11.2. Ratings of mBank and Group subsidiaries

Evaluation of mBank’s financial credibility

mBank has rating agreements with Fitch Ratings (Fitch) and Standard & Poor’s Ratings Services (S&P’s). Ratings assigned by these agencies in 2014 are presented in the table below.

 

 

Fitch - status as of December  31, 2014

mBank

Commerzbank AG

Long–term IDR

A

A+

Short-term IDR

F1

F1+

Viability rating

bbb-

bbb

Support rating

1

1

Outlook for long-term rating

negative

negative

Rating of senior unsecured debt issued under the Euro Medium Term Note Programme (EMTN)

A; F1

-

Bonds' tranches issued by mFinance France in 2012-2014

A

-

S&P’s - status as of December 31, 2014

mBank

Commerzbank AG

Long-term deposits rating

BBB+

A-

Short-term rating

A-2

A-2

Stand Alone Credit Profile

bbb-

bbb-

Outlook for long-term rating

negative

negative

Rating of the Euro Medium Term Note Programme (EMTN)

BBB+

-

Bonds' tranches issued by mFinance France in 2012-2014

BBB+

-

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On March 27, 2014, the Fitch Ratings agency confirmed the long-term foreign currency Issuer Default Rating of mBank at the "A" level, changing its outlook from stable to negative. The adjustment of mBank's rating outlook resulted from changing the Commerzbank's long-term rating outlook from stable to negative due to a global review of assessments of support provided by the state to European banks conducted by the Fitch agency.

On May 19, 2014 Fitch once again confirmed mBank’s long-term rating for foreign currency at “A” with a negative outlook.  The rating is higher than that for long-term debt of Poland in a foreign currency, which is at “A-”. According to Fitch, mBank's viability rating is influenced by its position in the Polish banking sector, a limited risk appetite, solid financial results, high capitalisation and a favourable macroeconomic environment. The still high, although gradually decreasing, share of mortgage loans in foreign currencies in mBank's credit portfolio and a material scale of needs with regard to refinancing in foreign currencies in the next years are considered by the agency to be risk factors. mBank’s long-term rating reflects very high probability of support from Commerzbank. On the other hand, Commerzbank’s long-term rating provides for potential support of the state.  As a result of entry into force of the Bank Recovery and Resolution Directive (BRRD) which limits to minimum the possibility of state support for banks going bankrupt, according to Fitch agency it is probable that in Q1 2015 the long-term rating of Commerzbank will be reduced to “viability rating”, which will entail applying the same action at mBank.  

In 2014, the mBank's rating and the rating outlook issued by S&P’s did not change. The long-term rating of mBank at “BBB+” is by one notch lower than the assessment of Poland’s creditworthiness for a foreign currency (“A-”). On February 3, 2015, S&P listed mBank’s long-term and short-term rating on a CreditWatch with negative implications, following the same decision made for Commerzbank.

According to the credit opinion of S&P's of June 6, 2014, mBank's rating is a resultant of the reference level ("anchor") "bbb-" for all commercial banks in Poland and the agency's opinion concerning "adequate" business position of the Bank, "adequate" capital position and profitability, "adequate" risk assessment and liquidity. The risk adjusted high profitability and an established market position with a balanced contribution of retail and corporate banking are considered by the agency to be the most significant strengths of mBank. mBank’s long-term rating is positively influenced by potential support from Commerzbank. According to S&P's, mBank's rating level is limited by the following: portfolio of mortgage loans in foreign currencies, "loans/deposits" ratio higher than in the peer group and dependence on wholesale funding.

Next to ratings ordered at Fitch and S&P’s, mBank is also assigned the rating of Moody’s Investors Service granted on the basis of publicly available information as an entity not participating in the rating process.  As at December 31, 2014, Moody’s rating was as follows:

  • Long-term rating of deposits: Baa3 with a negative perspective (Commerzbank: Baa1).
  • Short-term rating:  Prime-3 (Commerzbank: Prime-2).
  • Baseline Credit Assessment: ba2 (Commerzbank: ba1) and financial strength rating (BFSR) D
     (Commerzbank: D+).

On May 29, 2014, Moody's lowered the long-term rating outlook to negative for more than eighty European banks, including Commerzbank and mBank. This was Moody's reaction to the official adoption of the Bank Recovery and Resolution Directive and Single Resolution Mechanism by the Council of the European Union, which could result in negative implications for the support rating.

Ratings of mBank Hipoteczny S.A. and mLeasing Sp. z o.o.

As at December 31, 2014, Fitch ratings assigned to mBank Hipoteczny and mLeasing were as follows: 

 

Fitch Ratings – ratings of mBank Hipoteczny and mLeasing

Long–term IDR

A (negative outlook)

Short-term IDR

F1

Support rating

1

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Oceny te zostały podtrzymane w dniu 19 maja 2014 roku. Ponadto, publiczne i hipoteczne listy zastawne emitowane przez mBank Hipoteczny posiadają ocenę „A”.