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Judgment of the CJEU – CHF loans. mBank estimates the effects

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The cost of risk related to CHF loans is estimated for the second quarter of 2023 at approximately PLN 1.5 billion, mBank said in a press release. The bank indicated that the expected net result of the group in the second quarter will be close to zero.

“As at June 23, 2023, the costs of legal risk related to foreign currency loans in CHF (Swiss francs) estimated for Q2 2023 amount to PLN 1,512.9 million. Therefore, the total value of provisions created for legal risk related to mortgage loans foreign currency loans as at June 23, 2023 is PLN 7.52 billion.

Read also: Borrowers can gain tens of thousands of zlotys. Calculations >>>

CHF loans – mBank reserves

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According to the bank, these costs result mainly from taking into account the impact of the CJEU judgment in case C-520/21 on the future jurisprudence of Polish courts in cases regarding CHF currency loans and the costs of the settlement program and updating other parameters included in the model.

At the same time, the bank informs that in the second quarter of 2023 the positive results from the core business were continued. Assuming no other unforeseen negative events, the bank expects that the net result achieved by the mBank group in the second quarter of 2023 will be close to zero, and As a consequence, the expected gross and net result in the first half of 2023 will be positive, mBank said.

Earlier, Bank Millennium announced that it estimated the provision for legal risk related to FX mortgage loans at PLN 680 million in the second quarter of 2023. At the same time, the management board expected a profit in this period.

Read more: “This has been the biggest deterrent to consumers from suing banks so far” >>>

Judgments of the CJEU

The Court of Justice of the EU issued last week, two judgments in cases brought against banks by consumerswho took loans denominated in Swiss francs. The CJEU found that the bank has no right to demand compensation from the consumer that goes beyond the return of the capital paid out and that the courts may order an interim measure in the form of suspension of loan installments during the trial to determine the unfair nature of the contract terms.

Read more: What do the judgments of the CJEU mean for franchise holders? >>>

After the announcement of the judgment, the KNF Office announced in a communiqué that it expects the banks to take into account the CJEU ruling in their models of creating provisions for legal risk related to the portfolio of mortgage foreign currency loans and still expects the banks to take an active stance in the field of systemic solution to this problem in the form of offering settlements to clients.

According to the data of the Credit Information Bureau (BIK), the number of active CHF loans decreased by nearly 46.5 thousand in 2022, and the value of repayments decreased by over PLN 5.5 billion. However, there are more and more lawsuits in cases concerning loans in Swiss francs. According to experts, their number may increase even more after the CJEU judgment is favorable for borrowers.

Main photo source: Shutterstock

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