Bank Millennium Sa · GPW:MIL
Bank Millennium Sa — H1 2022 Earnings Presentation
40 slides from Bank Millennium Sa's earnings presentation, Jul 26, 2022
Slide 1: Presentation 2Q22/1H22 results
Presentation 2Q22/1H22 results 26 July 2022 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 2Q22/1H22 results: Financial performance
01 PRESENTATION OF 2Q22/1H22 RESULTS Financial performance 4
Slide 5: Key profit & loss items
KEY PROFIT & LOSS ITEMS Change PLNmn 1H22 1H21 Change Y/Y 2Q22 1Q22 Q/Q Net interest income 2 139.9 1 277.2 67.6% 67.6% 1178.9 961.0 22.7% 22.7% Net commission income 426.9 414.1 3.1% 206.1 220.8 -6.7% Total operating income 2 496.7 1 789.4 39.5% 1336.8 1159.9 15.3% Total costs -1 163.1 -805.9 44.3%
Slide 6: Key balance sheet and business items
KEY BALANCE SHEET AND BUSINESS ITEMS PLNmn June 22 June 21 Change Y/Y Mar. 22 Change Q/Q Active customers (ths) 2 805 2 632 173 2 740 65 On-line and mobile customers 2 418 2 145 273 273 2 350 68 Customer funds 102 909 99 484 3.4% 105 233 -2.2% Deposits 96 122 89 998 6.8% 97 305 -1.2% Deposits of ind
Slide 7: Financial highlights of 1H22
FINANCIAL HIGHLIGHTS OF 1H22 Growing core profitability and efficiency, stable cost of risk Fees up Adjusted net profit* NII and NIM strongly up +106% y/y +68%; +156bp y/y +3% y/y Adj. ROE Adj. cost/income Cost of risk 23.0% 32.8% 37 bp (*) Extraordinary items: FX-mortgage legal risk provisions, cos
Slide 8: Financial highlights of 1H22
FINANCIAL HIGHLIGHTS OF 1H22 Gradual improvement of core profitability (excl. FX mortgage): net income up 106% y/y Net profit Net profit w/o extraordinary* items (PLNmn) +99% 11.2% 23.0% ROE adjusted* +30% 637 491 -11.3% -6.4% ROE reported 321 318 226 259 (PLNmn) +106% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
Slide 9: Interest and commission income
INTEREST AND COMMISSION INCOME NII in strongly upward trend in 1H22 with strong y/y growth of 68%; quarterly NIM jumped to 4.48% Net interest income Interest on loans and deposit (quarterly average) (PLNmn) 6.39% 4.57% 4.77% +68% 3.94% 3.37% 3.25% 3.33% 3.32% 3.69% 2.81% 3.22% 2.58% 2.49% 4.48% 2.53
Slide 10: Cost efficiency
COST EFFICIENCY Operating costs without BFG fees and contribution to IPS grew 9% y/y. C/I improved owing to strong core income Operating cost (PLNmn) Employees -413 8,412 8,141 7,846 7,630 7,493 7,335 7,238 7,148 44% 9% w/o BFG/IPS 7,014 7,035 6,942 6,842 6,735 6,602 6,450 6,454 11% 6,366 6,245 6,21
Slide 11: Asset quality
ASSET QUALITY Strong credit quality with stable cost of risk Cost of risk Impaired loans (IFRS9 stage 3 &POCI) (bp) 10.9% 10.9% 11.2% 10.6% 10.6% 10.5% 10.4% 10.6% 9.7% 33 42 39 40 35 37 Total loans 4.9% 4.7% 5.0% 4.9% 4.7% 4.7% 4.4% 4.4% 4.3% 49 53 46 46 4.3% 5.1% 4.6% 4.1% 60 47 Retail 4.1% 3.9% 3
Slide 12: Liquidity and capital
LIQUIDITY AND CAPITAL Good liquidity and sound capital adequacy despite material provision effort Liquidity indicators Group capital ratios * 202% 20.0% 20.0% 177% 178% 184% 19.5% 174% 19.4% 18.7% 161% 153% 18.2% 150% 151% 17.1% 17.0% 17.0% 16.5% 16.3% 16.0% 15.6% 15.1% 15.2% 91% 85% 86% 86% 14.0% 1
Slide 13: FX-mortgage portfolio (1/2)
FX-MORTGAGE PORTFOLIO (1/2) Accelerating pace of FX-mortgage portfolio’s downsizing FX-mortgages* (gross w/o legal risk provisions) FX-mortgages as % of total gross book (gross after legal risk provisions) (CHFmn) 5,000 4,698 4,406 4,500 -20% 20.4% 19.1% 4,094 4,000 3,782 3,498 3,500 3,216 3,137 -5%
Slide 14: FX-mortgage portfolio (2/2)
FX-MORTGAGE PORTFOLIO (2/2) Number of amicable settlements remained well above the number of new legal cases Provisions against legal risk as % of FX-mortgage book* Legal risk provisions/outstanding FX-mortgage book** (% of gross loans) 40.0% 40.0% 36.3% 36.3% 35.0% 35.0% 30.9% 30.9% 30.0% 25.7% 30.
Slide 15: Presentation of 2Q22/1H22 results: Business development
02 PRESENTATION OF 2Q22/1H22 RESULTS Business development 15
Slide 16: Business highlights of 1H22
BUSINESS HIGHLIGHTS OF 1H22 Good dynamics of retail business, corporate one showing gradual improvement Loans PLN mortgage loans Leasing portfolio +5% y/y +19% y/y +8% y/y Debit cards Active digital customers Customer deposits +202k y/y 2.4mn +7% y/y 16
Slide 17: Loans and customer funds
LOANS AND CUSTOMER FUNDS Good dynamics of business volumes, especially mortgage loans and corporate deposits Loan portfolio of the Group (net) Customer deposits (PLNmn) +5% +11% y/y without FX loans +7% +0.4% (PLNmn) +24% +6% 0% +19% 74,636 75,794 77,280 78,603 78,703 79,342 97,305 89,998 90,250 91,
Slide 18: Retail business – loans and customer funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS Slowdown of retail loans’ origination although still robust when compared to pre-pandemic levels. PLN loans keep high momentum. Retail loans (gross) Retail customer funds 4% -3% (PLNmn) +12% y/y without FX loans 1% -28% 19% (PLNmn) +37% -7% 58,993 60,334 61
Slide 19: Retail banking - number of customers and accounts
RETAIL BANKING - NUMBER OF CUSTOMERS AND ACCOUNTS Steady growth of customers and cards after completed merger with Euro Bank Active retail clients* Active micro-business clients (thousand) (thousand) +13 +173 +66 121.9 2,805 118.5 2,694 2,739 114.1 2,664 111.5 2,611 2,632 106.1 108.6 31/03/21 30/06/
Slide 20: More than just an account
MORE THAN JUST AN ACCOUNT For our clients, our mobile app is not only an account service channel, but is also an important sales channel for banking products Most clients prefer banking on the smartphone Digital channels results in 1H22 2.1mn 2.42mn Active mobile users* 78% 91% 32% Active digital us
Slide 21: More than just a bank
MORE THAN JUST A BANK In the mobile app and Millenet we provide access to additional non-banking services MilleAdministration in a smartphone Top-up codes Our client can apply for family benefits in the In May we introduced a new mobile app: Family 500+, RKO benefit, nursery VAS – codes to games, st
Slide 22: Opening an account is now easier than ever
OPENING AN ACCOUNT IS NOW EASIER THAN EVER We’ve redesigned the processes of opening an account online and in the mobile app WITH LOGGING INTO ANOTHER BANK Customers are more and more willing to use our open banking process, where identity is confirmed by logging into another bank. The process is av
Slide 23: Helping (also) online
HELPING (ALSO) ONLINE We use our digital channels to support Ukrainian citizens CHARITY TRANSFER ACCESS TO E-ADMINISTRATION In order to help refugees from Ukraine, Ukrainian citizens can now create we have implemented a new defined and use Trusted Profile via our transfer. The customer only enters t
Slide 24: Goodie – smartshopping platform of Bank Millennium
GOODIE – SMARTSHOPING PLATFORM OF BANK MILLENNIUM Development and promotions for cashback users Since 2018: 2.9mn 1H22: 221,000 app downloads app downloads PLN1.3bn PLN346mn generated cashback turnover generated cashback turnover PLN30mn PLN6.7mn amount of cashback amount of cashback 10.2mn 2.4mn ca
Slide 25: Companies business – deposits and loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Steady growth of loans: +5% y/y with rebound in leasing; strong growth of deposits: +24% y/y Loans to companies (gross) Companies deposits (PLNmn) +5% (PLNmn) +24% +7% +83% +8% +3% +4% 19,711 20,263 33,033 30,957 19,031 19,250 19,454 19,540 Factoring 2,835 2,9
Slide 26: Companies business – loans and transactions
COMPANIES BUSINESS – LOANS AND TRANSACTIONS Leasing and factoring sales keep similar level as one year ago; steady growth of transactions Leasing – new sales Factoring – turnover (PLNmn) (PLNmn) -1% +2% 13,383 13,667 1,784 1,761 1,076 6,896 6,568 7,245 6,661 7,006 1,022 1,017 6,487 856 905 762 1Q21
Slide 27: Digital channels for business
DIGITAL CHANNELS FOR BUSINESS We continue the digitization of processes for corporate clients In number of business In value of cash loans for +60% accounts opened online in +40% microetrepreneurs completed in 1H22 vs. 2H21 online channels in 1H22 vs. 2H21 MILLENETLINK We are expanding the solution
Slide 28: Credit holidays and capital management
03 PRESENTATION OF 2Q22/1H22 RESULTS Credit holidays and capital management 28
Slide 29: Credit holidays
CREDIT HOLIDAYS Significant upfront impact to be booked in 3Q22 The Act of July 7, introduced, among Expected impact on BM’s results in 3Q22: Other considerations: others, a handful of measures aimed at support of PLN mortgage borrowers, ▪ maximum cost of credit holidays at ▪ Application for/use of
Slide 30: Capital management
CAPITAL MANAGEMENT Capital ratios expected to be temporarily below minimum requirements due to the impact of upfront booking of credit holidays, but the recovery is expected in a relatively short term Upfront recognition of costs of credit holidays is expected to result in a negative net result for
Slide 31: Appendices
04 PRESENTATION OF 2Q22/1H22 RESULTS Appendices 31
Slide 32: Macroeconomic overview: Economy
MACROECONOMIC OVERVIEW Economy (pts, change PMI indicators in Eurozone and US (pts) Business sentiment indicators in Poland from 12.2021) Outlook for the Polish economy is deteriorating because of high inflation, high interest rates, prolonged disruptions in supply chains and increased risks of a gl
Slide 33: Macroeconomic overview: Financial markets
MACROECONOMIC OVERVIEW Financial markets Evolution of FX rates WIBOR 3M and market expectations (%) Monetary Policy Council continued monetary tightening in 2Q 2022. The pace of interest rates hikes slowed down in July due to mounting risks for economic activity. Expected continuation of the tighten
Slide 34: Macroeconomic overview: Monetary aggregates
MACROECONOMIC OVERVIEW Monetary aggregates Loans to households Mortgage loans Loans to companies Demand for loans in (PLNbn, % y/y) (PLNbn, % y/y) (PLN bn, % y/y) households’ sector, both for mortgage and cash loans, is going down because of rising interest rates. Growth of loans to companies accele
Slide 35: Ratings and market ratios
RATINGS AND MARKET RATIOS In 1H22, the outbreak of the war in Ukraine was the main factor influencing investors' moods. Since the beginning of the year the share price of Bank Millennium shares decreased 17% but in annual basis fell by 53%. 20% Bank Millennium share performance vs. WIG Bank index Ba
Slide 36: ESG activities
ESG ACTIVITIES ESG (Environmental, Social, Governance) issues have been an integral part of the Bank Millennium Group’s business strategy for years now. As a responsible and friendly bank, we want to exert a positive influence on our social, economic and natural environment, ensure full availability
Slide 37: Most important awards and achievements in 1st half 2022
THE MOST IMPORTANT AWARDS AND ACHIEVEMENTS OF BANK MILLENNIUM IN 1ST HALF 2022 Professionalism and activities for sustainable development confirmed by independent rankings and competitions Bank Millennium is the best bank in Poland Bank Millennium is Service Quality Star according to Global Finance
Slide 38: Synthetic P&L account
SYNTHETIC P&L ACCOUNT SYNTHETIC P&L ACCOUNT Reported results 1H21 1H22 Change Y/Y 1Q22 2Q22 Change Q/Q Net interest income 1 277 2 140 68% 961 1 179 23% Net commission income 414 427 3% 221 206 -7% Other non-interest income 98 -70 -171% -22 -48 119% Operating Income 1 789 2 497 40% 1 160 1 337 15% G
Slide 39: Balance sheet
BALANCE SHEET 30.06.2021 31.03.2022 30.06.2022 Change y/y ASSETS Cash and balances with the Central Bank 2 676 8 286 5 810 117% Loans and advances to banks 606 986 1 080 78% Loans and advances to customers 75 794 78 703 79 342 5% Amounts due from reverse repo trans. 18 26 8 -55% Debt securities 22 1
Slide 40: 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