Potential drivers for higher valuation
The banks has ambitions plans to improve profitability. They have good track record of improvement, it is becoming a stable (potentially growing) high dividend company.
Resolution of issues and still significant costs relating to Swiss franc loans in mBank should be ended in 2025. Presentation 26 September 2024.

The CEO Betina Orlopp (former CFO) gives a very good impression and have been able to deliver on restructuring plan. I liked the previous CEO Manfred Knof also.

Capital return
2022: 30% (€0.4bn),

2023: 50% (~€0.9bn), in 2024Q1 the bank will probably do buybacks of €0.6bn which was slightly higher than initially planned. At share price €10.6 that would obe 4.6% of the shares.

2024: 70 + X%, 2024 return consists of share buy-back applied for after H1 2024 results and dividend approved at AGM in 2025.

2022-24 total: ~€3bn. Where of 3-1.3 = €1.7bn remaining for 2024, €0.6bn in dividend (€0.7/share) and €1bn in buy back.

2025-2027 capital return with a pay-out ratio previously comnunicated "well above 50%" now looks to be >90%, but not more than the net result. The taget CET1 ratio is 13.5% which is lower than the 14.8% in 2024Q2.

Indications 14 March 2024 Morgan Stanley European Financials Conference,

Bertina CFO mentioned that the first 2 months 2024 started very well. I interpret that as NII is on a good level, probably the same level as 2023, while cost an other income are better than 2023Q4. Bertina said that Q1 is normally a good quarter.
https://cc.webcasts.com/morg007/031224a_js/?entity=12_OG0QWG0,

Net result forcast made 2023Q3

(2022: €1.4bn), 2023: €2.2bn, 2027: €3.4bn

Finances have improved very significantly due to the new managements execution of a restructuring plan. During 2021 the banks goals as well as analysts' estimates where set for operational profit 2021 (net -500MEUR), net profit 2022=500MEur, 2023=1000MEur, and 2024=1500MEur. With increases in ECB’s rates and good execution the outcome and expectations are now higher.

As with all banks there are risks for additional taxes, regulations and legal risks relating to potential wrongdoings in this heavily regulated industry.

Swiss franc loans in Polish mBank is a risk, was previously a high risk, but with recent court rulings the cost are high but the risk for unexpected result is lower. There is a path forward and significant parts of the problem loans are now resolved. But there are still risks for additional costs and other legal problems related to this.