Bank Millennium SA · GPW:MIL
Bank Millennium SA — FY2022 Earnings Presentation
38 slides from Bank Millennium SA's earnings presentation, Jan 31, 2023
Slide 1: Presentation 4Q22/2022 preliminary results
Presentation 4Q22/2022 preliminary results 31 January 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 4Q22/2022 preliminary results: Financial performance
01 PRESENTATION OF 4Q22/2022 PRELIMINARY RESULTS Financial performance 4
Slide 5: Key profit & loss items
KEY PROFIT & LOSS ITEMS Change PLNmn 2022 2021 Change Y/Y 4Q22 3Q22 Q/Q Net interest income 3 337 2 713 23% 1 349 -152 - Cost of credit holidays -1 324 - 99 -1 423 - Net interest income without credit holidays 4 661 2 713 72% 72% 1 250 1 271 -2% Net commission income 808 831 -3% 202 179 13% Total op
Slide 6: Key balance sheet and business items
KEY BALANCE SHEET AND BUSINESS ITEMS PLNmn Dec. 22 Dec. 21 Change Y/Y Sep. 22 Change Q/Q Active customers (ths) 2 887 2 694 193 193 2 859 28 On-line and mobile customers 2 519 2 263 256 256 2 483 36 Customer funds 104 468 100 425 4% 104 169 0% Deposits 98 039 91 448 7% 97 771 0% Deposits of individu
Slide 7: Financial highlights of 4Q22 and FY 2022
FINANCIAL HIGHLIGHTS OF 4Q22 and FY 2022 Growing core profitability and efficiency. Stable cost of risk. Positive net profit in 4Q22 of PLN249mn. Positive net profit in 4Q22 Adjusted net profit* NII** and NIM strongly up PLN249mn +99% y/y +72%; +173bp y/y Adj. ROE Adj. cost/income Cost of risk 21.5%
Slide 8: Strategy 2022-2024 execution
STRATEGY 2022 - 2024 EXECUTION STRATEGIC GOALS: 2021 2022 2024 • Bank is progressing with the execution of its 3-year business Number of active strategy adopted for the period 2022 to 2024. retail clients (thsnd.) 2 694 2 887 >3 000 • Operationalisation of the strategy is based on an intense program
Slide 9: Financial highlights of 4Q22 / FY 2022
FINANCIAL HIGHLIGHTS OF 4Q22 / FY 2022 Quarterly net profit of PLN 249m in 4Q22. Adjusted profit for 2022 of PLN 2.24bn, up 99% y/y. Net profit Net profit w/o extraordinary* items (PLNmn) 11.0% 21.5% ROE adjusted* +111% +9% -16.3% -17.5% ROE reported 619 673 491 458 321 318 (PLNmn) 226 259 249 +99%
Slide 10: Interest and commission income
INTEREST AND COMMISSION INCOME NII as a key profitability driver in 2022 with y/y growth of 72%. Quarterly NIM at 4.63% after its peak in 3Q22. Net interest income* Interest on loans* and deposits (quarterly average) (PLNmn) +72% +23% including cost 8.32% of credit holidays 7.76% 6.39% 4.76% 4.79% 4
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 -83 27% 11% w/o BFG/IPS 7,493 10% 7,238 7,148 7,035 6,942 6,860 6,842 6,735 6,735 6,602 6,450 6,454 12% 6,366 6,245 6,211 6,139 6,325 6,13
Slide 12: Asset quality
ASSET QUALITY Strong credit quality and low cost of risk Cost of risk Impaired loans (IFRS9 stage 3 &POCI) (bp) 10.9% 10.9% 11.2% 10.6% 10.4% 10.3% 10.1% 9.7% 37 44 Total loans 48 57 Retail 4.9% 4.7% 4.7% 4.4% 4.4% 4.5% 4.5% 4.3% 1 2 Companies 4.6% 4.1% 3.9% 3.9% 4.1% (PLNmn) 4.0% 3.8% 3.1% 2.4% 2.3
Slide 13: Liquidity and capital
LIQUIDITY AND CAPITAL Capital adequacy ratios recovered and are clearly above the regulatory thresholds. Strong liquidity position. Liquidity indicators Group capital ratios 223% 19.4% 18.7% 178% 184% 18.2% 174% 165% 17.1% 158% 16.3% 16.0% 150% 151% 15.6% 15.1% 15.2% 14.0% 14.4% 13.5% 13.5% 13.5% 12
Slide 14: 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 -17% 4,500 4,094 20.4%19.1% 4,000 3,782 3,498 -17% 3,500 3,2163
Slide 15: FX-mortgage portfolio (2/2)
FX-MORTGAGE PORTFOLIO (2/2) Number of amicable settlements dropped but remained 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) 46.8% 46.8% 50% 44.2% 41.3% 41.3% 36.3% 40% 36.3% 30.9%
Slide 16: Presentation of 4Q22/2022 preliminary results: Business development
02 PRESENTATION OF 4Q22/2022 PRELIMINARY RESULTS Business development 16
Slide 17: Business highlights of 2022
BUSINESS HIGHLIGHTS OF 2022 Good dynamics of deposits and customer acquisition despite deceleration in lending. RWA management in focus. Customer deposits PLN loans PLN mortgage loans +7% y/y +1% y/y +4% y/y Debit cards Active retail customers Companies’ Active digitalportfolio customers +206k y/y 2
Slide 18: Loans and customer funds
LOANS AND CUSTOMER FUNDS Deceleration in loans. Good growth in deposits. Loan portfolio of the Group (net) Customer deposits (PLNmn) -3% +1% y/y without FX loans +7% 0% +15% -2% 4% +4% (PLNmn) 78,603 78,703 79,342 78,965 76,565 97,305 96,122 97,771 98,039 91,448 15,833 15,649 15,653 15,798 15,911 Co
Slide 19: Retail business – loans and customer funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS Slowdown in loans. Deposits grew 4% y/y. Retail loans (gross) Retail customer funds -3% 0% (PLNmn) +3% y/y without FX loans +1% -28% +4% (PLNmn) +100% -13% 61,503 61,470 61,463 60,815 59,903 74,960 72,160 71,952 73,266 75,217 17,215 17,060 16,958 17,216 Con
Slide 20: Retail banking - number of customers and accounts
RETAIL BANKING - NUMBER OF CUSTOMERS AND ACCOUNTS Steady growth of customers and cards Active retail clients Active micro-business clients (thousand) (thousand) +193 +14 +28 119 122 125 128 2,887 106 109 111 114 2,805 2,859 2,694 2,739 2,611 2,632 2,664 31/03/21 30/06/21 30/09/21 31/12/21 31/03/22 3
Slide 21: Mobility and convenience with the app
MOBILITY AND CONVENIENCE WITH THE APP Growing number of customers for whom the mobile app is the first channel of access to the bank DIGITAL CHANNELS USERS MOBILE PAYMENTS 732.3 million 1.56mn +80% BLIK users in 2H 2022 In numer of BLIK P2P transfers (+26% y/y) in 2H22 v. 2H21 times customers logged
Slide 22: Innovations for retail customers
INNOVATIONS FOR RETAIL CUSTOMERS In 4Q22 we enriched electronic channels with more solutions that are useful in everyday life CASH LOAN FOR MILLENNIUM ID CYBER-SECURITY EDUCATION – NEW-TO-BANK QUIZZES AND VIDEOS CLIENTS We have made available on the website an Our customers can easily and securely W
Slide 23: Innovations for business
INNOVATIONS FOR BUSINESS In a difficult time for the economy, we support future and current entrepreneurs. BUSINESS OPENING IN ONLINE BUSINESS LOAN AND MOBILE BANKING ONLINE APPLICATION Bank Millennium supports entrepreneurial Customers who run a sole proprietorship can customers. Now, they can regi
Slide 24: Bank Millennium is the best digital bank in Poland according to Newsweek
BANK MILLENNIUM IS THE BEST DIGITAL BANK IN POLAND ACCORDING TO NEWSWEEK 1st in the “Remote Banking” category and 2nd in the “Bank for Mr. Kowalski” main category INTERNATIONAL PRIZES AND AWARDS FOR DIGITAL CHANNELS IN 2022 GLOBAL FINANCE: The Best Consumer Digital Bank in Poland Awards in three sub
Slide 25: Goodie – smartshopping platform of Bank Millennium
GOODIE – SMARTSHOPING PLATFORM OF BANK MILLENNIUM Development and promotions for cashback users Since 2018: 3.1mn 2022: 420,000 app downloads app downloads PLN1.7bn PLN750mn generated cashback turnover generated cashback turnover PLN37mn PLN14mn amount of cashback amount of cashback 13mn 5.2mn cashb
Slide 26: Companies business – deposits and loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Slight decrease of corporate portfolio in line with RWA focus. Cconsiderable y/y growth of deposits. Loans to companies (gross) Companies deposits (PLNmn) -2% (PLNmn) +15% -5% +84% +3% -11% -5% 19,711 20,263 20,690 33,033 30,957 19,540 19,122 Factoring 30,903
Slide 27: Companies business – loans and transactions
COMPANIES BUSINESS – LOANS AND TRANSACTIONS Deceleration of growth in leasing and factoring. Steady growth of transactions. Leasing – new sales Factoring – turnover (PLNmn) (PLNmn) -9% 0% 27,196 27,291 3,877 3,543 1,022 1,017 1,076 6,487 6,896 6,568 7,245 6,661 7,006 6,860 6,764 762 856 905 937 845
Slide 28: Products and improvements for corporate banking clients
PRODUCTS AND IMPROVEMENTS FOR CORPORATE BANKING CLIENTS We deliver comprehensive solutions based on modern technologies and are focusing on digitisation and digitalisation of business processes MILLENET FOR COMPANIES We have expanded the module of exchange of digital documents as regards electronic
Slide 29: Appendices
03 PRESENTATION OF 4Q22/2022 PRELIMINARY RESULTS Appendices 29
Slide 30: Macroeconomic overview: Economy
MACROECONOMIC OVERVIEW Economy Economic growth in Poland slowed to Data from real economy (% y/y) PMI indexes for Poland and Germany (pts) estimated 1.6% y/y in 4Q22 and in the whole year reached 4.7% compared to 6.8% in 2021. High inflation and high interest rates reduced real growth of consumption
Slide 31: Macroeconomic overview: Financial markets
MACROECONOMIC OVERVIEW Financial markets Evolution of FX rates WIBOR 3M and market expectations (%) The Monetary Policy Council hiked a reference rate to 6.75% in September 2022 and switched to wait-and-see approach that has been adopted due to the mounting risks for economic activity in coming quar
Slide 32: Macroeconomic overview: Monetary aggregates
MACROECONOMIC OVERVIEW Monetary aggregates Loans to households Mortgage loans Loans to companies Demand for loans is (PLN bn, % y/y) (PLN bn, % y/y) (PLN bn, % y/y) declining both in households’ and corporates’ sector amid high interest rates and lower economic activity. Consumer and mortgage loans
Slide 33: Ratings and market ratios
RATINGS AND MARKET RATIOS 4Q22 brought mixed performance of Polish equities with recovery of indices in November and December 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 Excha
Slide 34: ESG activities
ESG ACTIVITIES Two New Head Offices of Bank Millennium in Gdańsk in the spirit of sustainable development Substantive Partners: • Patent Office of the Republic of Poland • University of Science and Technology in Cracow • Warsaw School of Economics • 10.2022 premiere of the Report "Eco-index Millenni
Slide 35: Most important awards and achievements of Bank Millennium in 4Q22
THE MOST IMPORTANT AWARDS AND ACHIEVEMENTS OF BANK MILLENNIUM in 4Q22 Fantastic people, great digital banking and remote service quality confirmed by independent rankings and competitions Bank Millennium with the title of Reliable Beata Krupińska – Marketing Director of the Bank Millennium is the be
Slide 36: Synthetic P&L account
SYNTHETIC P&L ACCOUNT SYNTHETIC P&L ACCOUNT Reported results 2021 2022 Change Y/Y 3Q22 4Q22 Change Q/Q Net interest income 2 713 3 337 23% -152 1 349 - Including cost of credit holidays 0 -1 324 - -1 423 99 - Net interest income without credit 2 713 4 661 72% 1 271 1 250 -2% holidays Net commission
Slide 37: Balance sheet
BALANCE SHEET 31.12.2021 30.09.2022 31.12.2022 Change y/y ASSETS Cash and balances with the Central Bank 3 180 10 132 9 536 200% Loans and advances to banks 771 1 186 733 -5% Loans and advances to customers 78 603 78 965 76 565 -3% Amounts due from reverse repo trans. 269 5 5 -98% Debt securities 18
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