Bank Millennium SA · GPW:MIL
Bank Millennium SA — Q3 2022 Earnings Presentation
40 slides from Bank Millennium SA's earnings presentation, Oct 24, 2022
Slide 1: Presentation 3Q22/1-3Q22 results
Presentation 3Q22/1-3Q22 results 24 October 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 3Q22/1-3Q22 Results: Financial performance
01 PRESENTATION OF 3Q22/1-3Q22 RESULTS Financial performance 4
Slide 5: Key Profit & Loss Items
KEY PROFIT & LOSS ITEMS Change PLNmn 1-3Q22 1-3Q21 Change Y/Y 3Q22 2Q22 Q/Q Net interest income 3 411 1 946 75% 75% 1 271 1 179 8% 8% Net commission income 606 616 -2% 179 206 -13% Total operating income 3 902 2 635 48% 1 405 1 337 5% Total costs -1 625 -1 208 35% -462 -677 -32% Costs without BFG/IP
Slide 6: Key Balance Sheet and Business Items
KEY BALANCE SHEET AND BUSINESS ITEMS PLNmn Sep. 22 Sep. 21 Change Y/Y Jun. 22 Change Q/Q Active customers (ths) 2 859 2 664 195 195 2 805 54 On-line and mobile customers 2 483 2 206 277 277 2 418 65 Customer funds 104 169 99 820 4% 102 909 1.2% Deposits 97 771 90 250 8% 8% 96 122 1.7% Deposits of in
Slide 7: Credit Holidays
CREDIT HOLIDAYS Significant upfront impact booked in 3Q22 The Act of July 7, introduced, among Impact on BM’s results in 3Q22: Other considerations: others, a handful of measures aimed at support of PLN mortgage borrowers, ▪ PLN1,423mn upfront cost of credit ▪ application for/use of credit holidays
Slide 8: Financial Highlights of 1-3Q22
FINANCIAL HIGHLIGHTS OF 1-3Q22 Growing core profitability and efficiency, stable cost of risk Fees Adjusted net profit* NII and NIM strongly up +127% y/y +75%; +176bp y/y -2% y/y Adj. ROE Adj. cost/income Cost of risk 24.6% 32.6% 44bp (*) Extraordinary items: provision for credit holidays, FX-mortga
Slide 9: Financial Highlights of 1-3Q22
FINANCIAL HIGHLIGHTS OF 1-3Q22 Gradual improvement of core profitability (excl. FX mortgage and credit holidays): adjusted net income up 127% y/y Net profit Net profit w/o extraordinary* items (PLNmn) 12.6% 24.6% ROE adjusted* +172% +11% 705 637 -12.9% -28.6% ROE reported 491 321 318 226 259 (PLNmn)
Slide 10: Interest and Commission Income
INTEREST AND COMMISSION INCOME NII in upward trend in 1-3Q22 with y/y growth of 75%; quarterly NIM widened further to 4.79% Net interest income Interest on loans and deposit (quarterly average) (PLNmn) +75% 7,76% 6,39% 4,57% 4,77% 4,79% +8% 3,94% 3,69% 3,37% 3,22% 3,25% 3,33% 3,32% 3 411 2,81% 2,58%
Slide 11: Cost Efficiency
COST EFFICIENCY Operating costs without BFG fees and contribution to IPS grew 11% y/y. C/I improved owing to strong core income Operating cost (PLNmn) Employees -257 8 412 8 141 7 846 7 630 7 493 7 335 7 238 7 148 34% 11% w/o BFG/IPS 7 014 7 035 6 942 6 842 6 735 6 778 6 602 6 450 6 454 11% 6 366 6
Slide 12: Asset Quality
ASSET QUALITY Strong credit quality, higher cost of risk in retail Cost of risk Impaired loans (IFRS9 stage 3 &POCI) (bp) 10,5% 10,9% 10,9% 11,2% 10,4% 10,6% 9,7% 10,3% 36 44 Total loans 5,0% 4,9% 4,7% 4,7% 4,4% 4,4% 4,3% 4,5% 44 54 5,1% 4,6% 4,1% Retail 3,9% 3,9% 4,1% 4,0% 2,5% 2,4% 2,3% 2,2% 2,2%
Slide 13: Liquidity and Capital
LIQUIDITY AND CAPITAL Good liquidity but capital adequacy deteriorated due to provisions for credit holidays (PLN1.4bn) and FX mortgage with TCR and T1 falling below regulatory thresholds (sufficient CET1). Recovery plan launched to rebuild sound capital base. Liquidity indicators Group capital rati
Slide 14: 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 resulted in a negative net result for 3Q22. Without
Slide 15: 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 after legal risk provisions) 5 000 4 698 4 406 4 500 4 094 20,4% 19,1% -18% 4 000 3 782 3 498 3 500 3 216 3 137
Slide 16: 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) 45,0% 41,3% 45% 41,3% 38,3% 40,0% 40% 36,3% 36,3% 35% 30,9% 35,
Slide 17: Presentation of 3Q22/1-3Q22 Results: Business development
02 PRESENTATION OF 3Q22/1-3Q22 RESULTS Business development 17
Slide 18: Business Highlights of 1-3Q22
BUSINESS HIGHLIGHTS OF 1-3Q22 Decent dynamics of business volumes despite deceleration in retail business, corporate one showing gradual improvement PLN loans PLN mortgage loans Companies’ portfolio +6% y/y +10% y/y +7% y/y Debit cards Active digital customers Customer deposits +214k y/y 2.5mn +8% y
Slide 19: Loans and Customer Funds
LOANS AND CUSTOMER FUNDS Deceleration in retail but good trend in companies’ volumes Loan portfolio of the Group (net) Customer deposits (PLNmn) +2% +6% y/y without FX loans +8% -1% +22% +7% 3% +10% (PLNmn) 91 448 97 305 96 122 97 771 78 603 78 703 79 342 78 965 90 250 77 280 25 285 25 425 33 033 30
Slide 20: Retail Business – Loans and Customer Funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS Cash loans’ origination still robust but mortgages decelerate visibly. Deposits grew 3% q/q. Retail loans (gross) Retail customer funds 1% -2% (PLNmn) +6% y/y without FX loans -1% -33% 10% (PLNmn) +82% -12% 60 334 61 503 61 470 61 463 60 815 74 495 74 960 7
Slide 21: 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) +190 +14 +50 2 855 125 2 805 122 2 739 119 2 664 2 694 114 2 611 2 632 109 111 106 31/03/2130/06/2130
Slide 22: Clients Active Online
CLIENTS ACTIVE ONLINE Steady growth in the number of users of digital channels with the dominant role of mobile banking 2.5 million Over the past five years, the number of customers active in electronic channels Active digital users (+13% y/y) has doubled. 2.2 million 186 million 87% Active mobile u
Slide 23: Online Sales
ONLINE SALES Digital channels share in acquisition and sales is growing 81% 94% 35% CONTACTLESS PAYMENTS BY PHONE Digital share in cash Digital share in Digital share in loan sales in 3Q22. sales of term acquisition of Among the bank's customers, interest in This proportion has deposits in current c
Slide 24: BLIK Payments
BLIK PAYMENTS We support innovations and note record-breaking results in transactions 1.5 million 12.5 million +85% +49% BLIK users in 2022 so far Number of contactless BLIK In number of BLIK P2P In number of BLIK users registered (+30% y/y) transactions since the launch transfers to mobile in Bliko
Slide 25: More Than Banking
MORE THAN BANKING We go beyond banking standards in mobile app and Millenet MOBILE AUTHORIZATION BENEFIT APPLICATIONS ON THE PHONE OPEN BANKING September marked two years since On 1 July, we made Good Start We are constantly the implementation of mobile 300+ applications available via developing our
Slide 26: Digital Channels for Business
DIGITAL CHANNELS FOR BUSINESS We design end-to-end solutions for clients with their own business and corporate clients LEASE FORMS Business customers with leasing credit can easily manage their leases via online banking. We are gradually implementing more forms available electronically. Already 30%
Slide 27: Goodie – Smartshopping Platform of Bank Millennium
GOODIE – SMARTSHOPING PLATFORM OF BANK MILLENNIUM Development and promotions for cashback users Since 2018: 3mn 3Q22: 111,000 app downloads app downloads PLN1.5bn PLN200mn generated cashback turnover generated cashback turnover PLN33mn PLN3.7mn amount of cashback amount of cashback 11mn 1.3mn cashba
Slide 28: Companies Business – Deposits and Loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Growth of corporate exposures despite strong RWA focus; strong y/y growth of deposits Loans to companies (gross) Companies deposits (PLNmn) +6% (PLNmn) +22% +10% +114% +7% -11% +5% 19 711 20 263 20 690 33 033 30 957 19 454 19 540 Factoring 30 903 2 905 3 150 2
Slide 29: Companies Business – Loans and Transactions
COMPANIES BUSINESS – LOANS AND TRANSACTIONS Slow deceleration of growth in leasing and factoring; steady growth of transactions Leasing – new sales Factoring – turnover (PLNmn) (PLNmn) -4% +3% 2 801 2 698 19 951 20 527 1 022 1 017 1 076 937 6 896 7 245 7 006 6 860 762 856 905 6 487 6 568 6 661 1Q21
Slide 30: What's New and Improvements for Corporate Banking Clients
WHAT’S NEW AND IMPROVEMENTS FOR CORPORATE BANKING CLIENTS WE HAVE CHANGED AND EXPANDED THE PRODUCT OFFER: • we have made available a new BGK "crisis guarantees" programme, which replaced the liquidity guarantees available until 30 June 2022. Guarantees make it possible to secure loans, reverse facto
Slide 31: Presentation of 3Q22/1-3Q22 Results: Appendices
03 PRESENTATION OF 3Q22/1-3Q22 RESULTS Appendices 31
Slide 32: Macroeconomic Overview: Economy
MACROECONOMIC OVERVIEW Economy Data on real economy (% y/y) Indicators of expected economic situation (pts) In 3Q22, according to the Bank's estimates, GDP growth in Poland slowed down while the CPI inflation continued to intensify. Expectations for global economic activity, including Poland, have d
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 3Q22 and in Oct’22 „wait-and-see” approach has been adopted. Even as the MPC rhetoric turned more dovish the overall domestic fiscal and econom
Slide 34: Macroeconomic Overview: Monetary Aggregates
MACROECONOMIC OVERVIEW Monetary aggregates Loans to households Mortgage loans Loans to companies Households’ demand for loans (PLN bn, % y/y) (PLN bn, % y/y) (PLN bn, % y/y) is declining amid high interest rates, mainly due to mortgage loans. In Jul’22 and Aug’22 the value of total loans to enterpri
Slide 35: Ratings and Market Ratios
RATINGS AND MARKET RATIOS 3Q22 brought mixed performance of Polish equities with recovery of indices in July and early August and further deepening of losses thereafter, as risk aversion returned globally. Bank Millennium share performance vs. WIG Bank index Bank Millennium shares No of shares: 1 21
Slide 36: Recent ESG Actions
RECENT ESG ACTIONS ESG activities, one of the pillars of Bank Millennium’s business strategy, are implemented in the company’s day-to-day activity and apply to three main groups: customers, employees and community. The Bank also supports UN Sustainable Development Goals (SDG) and is also a signatory
Slide 37: Most Important Awards and Achievements of Bank Millennium in 3Q22
THE MOST IMPORTANT AWARDS AND ACHIEVEMENTS OF BANK MILLENNIUM in 3Q22 Professionalism, information security, world-class digital banking and people confirmed by independent rankings and competitions Bank Millennium is the Best Digital Bank in Contact Center employees stood on the Millenet internet b
Slide 38: Synthetic P&L Account
SYNTHETIC P&L ACCOUNT SYNTHETIC P&L ACCOUNT Reported results 1-3Q21 1-3Q22 Change Y/Y 2Q22 3Q22 Change Q/Q Net interest income 1 946 3 411 75% 1 179 1 271 8% Net commission income 616 606 -2% 206 179 -13% Other non-interest income 73 -116 -258% -48 -46 -5% Operating Income 2 635 3 902 48% 1 337 1 40
Slide 39: Balance Sheet
BALANCE SHEET 30.09.2021 30.06.2022 30.09.2022 Change y/y ASSETS Cash and balances with the Central Bank 1 978 5 810 10 132 412% Loans and advances to banks 578 1 080 1 186 105% Loans and advances to customers 77 280 79 342 78 965 2% Amounts due from reverse repo trans. 9 8 5 -52% Debt securities 21
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