Bank Millennium Sa · GPW:MIL
Bank Millennium Sa — H1 2024 Earnings Presentation
40 slides from Bank Millennium Sa's earnings presentation, Jul 26, 2024
Slide 1: 2Q24/1H24 results
2Q24/1H24 results 26 July 2024 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: 2Q24/1H24 Results: Financial performance
01 2Q24/1H24 RESULTS Financial performance 4
Slide 5: Main financial achievements in 1H24
MAIN FINANCIAL ACHIEVEMENTS IN 1H24 1H24 with further improvement in core profitability and high efficiency. Strong asset quality and liquidity. Material net profit despite cost of credit holidays and costs related to FX-mortgage portfolio. CAPITAL & MREL PROFITABILITY • Seventh quarter in a row wit
Slide 6: Key profit & loss items
KEY PROFIT & LOSS ITEMS PLNmn 1H24 1H23 Change Y/Y 2Q24 1Q24 Change Q/Q Net interest income 2 536 2 598 -2% 1 182 1 354 -13% o/w impact of credit holidays -201 0 - -201 0 - Net interest income without credit holidays 2 737 2 598 5% 1 383 1 354 2% Net commission income 390 404 -3% 191 200 -5% Total o
Slide 7: Key balance sheet and business items
KEY BALANCE SHEET AND BUSINESS ITEMS PLNmn June 24 June 23 Change Y/Y Mar. 24 Change Q/Q Active customers (ths) 3 083 2 949 134 134 3 045 38 incl. on-line and mobile 2 824 2 618 206 206 2 774 50 Customer Funds 126 121 107 831 17% 122 053 3% Deposits 116 540 100 597 16% 113 184 3% Deposits of individ
Slide 8: Strategy 22-24: on the way through "Inspired by People" strategy
STRATEGY 22-24 | ON THE WAY THROUGH “INSPIRED BY PEOPLE” STRATEGY Significant business growth supplemented by new digital solutions, while focusing on developing new strategy. CLIENT FINANCE RISK & CHF NUMBER OF SHARE OF SHARE OF ANNUAL NON- SHARE OF FX COST / RETURN ON RETAIL ACTIVE DIGITAL DIGITAL
Slide 9: Financial highlights of 2Q24/1H24
FINANCIAL HIGHLIGHTS OF 2Q24/1H24 Material reported net profit of PLN357mn in 1H24. Adjusted net profit of PLN1.5bn. Adjusted ROE of c.19%, slightly lower as a consequence of higher equity base. Net profit Net profit w/o extraordinary* items (PLNmn) 22.7% 18.8% ROE adjusted* +3% 12.0% 10.1% ROE repo
Slide 10: Interest and commission income
INTEREST AND COMMISSION INCOME NII w/o credit holidays still in uptrend (+2% q/q in 2Q24). NIM in 2Q24 at 4.28%. Preliminary credit holiday cost of PLN201mn to be reviewed in 2H24. Commissions declined 3% y/y after bancassurance transaction. Net interest income* Interest on loans* and deposits (quar
Slide 11: Efficiency
EFFICIENCY Operating costs grew 14% y/y. C/I at 31% at relatively stable low level (close to 30% for 2 years). Operating cost (PLNmn) Employees -36 Cost/income 14% adjusted* 6,860 6,815 6,746 6,776 6,747 6,731 6,710 12% 6,325 6,306 6,241 6,306 6,320 6,330 6,313 16% +72 29.7% 31.3% 4Q22 1Q23 2Q23 3Q2
Slide 12: Asset quality
ASSET QUALITY Strong credit quality with improving trend in consumer loans supported by positive impact of NPLs’ sale. Cost of credit risk lower in 2Q24; 1H24 very similar to 1H23. Coverage ratio Impaired loans (IFRS9 stage 3 &POCI) 73% 74% 10.1% 10.2% 10.1% 10.4% 9.9% Cost of risk (bp) 9.8% 9.3% 45
Slide 13: Capital ratios, MREL requirements and liquidity
CAPITAL RATIOS, MREL REQUIREMENTS AND LIQUIDITY Capital adequacy ratios remain comfortably above regulatory thresholds. Group capital ratios Capital requirement vs. actual ratios as on 30 June’24 (Group) Inclusion of 1H24 net profit would add c1.3ppt to capital ratios 18.1% 18.0% 17.1% Surplus 4.9 p
Slide 14: FX-mortgage portfolio (1/2)
FX-MORTGAGE PORTFOLIO (1/2) Maintained fast pace of FX-mortgage portfolio’s downsizing. Number of amicable settlements to date exceeded 23.5k, equivalent to 38% of active agreements at YE19. FX-mortgages* (gross w/o legal risk provisions) (CHFmn) FX-mortgages as % of total gross book (gross less all
Slide 15: FX-mortgage portfolio (2/2)
FX-MORTGAGE PORTFOLIO (2/2) Outstanding balance of legal risk provisions at PLN7.5bn. Legal risk provisions / outstanding gross loans ratio crossed symbolic 100% mark. Provisions against legal risk* (PLNmn) Provisions against legal risk as % of FX-mortgage book* 7,534 7,600 6,980 7,269 7,226 101.4%
Slide 16: 2Q24/1H24 Results: Business development
02 2Q24/1H24 RESULTS Business development 16
Slide 17: Main business achievements in 1H24
MAIN BUSINESS ACHIEVEMENTS IN 1H24 High growth of deposits. Growing customer acquisition, retail lending and leasing contracts. BUSINESS VOLUMES EVOLUTION MAIN COMMERCIAL HIGHLIGHTS • Total deposits portfolio grew 16% y/y, retail deposits up 16% y/y • Active retail clients of 3,083 th. with 92% digi
Slide 18: Loans and customer funds
LOANS AND CUSTOMER FUNDS Growth of consumer and mortgage loans. Companies’ portfolio grew 2% in 2Q24, continuing to rebound. Robust growth in deposits (+16% y/y). Investment products strongly up (32% y/y). Loan portfolio of the Group (net) Customer deposits (PLNmn) +4% y/y without FX +1% +16% mortg.
Slide 19: Retail business – loans and customer funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS Growing consumer and PLN mortgage loans. High growth of deposits (+16% y/y). Retail loans (gross) Retail customer funds +2% +18% (PLNmn) +7% y/y without FX loans +8% +32% +6% (PLNmn) +34% 58,047 58,308 58,511 58,440 59,032 +9% 89,929 93,010 81,664 84,669 17
Slide 20: Retail banking - number of customers and accounts
RETAIL BANKING - NUMBER OF CUSTOMERS AND ACCOUNTS Considerable growth of new customers, cards and accounts. Further growth beyond the YE24 target of 3 milion active clients. Active retail clients Active micro-business clients (thousand) (thousand) +134 +17 +38 151 3,003 3,045 3,083 147 2,949 2,981 1
Slide 21: Mobile app and digital users
MOBILE APP AND DIGITAL USERS We continue our mobile-first approach, placing the app in the centre of our actions 2.8mn NEW DESIGN OF THE APP Active digital users* From June, the first customers (+8% y/y) can already use the refreshed mobile app. The way of navigating the app and the product pages ha
Slide 22: Digital sales, payments & VAS
DIGITAL SALES, PAYMENTS & VAS We are building a set of online products and services that make everyday life easier CASH LOANS ACCOUNTS TERM DEPOSITS JUNIOR ACCOUNTS 83% 45% 95% 58% Digital share in cash Digital share in current Digital share in term Digital share in junior loan sales in 2Q24 account
Slide 23: What's new in digital
WHAT’S NEW IN DIGITAL We are constantly improving digital services and exploring new areas such as BNPL and currency exchange CURRENCY EXCHANGE BLIK PAY LATER SECURITY At the beginning of the summer The bank's customers can now use the We are implementing solutions to counter the effects of identity
Slide 24: Goodie – bank's smartshopping platform
GOODIE – BANK’S SMARTSHOPPING PLATFORM Continued growth in goodie cashback, activation and acquisition promotions 1H24: 54% increase y/y in the number of active cashback users 66% increase y/y in the number of transactions made via goodie cashback Almost PLN3bn spent in goodie cashback for purchases
Slide 25: Companies business – deposits and loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Corporate loan portfolio already showed some rebound in quarterly trend. Corporate deposits grew 15% y/y. Stronger focus on SME clients. Loans to companies (gross) Companies' deposits (PLNmn) -2% (PLNmn) +15% -6% +16% 0% +13% -3% +3% +1% 31,929 32,124 33,111 1
Slide 26: Companies business – leasing, factoring and transactions
COMPANIES BUSINESS – LEASING, FACTORING AND TRANSACTIONS Leasing contracts accelerated reaching 20% growth y/y. Visible growth of clients’ transactions. Leasing – new sales Factoring – turnover (PLNmn) (PLNmn) +20% -4% 13,149 12,635 1,898 1,581 1,013 6,527 6,621 6,158 6,626 6,451 6,183 804 863 886 7
Slide 27: Changes in the offer for corporate banking clients
CHANGES IN THE OFFER FOR CORPORATE BANKING CLIENTS We are introducing new guarantee programmes, developing our employees' ESG competences NEW GUARANTEE PROGRAMMES GREEN ACADEMY We have introduced new BGK guarantee programmes into the offer: We have completed the first part of the Green Academy - the
Slide 28: Online business
ONLINE BUSINESS We are developing an ecosystem of business services to make it easier to manage a company from its launch MILLENNIUM PAY & ONLINE STORE The Bank has introduced the Millennium PAY payment gateway for business clients operating in the e-commerce sector. It enables online merchants to a
Slide 29: 2Q24/1H24 Results: Appendices
03 2Q24/1H24 RESULTS Appendices 29
Slide 30: Macroeconomic overview: Economy
MACROECONOMIC OVERVIEW Economy Economic recovery accelerated in Poland in Data from real economy (% y/y) Economic sentiment indicators (sa, pts) 2Q24 and according to Bank Millennium's estimates GDP growth reached ca. 3.0% y/y compared to 2.0% y/y in 1Q24. Important pillar of the economic growth rem
Slide 31: Macroeconomic overview: Financial markets
MACROECONOMIC OVERVIEW Financial markets Evolution of FX rates WIBOR 3M and market expectations (%) The Monetary Policy Council kept its hawkish bias as the NBP governor communicates the stabilization of interest rates in coming quarters. In the Bank’s opinion the interest rates should be stable at
Slide 32: Macroeconomic overview: Deposits and loans in economy
MACROECONOMIC OVERVIEW Deposits and loans in economy Total deposits and loans Growth rate of deposits Growth rate of loans (PLN bn) (% y/y) (% y/y) Growth of deposits in the banking sector accelerated in 2Q24. In June 2024, their value was higher by 8.6% y/y vs. 7.2% y/y in 1Q24. Improvement was obs
Slide 33: Ratings and market ratios
RATINGS AND MARKET RATIOS In 1H24 WSE good investor sentiment continued on WSE. Bank Millennium’s shares gained 12% ytd. Ytd change of Bank Millennium share performance vs. WIG Banks index Ratings of Bank Millennium +25% On April 26, 2024 Moody’s confirmed Bank’s long- and short-term deposit ratings
Slide 34: ESG activities
ESG ACTIVITIES ESG report of Bank Millennium and Bank Continued cooperation with Bank Gospodarstwa Raising awareness of sustainable development Millennium Group for 2023 Krajowego • The Bank has launched the Green Academy, • The ESG report is an annual summary of the • BiznesMax Plus i Ekomax – Bank
Slide 35: ESG activities
ESG ACTIVITIES Our People’24: Save the Planet • Bank Millennium and the Bank Millennium 21. Millennium Docs Against Gravity festival Foundation have launched the second edition Financial ABC • For 19 years, Bank Millennium has been of the initiative bringing together employees around the idea of pro
Slide 36: The most important awards and achievements of Bank Millennium in 2Q24
THE MOST IMPORTANT AWARDS AND ACHIEVEMENTS OF BANK MILLENNIUM in 2Q24 The Innovators 2024, Golden Banker 2024, Stars of Banking DGP Bank Millennium is one of the best Bank Millennium with the title of The Bank Millennium is again one of the best banks in Poland in building customer Greatest Financia
Slide 37: Awards for digital channels in 1H24
AWARDS FOR DIGITAL CHANNELS IN 1H24 The quality of our digital solutions is appreciated in Poland and abroad PAYTECH AWARDS – Award in the Best Card Initiative category for omnichannel credit card application and card services in digital channels THE INNOVATORS – Top Innovator in Finance 2024 for Be
Slide 38: Synthetic P&L account
SYNTHETIC P&L ACCOUNT SYNTHETIC P&L ACCOUNT 1H23 1H24 Change Y/Y 1Q24 2Q24 Change Q/Q Net interest income 2 598 2 536 -2% 1 354 1 182 -13% Including cost of credit holidays 0 -201 - 0 -201 - Net interest income without 2 598 2 737 5% 1 354 1 383 2% credit holidays Net commission income 404 390 -3% 2
Slide 39: Balance sheet
BALANCE SHEET PLN million 30.06.2023 31.03.2024 30.06.2024 Change y/y ASSETS Cash and balances with the Central Bank 6 769 4 937 5 857 -13% Loans and advances to banks 532 427 488 -8% Loans and advances to customers 74 152 73 911 74 645 1% Amounts due from reverse repo trans. 48 431 198 315% Debt se
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