Bank Millennium Sa · GPW:MIL
Bank Millennium Sa — Q1 2023 Earnings Presentation
38 slides from Bank Millennium Sa's earnings presentation, Apr 28, 2023
Slide 1: Presentation 1Q23 results
Presentation 1Q23 results 28 April 2023 1
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by Bank Millennium for its stakeholders for information purpose only. The information presented in this presentation should be read together with other information published by the Bank (on www.bankmillennium.pl), in particular financial and current rep
Slide 3: Agenda
AGENDA 3
Slide 4: Presentation of 1Q23 results: Financial performance
01 PRESENTATION OF 1Q23 results Financial performance 4
Slide 5: Key profit & loss items
KEY PROFIT & LOSS ITEMS PLNmn 1Q23 1Q22 Change Y/Y 4Q22 Change Q/Q Net interest income 1 262 961 31% 1 349 -6% o/w impact of credit holidays 99 Net interest income without credit holidays 1 262 961 31% 31% 1 250 1% Net commission income 201 221 -9% 202 -1% Total operating income (without credit 2 05
Slide 6: Key balance sheet and business items
KEY BALANCE SHEET AND BUSINESS ITEMS PLNmn Mar. 23 Mar. 22 Change Y/Y Dec. 22 Change Q/Q Active customers (ths) 2 923 2 740 183 183 2 887 36 incl. on-line and mobile 2 598 2 350 248 248 2 519 79 Customer Funds 107 701 105 233 2% 104 468 3% Deposits 100 876 97 305 4% 98 039 3% Deposits of individuals
Slide 7: Financial highlights of 1Q23
FINANCIAL HIGHLIGHTS OF 1Q23 Strong core profitability, efficiency and asset quality. Two consecutive quarters of material positive net results despite elevated costs related to FX-mortgage portfolio. Positive net profit in 1Q23 Adjusted net profit* NII** and NIM strongly up PLN252mn +37% y/y +31%;
Slide 8: Financial highlights of 1Q23
FINANCIAL HIGHLIGHTS OF 1Q23 Material positive reported net result of PLN 252mn in 1Q23. Adjusted profit of PLN 672mn, up 37% y/y. Net profit Net profit w/o extraordinary* items (PLNmn) +37% 20.1% 22.1% ROE adjusted* 0% 619 671 672 -7.5% 17.7% ROE reported 491 458 249 252 (PLNmn) +37% 1Q22 2Q22 3Q22
Slide 9: Interest and commission income
INTEREST AND COMMISSION INCOME NII broadly stable in 1Q23 with solid y/y growth of 31%. Quarterly NIM slowly narrowing Net interest income* Interest on loans* and deposits (quarterly average) (PLNmn) +31% 8.32% 8.62% 7.76% +1% 6.39% 4.76% 4.78% 4.63% 4.58% 3.25% 3.33% 3.32% 3.68% 4.47% 2.56% 2.91% 3
Slide 10: Cost efficiency
COST EFFICIENCY Operating costs grew 7% y/y, clearly below inflation. C/I improvement driven by growing operating income. Operating cost (PLNmn) Employees -28 7% 10% 7,238 7,148 7,035 6,942 6,860 6,842 6,735 6,778 6,815 12% 6,450 6,454 6,366 6,245 6,211 6,325 6,306 6,139 6,219 -3% +95 35.3% 28.7% Co
Slide 11: Asset quality
ASSET QUALITY Strong credit quality although more provisions created for retail loans Cost of risk (bp) Impaired loans (IFRS9 stage 3 &POCI) 40 63 10.9% 10.9% 11.2% 10.6% Total loans 10.4% 10.3% 10.1% 10.2% 9.7% 46 81 Retail 19 0 Companies 4.9% 4.7% 4.7% 4.4% 4.4% 4.3% 4.5% 4.5% 4.7% 4.6% 3.1% 3.4%
Slide 12: Liquidity and capital
LIQUIDITY AND CAPITAL Capital adequacy ratios marginally down q/q but well above regulatory thresholds. Strong liquidity position. Liquidity indicators Group capital ratios 223% 228% 17.1% 16.0% 150% 151% 158% 165% 15.2% 14.0% 14.4% 14.1% 13.5% 13.5% 13.5% 86% 81% 12.9% 12.7% 83% 81% 78% 75% 12.1% 1
Slide 13: FX-mortgage portfolio (1/2)
FX-MORTGAGE PORTFOLIO (1/2) Maintained fast pace of FX-mortgage portfolio’s downsizing FX-mortgages* (gross w/o legal risk provisions) (CHFmn) FX-mortgages as % of total gross book (gross less alloc. legal risk provisions) 5,000 4,698 4,406 4,500 4,094 20.4% 19.1% 4,000 3,782 3,498 -16% 18.3% 17.0%
Slide 14: FX-mortgage portfolio (2/2)
FX-MORTGAGE PORTFOLIO (2/2) Number of amicable settlements to date reached 18.6k, nearly 1/3 of active agreements at YE19 Provisions against legal risk as % of FX-mortgage book* Legal risk provisions/outstanding FX-mortgage book** (% of gross loans) 55.8% 60% 55.8% 52.0% 46.8% 50% 41.3% 46.8% 36.3%
Slide 15: Presentation of 1Q23 results: Business development
02 PRESENTATION OF 1Q23 results Business development 15
Slide 16: Business highlights of 1Q23
BUSINESS HIGHLIGHTS OF 1Q23 Good dynamics of deposits and customer acquisition despite deceleration in lending. RWA management in focus. Customer deposits Retail deposits Cash loan sales +4% y/y +9% y/y +10% q/q Payment cards Active retail customers Companies’ Active digitalportfolio customers +214k
Slide 17: Loans and customer funds
LOANS AND CUSTOMER FUNDS Slowdown in loan growth. Growth in deposits driven by retail segment. Loan portfolio of the Group (net) Customer deposits (PLNmn) 0% y/y without FX mortg. -4% +4% loans +2% -7% -2% +9% 0% (PLNmn) 78,703 79,342 78,965 76,565 75,380 97,305 96,122 97,771 98,039 100,876 15,649 1
Slide 18: Retail business – loans and customer funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS PLN mortgage and consumer loans decelerated. Deposits grew visibly by 9% y/y. Retail loans (gross) Retail customer funds -5% +7% (PLNmn) +1% y/y without FX loans +1% -13% +2% (PLNmn) +90% -7% 61,470 61,463 60,815 59,903 58,613 72,160 73,266 75,217 76,926 71
Slide 19: Retail banking - number of customers and accounts
RETAIL BANKING - NUMBER OF CUSTOMERS AND ACCOUNTS Successful acquisition of new customers combined with strong growth of cards Active retail clients Active micro-business clients (thousand) (thousand) +183 +12 +36 2,923 131 2,859 2,887 128 2,805 125 2,740 122 119 31/03/22 30/06/22 30/09/22 31/12/22
Slide 20: Bank at the client's hand
BANK AT THE CLIENT’S HAND Steady increase in the number of active digital users, together with the decrease of Millenet only users ACTIVE USERS OF DIGITAL CHANNELS ONLINE SALES 80% 96% 43% 2.6mn Digital channels share Digital channels share Digital channels share in sales of term in current accounts
Slide 21: Mobile payment and value added service
MOBILE PAYMENT AND VALUE ADDED SERVICE We are with our customers when they are shopping, travelling or dealing with official matters 1.5mn E-ADMINISTRATION BLIK users in 1Q23 (+25% r/r) Family benefit applications 253ki bezpieczny62% pozwala klientom w wygodny sposób Applications Applications 45mn p
Slide 22: Innovations in digital channels
INNOVATIONS IN DIGITAL CHANNELS Convenience and security every day BLIK Transfer Request Biometrics authorisation We are developing solutions that build We have expanded the use of biometrics in and strengthen social networks. For the mobile app. More than one million users several years now, our cu
Slide 23: Convenience in running own business
CONVENIENCE IN RUNNING OWN BUSINESS New services in the mobile app for customers with a business account Public transport and parking tickets purchase in the app directly from a business account BLIK contactless payments for micro-entrepreneurs - our customers in this segment gained for the first ti
Slide 24: Goodie – smartshopping platform of Bank Millennium
GOODIE – SMARTSHOPING PLATFORM OF BANK MILLENNIUM Development and promotions for cashback users 1Q23: 50% increase y/y the numer of active cashback users 100% increase y/y the numer of new cashback users 42% increase compared to 4Q22 the numer od active users in the „Returns for purchases” service o
Slide 25: Companies business – deposits and loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Stagnation in corporate portfolio due to RWA limitations. Solid growth of deposits q/q. Loans to companies (gross) Companies deposits (PLNmn) -2% (PLNmn) -7% +3% +29% +2% -27% -6% +1% +5% 19,711 20,263 20,690 33,033 30,957 19,122 19,275 Factoring 30,903 29,252
Slide 26: Companies business – loans and transactions
COMPANIES BUSINESS – LOANS AND TRANSACTIONS Some contraction in leasing and factoring. Steady growth of transactions. Leasing – new sales Factoring – turnover (PLNmn) (PLNmn) -9% -2% 937 6,661 7,006 6,860 6,764 905 6,527 856 845 776 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22 4Q22 1Q23 (thousand) Volume
Slide 27: Novelties and improvements for corporate banking clients
NOVELTIES AND IMPROVEMENTS FOR CORPORATE BANKING CLIENTS • We introduced to our offer for corporate clients: ✓ loan for the construction of a photovoltaic installation or power plant supporting environmentally friendly solutions and energy transformation ✓ technological loan, which allows to obtain
Slide 28: Presentation of 1Q23 results: Appendices
03 PRESENTATION OF 1Q23 results Appendices 28
Slide 29: Macroeconomic overview: Economy
MACROECONOMIC OVERVIEW Economy Data from real economy (% y/y) PMI indexes for Poland and Germany (pts) Economic growth in Poland continued to slow in first months of 2023 as high inflation and high interest rates reduced households’ consumption. In the same time investments continued to grow with su
Slide 30: Macroeconomic overview: Financial markets
MACROECONOMIC OVERVIEW Financial markets Evolution of FX rates WIBOR 3M and market expectations (%) The Monetary Policy Council continued in 1Q23 a wait-and-see approach that had been adopted due to the mounting risks for economic activity, but also stubbornly high inflation. In the Bank’s opinion,
Slide 31: Macroeconomic overview: Monetary aggregates
MACROECONOMIC OVERVIEW Monetary aggregates Loans to households Mortgage loans Loans to companies Demand for loans is stabilizing (PLN bn, % y/y) (PLN bn, % y/y) (PLN bn, % y/y) at low levels. Elevated inflation and high interest rates reduced production of new loans. Consumer and mortgage loans are
Slide 32: Ratings and market ratios
RATINGS AND MARKET RATIOS 1Q23 brought mixed performance of Polish equities with recovery of indices at the end of March Annual change of Bank Millennium share performance vs. WIG Banks index Bank Millennium shares No of shares: 1 213 116 777 (listed 1 213 008 137) Listed: on Warsaw Stock Exchange s
Slide 33: ESG Activities
ESG Activities Millennium Group for the fourth time distinguished in the Bloomberg Gender-Equality index • Banco Comercial Portugues entered the international Bloomberg Gender-Equality index for the fourth time in a row. In 2023, it achieved its best result so far. • The Bloomberg Gender-Equality In
Slide 34: The most important awards and achievements of Bank Millennium in 1Q23
THE MOST IMPORTANT AWARDS AND ACHIEVEMENTS OF BANK MILLENNIUM IN 1Q23 Fantastic people, winning teams and the highest standards of service confirmed by independent rankings and competitions 1st place for the team of economists in the Service Quality Star REFINITIV ranking and 2nd place for the 1st p
Slide 35: Other important awards
OTHER IMPORTANT AWARDS Special honours for digital banking channels in 1Q23 INSTITUTION OF THE YEAR 2023 MOBILE TRENDS AWARDS 2022 Among winners in categories: Bank Millennium mobile app in the finals of • Best Mobile App the ranking. The nomination in Mobile • Best Online Banking Banking category f
Slide 36: Synthetic P&L account
SYNTHETIC P&L ACCOUNT SYNTHETIC P&L ACCOUNT Reported results 1Q22 1Q23 Change Y/Y 4Q22 Change Q/Q Net interest income 961 1 262 31% 1 349 -6% Including cost of credit holidays 0 0 - 99 - Net interest income without credit holidays 961 1 262 31% 1 250 1% Net commission income 221 201 -9% 202 -1% Othe
Slide 37: Balance sheet
BALANCE SHEET 31.03.2022 31.12.2022 31.03.2023 Change y/y ASSETS Cash and balances with the Central Bank 8 286 9 536 5 452 -34% Loans and advances to banks 986 733 586 -41% Loans and advances to customers 78 703 76 565 75 380 -4% Amounts due from reverse repo trans. 26 5 0 -100% Debt securities 18 7
Slide 38: Investor relations contact
INVESTOR RELATIONS CONTACT: Head of Investor Relations Katarzyna Stawinoga Tel: +48 22 598 1110 Dariusz Górski e-mail: katarzyna.stawinoga@bankmillennium.pl Tel: +48 514 509 925, +48 22 598 1115 e-mail: dariusz.gorski@bankmillennium.pl Marek Miśków Tel: +48 22 598 1116 e-mail: marek.miskow@bankmille