustments, EIR commission
282 778
238 651
-hedge accounting adjustments related to fair value of hedged items
8 313
42 989
Decrease (due to)
(2 909 406)
(740 951)
-redemption
(2 567 698)
(452 685)
-interest repayment, interest non-linearity adjustments, EIR commission,
(294 390)
(235 036)
-exchange differences
(47 318)
(53 230)
As at the end of the period
6 056 470
6 614 785
Short-term (up to 1 year)
1 062 285
2 617 691
Long-term (over 1 year)
4 994 185
3 997 094
Fixed interest rate debt securities issued
443 925
3 002 976
Floating interest rate debt securities issued
5 612 545
3 611 809
24. Provisions
Mortgage covered bonds
31.12.2025
31.12.2024
Provision (due to)
2 092
2 164
-provisions for retirement and disability benefits
198
164
-provisions for legal proceedings
1 894
2 000
Provision, in total
2 092
2 164
Expected settlement period of the provision:
Short-term (up to 1 year)
843
419
Long-term (over 1 year)
1 249
1 745
Movements in provisions
2025
Change of status in the period from 1 January to 31 December
Changes in provisions for legal proceedings
Provisions for retirement and disability benefits
Provisions as at the beginning of the period
2 000
164
-increase on provisions
509
26
-release of provisions
(218)
(34)
-other changes/ transfer to assets
(397)
42
Provisions as at the end of the period
1 894
198
Expected settlement period of provisions:
Short-term (up to 1 year)
830
13
Long-term (over 1 year)
1 064
185
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
76
2024
Change of status in the period from 1 January to 31 December
Changes in provisions for legal proceedings
Provisions for retirement and disability benefits
Provisions as at the beginning of the period
823
114
-increase on provisions
1 177
16
-release of provisions
-
(26)
-other changes/ transfer to assets
-
60
Provisions as at the end of the period
2 000
164
Expected settlement period of provisions:
Short-term (up to 1 year)
404
15
Long-term (over 1 year)
1 596
149
25. Other liabilities
31.12.2025
31.12.2024
Other liabilities (due to)
15 660
14 032
- passive accruals
10 588
9 147
- settlements due to tax from Bank balance sheet items
2 010
1 942
- provision for holiday equivalents
947
902
-settlements with insurers
545
647
-liabilities due to income tax on salaries, Social Security contributions and VAT
920
487
-other
650
907
Other liabilities, in total
15 660
14 032
Short-term (up to 1 year)
15 660
14 032
26. Deferred income tax assets and provision
Deferred income tax is presented as the difference between the tax value of assets and liabilities and their carrying amount using the income tax rate expected to be applicable in the year when the tax obligation arises. Therefore, due to the change in CIT rates from 2026 and subsequent years, temporary differences were recalculated using the rates at which they will be realized, which had a positive impact on net final result in the amount of TPLN 3 251.
Changes in deferred tax provisions and assets are presented in mandatory charges to the financial result, except for provisions and assets related to items recognized in other comprehensive income.
Changes in deferred tax assets and liabilities in the period from January 1, 2025 to December 31, 2025 are presented below.
Deferred income tax assets
As at 01.01.2025
Through the profit and loss account
Recognized in the income statement
As at 31.12.2025
Interest accrued
17 954
208
-
18 162
Valuation of derivative financial instruments
10 613
(313)
(6 713)
3 587
Valuation of debt financial instruments measured at fair value through other comprehensive income
1 367
-
(1 175)
192
Provisions and write-offs for impairment of loans and credits
5 014
1 270
-
6 284
Provisions and other liabilities related to employment benefits
1 294
840
19
2 153
Accruals of costs
2 648
3 148
-
5 796
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
77
The difference between the depreciation of the right to use and the cost of financing the lease (IFRS 16)
2 866
124
-
2 990
Revenues to be settled (commissions settled using the effective interest rate method)
(2 051)
1 546
-
(505)
Total deferred income tax assets
39 705
6 823
(7 869)
38 659
Settled within 12 months
29 385
To be settled after more than 12 months
9 274
Deferred income tax liabilities
As at 01.01.2025
Through the profit and loss account
Recognized in the income statement
As at 31.12.2025
Interest accrued
(17 542)
(4 899)
-
(22 441)
Valuation of derivative financial instruments
(5 222)
850
2 014
(2 358)
Valuation of debt financial instruments measured at fair value through other comprehensive income
(427)
-
(1 230)
(1 657)
Provisions and other liabilities related to employment benefits
(1)
-
-
(1)
Costs paid in advance
(4 000)
6 577
-
2 577
Difference between tax and balance sheet depreciation/amortisation
(4 467)
(737)
-
(5 204)
Total deferred income tax liabilities
(31 658)
1 791
784
(29 083)
Settled within 12 months
(23 879)
To be settled after more than 12 months
(5 204)
Deferred income tax assets (net)
As at 01.01.2025
Through the profit and loss account
Recognized in the income statement
Changes caused by the transfer of the portfolio within ZCP
As at 31.12.2025
Total deferred income tax assets (net)
8 047
8 614
(7 085)
-
9 576
Settled within 12 months
5 506
To be settled after more than 12 months
4 070
Changes in deferred tax assets and liabilities in the period from January 1, 2024 to December 31, 2024 are presented below.
Deferred income tax assets
As at 01.01.2024
Through the profit and loss account
Recognized in the income statement
As at 31.12.2024
Interest accrued
17 938
16
-
17 954
Valuation of derivative financial instruments
26 043
(9 128)
(6 302)
10 613
Valuation of debt financial instruments measured at fair value through other comprehensive income
3 103
-
(1 736)
1 367
Provisions and write-offs for impairment of loans and credits
5 027
(13)
-
5 014
Provisions and other liabilities related to employment benefits
1 321
(38)
11
1 294
Accruals of costs
2 196
452
-
2 648
The difference between the depreciation of the right to use and the cost of financing the lease (IFRS 16)
3 225
(359)
-
2 866
Revenues to be settled (commissions settled using the effective interest rate method)
(2 644)
593
-
(2 051)
Total deferred income tax assets
56 209
(8 477)
(8 027)
39 705
Settled within 12 months
31 825
To be settled after more than 12 months
7 880
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
78
Deferred income tax liabilities
As at 01.01.2024
Through the profit and loss account
Recognized in the income statement
As at 31.12.2024
Interest accrued
(17 021)
(521)
-
(17 542)
Valuation of derivative financial instruments
(13 331)
8 625
(515)
(5 221)
Valuation of debt financial instruments measured at fair value through other comprehensive income
(263)
-
(164)
(427)
Provisions and other liabilities related to employment benefits
(1)
-
-
(1)
Costs paid in advance
(7 400)
3 400
-
(4 000)
Difference between tax and balance sheet depreciation/amortisation
(4 331)
(136)
-
(4 467)
Total deferred income tax liabilities
(42 347)
11 368
(679)
(31 658)
Settled within 12 months
(27 191)
To be settled after more than 12 months
(4 467)
Deferred income tax assets (net)
As at 01.01.2024
Through the profit and loss account
Recognized in the income statement
As at 31.12.2024
Total deferred income tax assets (net)
13 862
2 891
(8 706)
8 047
Settled within 12 months
4 634
To be settled after more than 12 months
3 413
Year ended 31 December
Deferred tax recognized in the income statement
2025
2024
Interest accured
(4 691)
(505)
Valuation of derivative financial instruments
537
(503)
Amount of imprairment write-downa on receivables and adjustment to fair value*
1 270
(13)
Provisions and other liabilities related to employment benefits
840
(38)
Accurals
3 148
452
Revenue to be settled (commissions settled using the effective interest rate method)
1 546
593
Prepaid costs
6 577
3 400
The difference between tax and accounting depreciation/long-term leasing
(613)
(495)
Total, deferred tax recognized in the income statement
8 614
2 891
27. Proceedings pending before a court, an authority competent for arbitration proceedings or a public administration authority
In 2025 as well as in 2024, the Bank was not involved in any proceedings before a court, arbitration body, or public administration authority, where the value of such proceedings represented at least 10% of the Bank’s equity. No significant actions were brought by the Bank or against the Bank within the presented reporting periods. The Bank made no provisions for ongoing disputes of that category.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
79
28. Off-balance sheet commitments
Off-balance-sheet commitments of the Bank include:
■ lending commitments
■ liabilities received due to unused available credit lines (revolving loans, stand-by lines, overdrafts),
■ liabilities in respect of derivative financial instruments.
The tables below present the off-balance-sheet liabilities at 31 December 20 25 and 31 December 2024
31.12.2025
Up to 1 year
From 1 to 5 years
Over 5 years
Total
1. Off-balance sheet liabilities
-
894 793
2 500 000
3 394 793
Liabilities received :
a) Financial liabilities received
-
894 793
2 500 000
3 394 793
2. Derivative financial instruments (nominal value of contracts)
1 251 378
1 363 496
-
2 614 874
1. Interest rate derivatives
505 763
1 363 496
-
1 869 259
2. Foreign exchange derivatives
745 615
-
-
745 615
Total off-balance sheet items
1 251 378
2 258 289
2 500 000
6 009 667
31.12.2024
Up to 1 year
From 1 to 5 years
Over 5 years
Total
1. Off-balance sheet liabilities granted and received
-
894 956
500 000
1 394 956
Liabilities received :
a) Financial liabilities received
-
894 956
500 000
1 394 956
2. Derivative financial instruments (nominal value of contracts)
8 639 450
1 877 686
-
10 517 136
1. Interest rate derivatives
2 657 806
1 877 686
-
4 535 492
2. Foreign exchange derivatives
5 981 644
-
-
5 981 644
Total off-balance sheet items
8 639 450
2 772 642
500 000
11 912 092
29. Pledged assets
The Bank secured the issued mortgage covered bonds with receivables from loans granted (mortgage covered bonds described in Note 23). Moreover, the Bank entered treasury bonds in the mortgage bond collateral register as substitute assets or as a surplus resulting from Art. 18 section 3a of the Act on Covered Bonds and Mortgage Banks.
A mortgage bank shall be obliged to maintain, for mortgage covered bonds, a surplus created from assets meeting the conditions set out in Article 18 (3c) of the Mortgage Bills and Mortgage Banks Act, in an amount not lower than the maximum cumulative net liquidity outflow over a consecutive period of 180 days. The net liquidity outflow shall be the outflows of payments due on a given payment date, including payments of the face value of and interest on mortgage bonds and payments on derivatives under the mortgage bond programme, after deducting the inflows of payments due on the same date on assets pledged as collateral for mortgage bonds.
The amount of the substitute security may be withdrawn from the register at any time (released), provided that the trustee agrees. The amount of the excess varies over time and must remain in the register, until all mortgage bonds are redeemed.
The Bank secured the issued mortgage covered bonds with Treasury bonds with a carrying amount as at December 31, 2025, TPLN 172 123 (as at December 31, 2024, TPLN 299 192).
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
80
30. Registered share capital
As at 31 December 2025 and at 31 December 2024 the total number of ordinary shares was 2 200 000 shares with the nominal value of PLN 100 per share. All shares in issue are fully paid up.
On 14 June 2023. The District Court for the City of Warsaw, XII Commercial Division of the National Court Register, made an entry concerning the cancellation of 1 160 000 ordinary shares with a nominal value of PLN 100 each, in connection with the transaction of demerging the Bank by spinning off part of its business and transferring it to mBank.
Registered share capital (structure) as at 31 December 2025 and 2024
Share type
Type of preference
Type of restrictions
Number of shares
Series / issue at par value (PLN)
Means of covering share capital
Registration date
Right to dividend
registered
-
-
500 000
50 000 000
cash
16.04.1999
01.01.2000
registered
-
-
850 000
85 000 000
cash
20.09.2000
01.01.2001
registered
-
-
400 000
40 000 000
cash
24.04.2006
01.01.2006
registered
-
-
450 000
45 000 000
cash
08.01.2013
01.01.2013
Total number of shares
2 200 000
-
Total registered share capital
220 000 000
The shareholders of Bank as at December 31,2025 and 2024 are presented in the table below:
Shares
Voting rights at the General Shareholders' Meeting
Shareholder’s name
Equity (PLN)
Numbers of shares
%
Numbers of vote
%
mBank S.A.
220 000 000
2 200 000
100.00
2 200 000
100.00
Total
220 000 000
2 200 000
100.00
2 200 000
100.00
31. Supplementary capital from the sale of shares above their nominal value
Supplementary capital from the sale of shares above their nominal value in 2025 and 2024 was TPLN 507 362. The supplementary capital is created from the surplus achieved on the issue of shares above par value remaining after covering the costs of the issue, for the purpose of covering balance sheet losses that may arise in connection with the Bank's operations.
32. Retained earnings
31.12.2025
31.12.2024
Other supplementary capital
361 712
361 712
General banking risk reserve
44 800
44 800
Undistributed financial result from previous years
(284 833)
(279 661)
Result of the current year
6 223
(5 172)
Total retained earnings
127 902
121 679
Other supplementary capital and the General Risk Fund are created as a result of profit appropriation and are intended for the purposes specified in the Memorandum of Association or other legal regulations.
The Bank is obliged to transfer at least 8% of its net profit to its statutory supplementary capital until it has reached the level of one-third of the Bank’s share capital. The Bank may also transfer a part of its net profit to the General Risk Fund to cover unforeseen losses.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
81
33. Dividend per share
Bank does not plan to pay a dividend for 2025, nor did it pay any for 2024.
34. Notes to the statement of cash flows
Cash and cash equivalents
For the purpose of the statement of cash flows, the balance of cash and cash equivalents includes the following balances with maturities of up to three months.
31.12.2025
31.12.2024
Cash and Cash equivalents (Note 16)
42 710
63 398
Amounts due from other banks (Note 16)
17 756
17 779
Money bills (Note 18)
59 954
334 843
Total cash and cash equivalents
120 420
416 020
Supplementary information to the statement of cash flows
Change in the status of items of operational activity
The following table provides additional information to the statement of cash flows and presents differences between the balance-sheet changes in items and changes in such items recognized under operating activities in the statement of cash flows.
Year ended 31 December
2025
2024
Financial assets and liabilities held for trading and derivative hedging instruments - change in balance due to balance sheet balances
(33 355)
(11 547)
The difference between the interest accrued and paid in cash in the period
(34 664)
(71 193)
Valuation recognized in other comprehensive income
24 732
35 879
Financial assets and liabilities held for trading and derivative hedging instruments, total
(43 287)
(46 861)
Loans and advances to clients, change resulting from balance-sheet values
(513 828)
(513 948)
The difference between the interest accrued and paid in cash in the period
(48 680)
13 587
Changes in fair value of hedged items in portfolio hedging against interest rate risk
9 249
3 313
Change in loans and advances to clients, total
(553 259)
(497 048)
Financial assets at fair value through other comprehensive income - change resulting from balance-sheet values
508 578
(439 350)
Exclusion of change in cash and cash equivalents
(274 889)
279 887
Valuation recognized in other comprehensive income
9 166
10 000
The difference between the interest accrued and paid in cash in the period
17 939
8 896
Change in respect Financial assets at fair value through other comprehensive income, total
260 794
(140 567)
Debt securities issued at amortised cost - change resulting from balance-sheet values
(558 315)
740 689
The difference between the interest accrued and paid in cash in the period
9 225
(2 239)
Exclusion of change in cash from financing activities
567 698
(782 315)
(Foreign exchange gains) losses
4 213
52 650
Change in debt securities in issue at amortised cost, total
22 821
8 785
Amounts due to other banks, change resulting from balance-sheet values
548 196
152 682
The difference between the interest accrued and paid in cash in the period
(22 051)
(26 982)
Exclusion of change in cash from financing activities
(604 894)
(201 025)
Change in amounts due to banks, in total
(78 749)
(75 325)
Debt securities in issue - change resulting from balance-sheet values
1
(12)
The difference between the interest accrued and paid in cash in the period
406
(31)
Transfer to cash flows from financing activities - leasing
(136)
504
Change in amounts due to clients, in total
271
461
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
82
Interest received and paid with respect to the operational activity
Year ended 31 December
2025
2024
Interest received from:
Cash and Cash equivalents
451
1 112
Receivables from banks
4 927
2 854
Loans and advances to customers
741 341
680 662
Debt securities measured at fair value through comprehensive income
34 144
35 532
Derivative instruments classified to the banking book
23 961
49 657
Income from interest received, total
804 824
769 817
Year ended 31 December
2025
2024
Interest paid on account:
Settlements with banks on account of received credits, security deposits with the original maturity below 1 year, liabilities on account of deferred payment
145 470
182 132
Settlements with banks on account of debt securities issued with an original maturity of less than one year
-
2 187
Total cost of interest paid
145 470
184 319
Cash flows from financing activities
The following tables present a change in liabilities in connection with the financing activities
OB.
CB
01.01.2025
Cash flow
Other changes
31.12.2025
Debt securities in issue (long-term)
3 988 843
(567 698)
1 560 603
4 981 748
Amounts due to banks (long-term)
3 485 274
605 270
(59 984)
4 030 560
Leasing liabilities
12 211
(3 077)
849
9 983
OB.
CB
01.01.2024
Cash flow
Other changes
31.12.2024
Debt securities in issue (long-term)
5 452 296
782 315
(2 245 768)
3 988 843
Amounts due to banks (long-term)
3 333 621
201 653
(50 000)
3 485 274
Leasing liabilities
14 253
(2 941)
899
12 211
Column “Other Changes” shows non-cash flows resulting from accrued interest, commissions accounted for with the effective interest rate method, exchange differences, changes in hedge accounting adjustments related to fair value of hedged items, financial liabilities with deferred maturity resulting from agreements concluded with mBank S.A. on the transfer of a portfolio of retail loans secured with a mortgage on real estate.
35. Incentive plan for the Bank’s Management Board and employees having a material impact on the risk profile of the Bank
The rules for determining the variable remuneration components of persons holding positions that have a significant impact on the Bank's risk profile are set out in the "Remuneration policy for persons having a significant impact on the risk profile at mBank Hipoteczny S.A." hereinafter referred to as the "Policy", adopted for the first time by the Resolution of the Supervisory Board no. 21/2012 of 19 September 2012. Since then, the Policy has been subject to annual verification and modification by the Management Board and Supervisory Board of the Bank. The currently
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
83
applicable policy was approved by resolution of the Supervisory Board No. 24/2025 of March 31, 2025.
Persons eligible to participate in the programme are those holding positions identified as having a material impact on the Bank's risk profile in accordance with the Risk Taker identification policy, defined as Risk Taker - Member of the Bank's Management Board and Risk Taker - Employee of the Bank.
Bonus for Risk Takers - Members of the Bank's Management Board
The bonus amount of individual members of the Bank's Management Board is determined by the Supervisory Board, which determines the bonus amount for the respective Risk Taker - Member of the Bank's Management Board, whereby the bonus amount granted to individual Risk Takers - Members of the Bank's Management Board need not be identical. The amount of the bonus is determined based on the performance evaluation of each Risk Taker. The Supervisory Board carries out the analysis and performs the Assessment on the basis of the targets set for the Risk Taker, which are set with reference to a period of at least 3 years. The decision regarding the determination of the bonus amount and the assessment of the Risk Taker's performance of the targets set is left to the sole discretion of the Supervisory Board.
The bonus consists of a non-deferred portion representing 60% of the bonus and a deferred portion representing 40% of the bonus.
The Non-Deferred Portion is subject to payment as follows:
■ the first half (50%) of the Non-Deferred Portion is paid in cash after the Bank's AGM has approved the Bank's financial statements for the previous calendar year, i.e. the statements for the year for which the bonus was granted, but no later than 31 July of the year in which the Bank's AGM was held,
■ the second half (50%) of the Non-Deferred Portion is paid out in the form of phantom shares, no earlier than 12 months after the date of the Bank's AGM approving the Bank's financial statements for the previous calendar year, i.e. the statements for the year for which the bonus was granted.
The Deferred Portion is payable in 5 equal annual tranches starting from the year following the year in which the financial statements for the year for which the bonus is granted are approved, on the following basis:
■ the first half (50%) of each tranche of the Deferred Portion shall be paid in cash after the Bank's AGM approves the Bank's financial statements for the previous calendar year, but no later than 31 July of the year in which the Bank's AGM is held,
■ the second half (50%) of each tranche of the Deferred Portion shall be paid in the form of phantom shares, no earlier than 12 months after the date of the Bank's AGM approving the Bank's financial statements for the previous calendar year.
The deferral period for the cash portion as well as the portion paid out in the form of phantom shares for 5 years applies from the bonus awarded for 2021. In previous years it was 3 years.
Bonus for Risk Takers - Bank Employees
The bonus amount of individual Risk Takers - Bank Employees is determined by the Bank's Management Board. The Bank's Management Board carries out the analysis and performs the Appraisal on the basis of the targets set for the Risk Taker, which are set with reference to a period of at least 3 years. The decision on the amount of the bonus is at the sole discretion of the Bank's Management Board. The bonus consists of a non-deferred portion representing 60% of the bonus and a deferred portion representing 40% of the bonus.
The Risk Taker - Bank Employee bonus must be paid in deferred form if at least one of the conditions applies:
■ the bonus amount exceeds one-third of the total annual remuneration (i.e. the sum of the fixed remuneration and the Bonus) or
■ the amount of the Bonus is higher than the Polish zloty equivalent of EUR 50,000 (converted at the average exchange rate of the National Bank of Poland as at the date of the decision to grant the bonus.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
84
Making a payment of the entire bonus in cash in a non-deferred form requires a decision of the Bank's Board of Directors with regard to the Risk Taker - Bank Employee.
The Non-Deferred Portion is subject to payment as follows:
■ the first half (50%) of the Non-Deferred Portion shall be paid in cash after the Bank's AGM has approved the Bank's financial statements for the previous calendar year, i.e. the statements for the year for which the bonus was granted, but no later than 31 July of the year in which the Bank's AGM was held,
■ the other half (50%) of the Non-Deferred Portion will be paid out in phantom shares, no earlier than 12 months after the date of the Bank's AGM approving the Bank's financial statements for the previous calendar year, i.e. the statements for the year for which the bonus was granted.
The Deferred Portion is payable in 4 equal annual tranches starting from the year following the year in which the financial statements for the year for which the Bonus is granted are approved, as follows:
■ the first half (50%) of each tranche of the Deferred Portion shall be paid in cash after the AGM approves the Bank's financial statements for the previous calendar year, but no later than 31 July of the year in which the Bank's AGM is held,
■ the second half (50%) of each tranche of the Deferred Portion will be paid out in phantom shares, no earlier than 12 months after the date of the of the Bank's AGM approving the Bank's financial statements for the previous calendar year.
The deferral period of the cash portion as well as the portion paid out in the form of phantom shares for 4 years applies from the bonus awarded for 2021. In previous years, it was 3 years. Starting with the 2020 bonus, the Supervisory Board in respect of the members of the Management Board and the Management Board in respect of the Risk Taker - employees of the Bank, in particularly justified cases related to minimising the risks associated with maintaining the Bank's solid capital base in order to ensure the Bank's ability to respond effectively to the country's economic situation, e.g. related to the COVID-19 pandemic, may adopt a resolution to pay out part or all of the cash tranches (both the non-deferred tranche and the deferred tranches) in phantom shares of the Bank under the terms and conditions set out above. Accordingly, the Supervisory Board in the case of members of the Management Board and the Management Board in the case of employees may decide to withhold in full or reduce the amount of a deferred tranche if it determines that, over a longer time horizon than 1 calendar year (i.e. for a period of at least 3 years) Risk Taker has had a direct and negative impact on the financial result or market position of the Bank or Group of mBank during the assessment period, has breached the principles and norms adopted in the Group, has directly led to significant financial losses, when at least one of the elements included in the scorecard has not been met or when any of the prerequisites referred to in Article 142 of the Banking Act has occurred, in particular the cases in paragraph 2.
If the events referred to above occur at the stage of determining the bonus for Risk Takers, the Supervisory Board or the Management Board, respectively, may decide not to grant the bonus in full or to reduce it for a given calendar year.
The withholding in full or reduction of the bonus as well as any deferred tranche may also apply to the bonus and/or the deferred tranche paid to the employee after the expiry or termination of the employment contract.
In addition, the Risk Taker may be obliged, under the terms and within the timeframe determined by a decision of the Supervisory Board or the Management Board respectively, to repay the bonus granted and paid for the calendar year in question (i.e.: the non-deferred portion and all deferred portions), in the event that he or she has violated the principles and norms adopted in the mBank Group, has committed a material breach of generally applicable laws or has directly led to significant financial losses resulting from a deliberate negative action to the detriment of the mBank Group or has led to financial sanctions being imposed on the Bank by supervisory authorities on the basis of a legally valid decision.
The decision on the occurrence of the above-described events may be taken up to the end of the calendar year in which the last tranche of the deferral part of the bonus for the year in which the event occurs will be paid. The accounting treatment of incentive programs is described in Note 2.17.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
85
36. Related party transactions
All transactions between the Bank and related entities were typical and routine transactions, concluded, in the opinion of the Management Board, on terms not deviating from market conditions, and their nature and terms resulted from the Bank's current operating activities. Transactions with related entities carried out as part of normal operating activities include loan pooling transactions, liabilities arising from the issue of debt securities, derivative transactions, and real estate leasing.
The following table presents financial liabilities towards mBank S.A., broken down by contractual maturity dates.
31.12.2025
From 1 to 3 months
From 3 to 12 months
From 1 to 5 years
Over 5 years
Total
Loans received
-
-
234 582
2 552 126
2 786 708
Liabilities arising from the issue of mortgage bonds and bonds
-
771 860
3 402 667
-
4 174 527
Other financial liabilities with deferred payment date
-
12 914
1 260 544
-
1 273 458
Derivative financial instruments
334
-
257
-
591
31.12.2024
From 1 to 3 months
From 3 to 12 months
From 1 to 5 years
Over 5 years
Total
Loans received
-
-
1 445 879
1 353 359
2 799 238
Liabilities arising from the issue of mortgage bonds and bonds
-
-
3 549 790
-
3 549 790
Other financial liabilities with deferred payment date
-
-
712 730
-
712 730
Derivative financial instruments
9 344
313
85
-
9 742
Other financial liabilities with deferred payment term related to a liability resulting from agreements concluded with mBank S.A. on 30 November 2018 on the transfer of retail loans secured with a mortgage on real estate.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 20 25 ( in PLN thousand )
86
The table below presents the amounts of the Bank’s transactions with related entities. The transaction value covers assets and liabilities’ balances as at 31 December 2025 and 31 December 2024, and related costs and income for 2025 and 2024.
(PLN ‘000)
Supervisory and Management Board members of Bank S.A./mBank S.A., management personnel of mBank S.A.
Other persons and entities related*
mBank Group companies***
mBank S.A.
Commerzbank Group companies***
As at the end of the period
31.12.2025
31.12.2024
31.12.2025
31.12.2024
31.12.2025
31.12.2024
31.12.2025
31.12.2024
31.12.2025
31.12.2024
Statement of finacial position
Total assets
503
1 452
506
579
663
782
33 861
43 049
-
-
Total liabilities
-
-
-
-
690
797
8 247 595
7 085 791
-
32 206
Off-balance sheet liabilities received
-
-
-
-
-
-
3 394 793
1 394 956
-
-
Derivative financial instruments (purchase, sale)
-
-
-
-
-
-
1 109 111
3 881 443
-
-
Property, plant and equipment include lease contracts classified in accordance with IFRS 16, relating to buildings, i.e. rental of office space in Warsaw and Łódź and redemption of the above-mentioned asset components.
(PLN ‘000)
Supervisory and Management Board members of Bank , management personnel of mBank S.A.
Other persons and entities related*
mBank Group companies***
mBank S.A.
Commerzbank Group companies***
Year ended
31.12.2025
31.12.2024
31.12.2025
31.12.2024
31.12.2025
31.12.2024
31.12.2025
31.12.2024
31.12.2025
31.12.2024
Income statement
Interest income
52
115
35
43
185
213
15 165
42 230
-
-
Interest expense
-
-
-
-
(45)
(28)
(537 727)
(500 819)
(50)
(2 365)
Fee and commission expenses
-
-
-
-
-
(1)
(5 306)
(4 382)
-
-
Net trading income
-
-
-
-
-
-
5 097
(2 109)
-
-
Other operating income
-
-
-
-
3
-
19 480
18 359
-
-
Other operating expenses
-
-
-
-
-
(2)
(603)
(547)
-
-
Overhead costs, amortisation and depreciation
-
-
-
-
(608)
(528)
(4 200)
(4 202)
-
-
* Other related persons and entities include: close family members of Members of the Supervisory Board and Management Board of the Bank, Members of the Supervisory Board and Management Board of mBank, key management staff of mBank The **The item “mBank Group companies” includes transactions with the following mBank Group companies: mFinanse S.A., mLeasing Sp. z o.o
*** The item “Commerzbank Group companies” includes transactions of acquisition of mortgage covered bonds on the secondary market by Commerzbank AG and Future Tech.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
for 202 5 ( in PLN thousand )
87
Composition and remuneration of Members of the Bank’s Management Board
As at 31 December 2025, the composition of the Management Board was as follows:
■ Piotr Petelewicz — President of the Management Board
■ Katarzyna Dubaniewicz — Member of the Management Board
■ Adrian Kaim — Member of the Management Board
On April 11, 2025, the Supervisory Board appointed: Piotr Petelewicz as President of the Management Board, Katarzyna Dubaniewicz as Member of the Management Board and Adrian Kaim as Member of the Management Board for a joint 3-year term of office.
On the day of the General Meeting of the Bank approving the financial statements for the financial year 2024, i.e. on April 14, 2025, the joint term of office of the Management Board ended: Piotr Petelewicz - President of the Management Board, Andrzej Kulik - Member of the Management Board supervising the management of significant risk in the Bank's operations, Katarzyna Dubaniewicz - Member of the Management Board.
On September 5, 2025, the Polish Financial Supervision Authority agreed to appoint Adrian Kaim as a member of the Management Board supervising the management of significant risk in the activities of mBank Hipoteczny S.A.
Remuneration paid in PLN
31.12.2025
31.12.2024
Management Board
Gross base salary
1 568 333
1 440 806
Other benefits *
84 627
106 162
Settlement of the incentive program
250 900
261 128
Remuneration of former Members of the Management Board
Gross base salary
156 000
246 613
Other benefits *
24 697
49 297
Settlement of the incentive program
450 459
442 803
Compensation - non-competition
-
330 887
* "Other benefits" include co-financing of medical care, insurance, multisport card, company car, PPK contributions.
As at 31 December 2025, the amount of the provision for bonuses / bonuses for employees and the Bank's Management Board was TPLN 6 030 (as at December 31, 2024, TPLN 5 687 respectively).
The variable remuneration program for Members of the Management Board and employees who have a significant impact on the Bank's risk profile is described in Note 35.
Composition and remuneration of the Supervisory Board members
The composition of the Supervisory Board of Bank as at 31 December 2025:
1.
Marek Lusztyn
-
Chairman of the Supervisory Boar
2.
Pascal Ruhland
-
Vice-chairman of the Supervisory Board
3.
Monika Bączyńska
-
Member of the Supervisory Board
4.
Łukasz Czekajewski
-
Member of the Supervisory Board
5.
Paweł Graniewski
-
Independent Member of the Supervisory Board
6.
Anna Sibińska
-
Independent Member of the Supervisory Board
7.
Grzegorz Ostrowski
-
Member of the Supervisory Board
8.
Marta Żyndul
-
Member of the Supervisory Board
9.
Ilona Garanty
-
Member of the Supervisory Board
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On March 12, 2025, Łukasz Maculewicz resigned from his position as a member of the Supervisory Board, effective April 1, 2025.
On April 14, 2025, the General Meeting of Shareholders appointed Łukasz Czekajewski to the Supervisory Board.
On August 1, 2025, Mariusz Tokarski resigned from his position as a member of the Supervisory Board, effective August 31, 2025.
On August 18, 2025, the General Meeting of Shareholders appointed Anna Sibińska to the Supervisory Board, effective as of September 1, 2025.
On December 16, 2025, Michał Popiołek resigned from his position as a member of the Supervisory Board, effective December 16, 2025.
On December 16, 2025, the General Meeting of Shareholders appointed Ilona Garanty to the Supervisory Board, effective December 17, 2025.
The composition of the Supervisory Board of Bank as at 31 December 2024:
1.
Marek Lusztyn
-
Chairman of the Supervisory Boar
2.
Pascal Ruhland
-
Vice-chairman of the Supervisory Board
3.
Monika Bączyńska
-
Member of the Supervisory Board
4.
Łukasz Maculewicz
-
Member of the Supervisory Board
5.
Paweł Graniewski
-
Independent Member of the Supervisory Board
6.
Michał Popiołek
-
Member of the Supervisory Board
7.
Mariusz Tokarski
-
Independent Member of the Supervisory Board
8.
Grzegorz Ostrowski
Member of the Supervisory Board
9.
Marta Żyndul
-
Member of the Supervisory Board
On September 6, 2024, Mikołaj Tatarkiewicz resigned from the position of member of the Supervisory Board with effect from September 14, 2024.
On September 25, 2024, the General Meeting appointed Marta Żyndul to the Supervisory Board, and then on November 28, 2024, the General Meeting appointed Monika Bączyńska to the Supervisory Board.
In 2024, the Supervisory Board worked without remuneration, with the exception of Paweł Graniewski and Mariusz Tokarski, who, as members of the Supervisory Board, received remuneration for 2024 in the amount of TPLN 184 (TPLN 92 respectively).
37. Information on the registered audit company
On March 1, 2024, the Supervisory Board selected KPMG Audyt Sp. z o. o. sp. k. as a company providing audit services related to statutory audits and reviews of Bank statements. for the years 2024 and 2025.
In 2025, the total amount of remuneration paid to KPMG Audyt Sp. z o. o. sp. k. for the audit and review of the financial statements and consolidation packages amounted to TPLN 384. As at December 31, 2025, the provision for the auditor's remuneration was: TPLN 171.
38. Capital adequacy
One of the Bank’s main tasks is to ensure an appropriate level of capital. Within the framework of the capital management policy, the Bank prepares the guidelines for the most effective planning and use of capital basis which:
■ are compliant with external and internal regulations in force,
■ guarantee a continuity of financial targets, which render an appropriate rate of return for shareholders,
■ ensure the maintenance of a strong capital basis being a fundamental support for business development.
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The Bank’s capital management policy is based on two basic pillars:
■ maintenance of an optimal level and structure of own funds with the application of available methods and means, like retention of net profit, subordinated loan or issue of shares,
■ effective use of existing capital, among others through application of a set of measures of effective use of the capital, limitation of activities that do not provide an expected rate of return and development of products with lower capital absorption.
Effective use of capital is an integral part of the capital management policy oriented at reaching an optimal rate of return on capital and as a result forming a stable foundation of reinforcement of the capital basis in future periods. This helps to maintain the Tier 1 common equity ratio (calculated as the quotient of Tier 1 common equity and total amount of risk exposure), Tier 1 capital ratio (calculated as the quotient of Tier 1 capital and total amount of risk exposure), and combined capital ratio (calculated as the quotient of own funds and total amount of risk exposure), at a level significantly higher than required by the regulatory authority.
The strategic capital objectives of the Bank are aimed at maintaining both the combined capital ratio and the Common Equity Tier 1 capital ratio at a level significantly higher than required by the regulatory authority. This permits a safe growth of the business while meeting supervision standards in long term.
Capital ratios
The measurement of own funds adequacy, including i.a. calculation of capital ratios and leverage ratio, own funds and the Bank’s total exposure to risk, is performed on the basis of the following regulations:
■ Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on the conditions for the admission of credit institutions to the business and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L. 2013 No. 176, p. 338, as amended),
■ Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012 (OJ EU. L. of 2013, No. 176, page 1, as amended),
■ Commission Implementing Regulation (EU) 2024/3117 of 29 November 2024 laying down implementing technical standards for the application of Regulation (EU) No 575/2013 of the European Parliament and of the Council as regards the supervisory reports of institutions and repealing Commission Implementing Regulation (EU) 2021/451, (OJ L. 2024/3117, December 27, 2024, as amended),
■ Act of August 29, 1997 - Banking Law (Journal of Laws of 2024, item 1646, as amended),
■ Act of August 5, 2015 on macroprudential supervision over the financial system and crisis management in the financial system (Journal of Laws of 2025, item 819, as amended).
In connection with the Macro-Prudential Oversight Act coming into force as of 1 January 2016, which transposes CRD IV into the Polish legal regime, as at 31 December 2025 the Bank was compelled to maintain own funds as such a level as would permit covering the conservation buffer determined under the Act at 2.5% of the total exposure to risk.
In accordance with the decision of the Financial Stability Committee, the anti-cycle buffer imposed on the Bank as at 31 December 2025 was 1%.
On March 19, 2020, the repeal of the regulation on the systemic risk buffer entered into force. The value of the systemic buffer as at 31 December 2025 is 0% of the total risk exposure amount.
Ultimately, the combined buffer requirement for Bank at the end of 2025 it was 3.5%.
Capital ratios both as at the end of 2025 and at the end of 2024 were above the minimum required values, which was presented in the table below. In 2025 and 2024, the Bank met external capital
requirements.
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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31.12.2025
Capital ratio
Minimum ratio
Presented ratio
Total capital ratio
11,50%
21,45%
Equiety Tier 1 capital ratio
9,50%
21,45%
Equiety Tier 1 core capital ratio
8,00%
21,45%
31.12.2024
Capital ratio
Minimum ratio
Presented ratio
Total capital ratio
10,50%
19,51%
Equiety Tier 1 capital ratio
8,50%
19,51%
Equiety Tier 1 core capital ratio
7,00%
19,51%
The Bank decided that for the purposes of capital adequacy calculation, including the calculation of own funds, based on Article 1(9) of the Regulation (EU) No 2017/2395 of the European Parliament and of the Council of December 12, 2017 (Regulation) amending the CRR, it will not apply the transitional period, which permits to alleviate the impact on capital, connected with the implementation of IFRS 9.
The capital ratios, own funds, leverage ratio reported in this document fully reflect the impact of IFRS 9.
Own funds
In accordance with the CRR Regulation, own funds consist of Common Equity Tier 1 capital, Additional Tier I capital and Tier II capital, however Bank does not identify items that could be treated as Additional Tier I capital.
Common Equity Tier I capital of mBank Hipoteczny S.A. encompasses:
■ paid-up equity instruments and the related share premium accounts,
■ earnings retained in previous years,
■ independently verified interim profits,
■ other accumulated comprehensive income,
■ other capital reserves,
■ general risk funds,
■ items reducing the Common Equity Tier 1 capital (value adjustments due to the requirements regarding prudent valuation, intangible assets, deficiency in credit risk adjustments in light of anticipated losses, regulatory adjustments concerning other accumulated comprehensive income, and net write-downs).
The Bank's own funds as at December 31, 2025 amounted to TPLN 828 729 (as at December 31, 2024, they amounted to TPLN 825 392). At the same time, the Common Equity Tier I capital amounted to TPLN 828 729(as at December 31, 2024 it was TPLN 825 392).
Leverage ratio
The regulatory leverage ratio as at 31 December 2024 was calculated on the basis of the provisions of Commission Delegated Regulation (EU) 2015/62 of 10 October 2014 amending Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to the leverage ratio (hereinafter: “Regulation 2015/62”).
The leverage ratio is calculated as a measure of Tier 1 capital divided by the total exposure measure and is expressed as a percentage. The total exposure measure is the sum of the exposure values specified in accordance with Regulation 2015/62 in respect of all assets and off-balance sheet items not deducted when determining the measure of Tier 1 capital.
Tier 1 capital to the leverage ratio was calculated in accordance with Regulation CRR using national options defined in the Banking Law, Art. 171a.
The financial leverage ratio at the end of 2025 was 7.55%, at the end of 2024 it was 7.48%.
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39. Other information
Reform of interest rate benchmarks
Bank as an entity providing services both in the field of granting loans and issuing securities and entering into derivative transactions (only for its own account) is an entity exposed to the risk related to the evolution of rates and market migration to rates compliant with the Regulation of the European Parliament and of the Council (EU) 2016/1011 of June 8, 2016 on indices used as benchmarks in financial instruments and financial contracts or for measuring the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No. 596/2014 (hereinafter the "BMR Regulation").
Since 2020, Bank has been working intensively to implement the reference rate reform. In order to effectively implement the changes resulting from the IBOR reform, a project was launched at Bank already in 2020, which simultaneously implemented the solutions agreed within the mBank Group. It should also be emphasized that Bank has its own "Action Plan" covering: index inventories, template of continuity clauses for retail clients, template of continuity clauses for commercial clients, method of implementing clauses in existing and new contracts, base of products based on benchmarks with inventory of continuity clauses contained therein, specifying the situation in which Bank should inform clients about events on indicators.
The key risks Bank was exposed to in connection with the IBOR reform, identified and managed as part of the project, are:
■ risk related to the lack of established market practices and uncertainty related to the manner of transition of contracts to new alternative indices, which may lead to an unfavorable change in the risk profile of these contracts,
■ the risk of non-cooperation of the Bank's customers in introducing changes to the contracts required by the IBOR reform and, as a result, uncertainty regarding the appropriate basis for calculating contractual cash flows after the indicators cease to be published or lose their representativeness,
■ risk of failure to implement the required changes in IT systems on time.
The impact of the reform of reference interest rate indices in Bank is observed in the area of financial instruments, in particular loans and securities whose interest rates are based on WIBOR and EURIBOR reference indices. Of the two ratios, the greatest risk was generated by transactions based on WIBOR.
In the second half of 2022, the National Working National Working Group (NGR) was established by the Polish Financial Supervision Authority at the request of financial market participants. The aim of the work of the NGR is to prepare the process of effective implementation of the new reference index on the Polish financial market and to replace it with the currently used reference index of the WIBOR interest rate. In the course of the work of expert teams of the National Working Group, tasks were identified, prioritized and time-consuming to be estimated, the implementation of which by all market participants is required for the correct and safe replacement of the previously used WIBOR reference rates by the new reference index.
In 2023, there were changes to the dates of the so-called Roadmap, according to which the reform of the benchmarks will be implemented by the end of the end of 2027, with the simultaneous implementation of a new offer of financial products based on WIRON in 2024-2027 and full readiness to stop developing and publishing WIBOR benchmarks from the beginning of 2028.
On March 29, 2024, the NGR Steering Committee decided to launch an additional round of public consultations regarding the review and assessment of alternative RFR (risk free rate) indicators that could potentially replace the WIBOR indicator.
On December 10, 2024, the NGR Steering Committee decided to select an index from the WIRF family, with a working called WIRF (based on deposits of unsecured credit and financial institutions),as a proposed target interest rate benchmark.
After analyzing legal, market and communication aspects, the NGR Steering Committee on January 24, 2025 approved the name POLSTR (Polish Short Term Rate) as the official name of the planned one benchmark. The POLSTR indicator is to be used in financial contracts, including: credit agreements, issues of debt securities and derivative instruments. This decision also means a verification and change of the previous NGR recommendation from 2023, indicating the selection of WIRON as the preferred index. In the course of further analyses. Business information of an
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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92
entity from the mBank Group - protected | mBank Groups entity Business information – protected it was found that WIRON was characterized by relatively high volatility compared to other analyzed indicators, which limited the likelihood of building a liquid market of derivatives based on this indicator. In 2025, the National Working Group on Benchmark Reform updated the map road reform and published recommendations regarding the use of the indicator reference POLSTR, in particular in the area of issuance of variable debt instruments interest rates and derivative conversion mechanisms. November 21, 2025 The Ministry of Finance conducted the first auction of treasury bonds based on the index POLSTR. These activities may support the development of the derivatives market based on transaction indicators and gradual increase in liquidity in the security segments. At the end of 2025, the Bank had 95.9% of the loan portfolio bearing interest based on the WIBOR. The bank was also an issuer of 12 series of securities bearing interest at: WIBOR rates, the last of which matures in 2030. Moreover, the Bank had 6 IRS-based transactions on the WIBOR index, used as part of interest rate risk management. With regard to the EURIBOR rate, the process of adapting it to the requirements of the BMR Regulation has been completed completed in June 2019 by expanding the catalog of transactions used in determining the indicator and implementing the cascade method allowing for determining the value indicator also in a situation of a limited number of market transactions. In the Bank's opinion, risk related to the reform of the EURIBOR index, resulting from the actions of European regulators, has been significantly limited.
The bank had 0.01% of the loan portfolio bearing interest based on the EURIBOR rate. It had no issues of securities based on EURIBOR, but it had 5 IRS transactions used to secure the issuance of mortgage bonds with a fixed interest rate in EUR.
The Bank's strategy is to adapt to the changes resulting from the reform as quickly as possible benchmarks, taking into account regulatory, market and operational. First of all, the Bank plans to implement derivative-based instruments on new benchmarks and then start taking over loan tranches based on these indicators, which will enable the issuance of mortgage bonds based on the new rate reference. With respect to existing loan portfolios, the Bank intends to actively offer loans customers with annexes introducing indicator continuity clauses (fallback).
31.12.2025
Nominal value
Weighted average maturity
(in years)
Interest rate swaps (IRS)
Wibor 3M
250 000
1.2
Total interest rate swaps (IRS)
250 000
Total
250 000
Non-derivative financial assets at contract value
Non-derivative financial liabilities at contract value
Derivatives at nominal value as net receivables and payables for derivative transactions
31.12.2025
31.12.2025
31.12.2025
PLN WIBOR
9 806 849
9 410 543
250 000
31.12.2024
Weighted average maturity
Nominal value
(in years)
Interest rate swaps (IRS)
Wibor 3M
250 000
2.2
Total interest rate swaps (IRS)
250 000
Foreign Currency Interest Rate Swaps (CIRS)
Wibor 3M
(1 281 900)
0.5
Foreign currency interest rate swaps (CIRS), total
(1 281 900)
Total
(1 031 900)
mBank Hipoteczny S.A. Financial Statements According to the International Financial Reporting Standards
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Non-derivative financial assets at contract value
Non-derivative financial liabilities at contract value
Derivatives at nominal value as net receivables and payables for derivative transactions
31.12.2024
31.12.2024
31.12.2024
PLN WIBOR
9 350 772
6 855 273
(1 886 500)
For the rate:
■ Wibor - Bank plans to switch to an alternative indicator in accordance with the NGR road map.
Article 35, (1b) of the Act Bonds
The total value of the financial liabilities referred to in Article 35(1)(2) of the Act of 15 January 2015 on Bonds, arising from these financial statements, amounts to BPLN 10.15 and does not differ significantly from the forecasts of financial liabilities as of the last day of the financial year contained in the proposals for the acquisition of covered bonds dated February 25, 2025, amounting to BPLN 10.15 for mortgage covered bonds series I, June 2, 2025, amounting to BPLN 10.26 for mortgage covered bonds series MBH0628, October 14, 2025 in the amount of PLN 10.26 billion for mortgage covered bonds series MBH0929 and November 27, 2025, amounting to BPLN 10.06 for mortgage covered bonds BRE [235] (forecast data is not subject to examination).
40. Post balance-sheet date events
On 16 January 2026, the Bank issued three-month own zero-coupon bonds with a maturity date of 16 April 2026. The aim of the issue was to reduce the costs of refinancing the balance sheet by obtaining short-term financing on more favorable terms.