Bank Millennium Sa · GPW:MIL
Bank Millennium Sa — Q1 2024 Earnings Presentation
40 slides from Bank Millennium Sa's earnings presentation, May 10, 2024
Slide 1: 1Q24 results
1Q24 results 10 May 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: Main achievements during 1Q24
MAIN ACHIEVEMENTS DURING 1Q24 CAPITAL & MREL PROFITABILITY • The sixth quarter in a row with positive net result. YTD reported net profit • Solid and stable level of capital ratios at Group level - Tier1 ratio improved of PLN128mn, PLN668mn excluding non-recurring events by 18 bps to 14.9% and TCR s
Slide 5: 1Q24 Results: Financial performance
01 1Q24 RESULTS Financial performance 5
Slide 6: Key profit & loss items
KEY PROFIT & LOSS ITEMS PLNmn 1Q24 1Q23 Change Y/Y 4Q23 Change Q/Q Net interest income 1 354 1 262 7% 7% 1 284 5% Net commission income 200 201 -1% 190 5% Total operating income 1 417 2 057 -31% 1 576 -10% Total operating cost -598 -522 15% -529 13% Costs without BFG/IPS -537 -438 23% -529 2% Loan l
Slide 7: Key balance sheet and business items
KEY BALANCE SHEET AND BUSINESS ITEMS PLNmn Mar. 24 Mar. 23 Change Y/Y Dec. 23 Change Q/Q Active customers (ths) 3 045 2 923 122 3 003 42 incl. on-line and mobile 2 774 2 598 176 176 2 702 72 Customer Funds 122 053 107 701 13% 115 316 6% Deposits 113 184 100 876 12% 107 246 6% Deposits of individuals
Slide 8: Highlights of 1Q24
HIGHLIGHTS OF 1Q24 2024 began with further improvement in core profitability and high efficiency. Strong asset quality and liquidity. Material net profit despite accounting for BFG resolution fund fee and costs related to FX-mortgage portfolio. Reported net profit KEY ACHIEVEMENTS (1Q24) PLN128mn NI
Slide 9: Strategy 22-24 | On the way through "Inspired by People" strategy
STRATEGY 22-24 | ON THE WAY THROUGH “INSPIRED BY PEOPLE” STRATEGY Last year of current strategic cycle started on a strong note. The core objective - ”FX mortgage share in bank loans” already below 10%, while robust business development continued. Already planning the next strategic cycle. CLIENT FI
Slide 10: Financial highlights of 1Q24
FINANCIAL HIGHLIGHTS OF 1Q24 Material reported net profit of PLN128mn in 1Q24 (y/y comps distorted by high one-off gains in 1Q23). Adjusted net profit of PLN714mn. Adjusted ROE of c. 18%, slightly lower as a consequence of higher equity. Net profit Net profit w/o extraordinary* items (PLNmn) 22.1% 1
Slide 11: Interest and commission income
INTEREST AND COMMISSION INCOME Considerable NII annual growth rate of 7% with stable commissions. Growth of NIM in 1Q24 due to volumes growth, lower cost of deposits and higher yields on bonds. Net interest income* Interest on loans* and deposits (quarterly average) (PLNmn) +7% 8.24% 8.47% 8.63% 8.7
Slide 12: Efficiency
EFFICIENCY Operating costs grew 15% y/y. C/I at the low level of 32%, supported by considerable growth in operating income. Operating cost (PLNmn) Employees -84 15% 6,842 6,735 6,778 6,860 6,815 6,746 6,776 6,747 6,731 29% 6,211 6,219 6,325 6,306 6,241 6,306 6,320 6,330 18% 6,139 +24 28.7% 31.8% Cos
Slide 13: Asset quality
ASSET QUALITY Strong credit quality, cost of credit risk identical to 1Q23 and higher coverage of NPLs Coverage ratio Impaired loans (IFRS9 stage 3 &POCI) 68% 73% 10.6% 10.3% 10.1% 10.2% 10.1% 10.4% Cost of risk (bp) 9.7% 9.8% 9.9% 63 63 Total loans 4.4% 4.3% 4.5% 4.5% 4.7% 4.5% 4.7% 4.6% 4.6% 81 67
Slide 14: Capital ratios, MREL requirements and liquidity
CAPITAL RATIOS, MREL REQUIREMENTS AND LIQUIDITY Capital adequacy ratios stabilised. Solid surplus above regulatory thresholds. Group capital ratios Capital requirement vs. actual ratios as on 31 March’24 (Group) Unprecedented organic rebuilding of capital ratios since Sept’22 18.1% 18.0% Surplus 5.8
Slide 15: 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 22.5k, equivalent to 37% 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 16: FX-mortgage portfolio (2/2)
FX-MORTGAGE PORTFOLIO (2/2) Outstanding balance of legal risk provisions down q/q on CHFPLN movements and growing use. Legal risk provisions / outstanding gross loans ratio at 91.5%. Provisions against legal risk* (PLNmn) Provisions against legal risk as % of FX-mortgage book* 6,9807,269 7,226 91.5%
Slide 17: 1Q24 Results: Business development
02 1Q24 RESULTS Business development 17
Slide 18: Business highlights of 1Q24
BUSINESS HIGHLIGHTS OF 1Q24 High growth of deposits. Growing customer acquisition, retail lending and leasing contracts. Customer deposits Consumer/PLN mortgage loans Leasing new sales in 1Q24 +12% y/y +7% / +5% y/y +14% y/y Payment cards Active retail customers Companies’ Active digitalportfolio cu
Slide 19: Loans and customer funds
LOANS AND CUSTOMER FUNDS Growth of consumer and mortgage loans. Companies’ portfolio grew slightly in 1Q24. Growth in deposits +12% y/y driven by retail segment. Investment products strongly up (30% y/y). Loan portfolio of the Group (net) Customer deposits (PLNmn) +2.4% y/y without FX -2% +12% mortg
Slide 20: Retail business – loans and customer funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS Growing consumer and PLN mortgage loans. High growth of deposits by 16% y/y. Retail loans (gross) Retail customer funds 0% +17% (PLNmn) +6% y/y without FX loans +7% +30% +5% (PLNmn) +38% 58,613 58,047 58,308 58,511 58,440 +6% 89,929 81,664 84,669 Consumer l
Slide 21: 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) +122 +16 +42 3,045 147 2,949 2,981 3,003 141 2,923 1
Slide 22: Digital users
DIGITAL USERS Electronic channels domination – steady growth of digital users and successes in CX INSTITUTION OF THE YEAR 2024 2.77mn Digital users* 1. award The best remote process of account (+7% y/y) opening 2. place The best mobile app 4. place The best online banking 2.55mn Mobile users** (+9%
Slide 23: Milleadministration
MILLEADMINISTRATION Success of Rodzina 800+ applications and a new application for people with disabilities FAMILY BENEFITS Our customers submitted almost 265,000 electronic applications for the 800+ benefit for the new benefit period, of which as many as 71% via mobile app. Bank Millennium is ranke
Slide 24: Sales in digital
SALES IN DIGITAL New omnichannel application form significantly supports the sale of credit cards in electronic channels CASH LOAN ACCOUNTS TERM DEPOSITS SUCCESS OF OUR OMNICHANNEL CREDIT CARD APPLICATION 80% 43% 95% Digital share in sales Digital share in sales in Digital share in ✓ Digital channel
Slide 25: Business online
BUSINESS ONLINE We support our customers in developing their own businesses • High acquisition of current +27% accounts in SOHO segment in in number of digital channels business accounts • Growing customer interest in opened online in 1Q24 vs. the process of registering 4Q23 one's own business - in
Slide 26: Goodie – Bank's smartshopping platform
GOODIE – BANK’S SMARTSHOPPING PLATFORM New brands in goodie cashback, increase in sales of eGift cards 1Q24: 60% increase y/y in parameters related to the number of cashback users 70% increase y/y in the number of transactions made via goodie cashback 50 new brands added to the goodie cashback servi
Slide 27: Companies business – deposits and loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Corporate loan portfolio already showed some rebound in 1Q24. Corporate deposits grew 4% y/y. Stronger focus on SME clients. Loans to companies (gross) Companies' deposits (PLNmn) -6% (PLNmn) +4% -11% +0% -4% +9% -7% +2% +5% 19,275 30,774 31,929 30,647 32,124
Slide 28: Companies business – leasing, factoring and transactions
COMPANIES BUSINESS – LEASING, FACTORING AND TRANSACTIONS Leasing contracts rebounded. Visible growth of clients’ transactions. Leasing – new sales Factoring – turnover (PLNmn) (PLNmn) +14% -1% +3% 6,527 6,621 6,626 6,451 6,158 863 886 776 804 686 -2% 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23 2Q23 3Q23 4Q23 1Q24
Slide 29: Changes in the offer for corporate banking clients
CHANGES IN THE OFFER FOR CORPORATE BANKING CLIENTS We are digitalizing service and introducing new guarantee programmes DIGITALISATION OF CUSTOMER SERVICE PROCESSES NEW GUARANTEE IN FACTORING TRANSACTIONS We have launched a new security - the KUKE S.A. guarantee. The new guarantee can be used to sec
Slide 30: Digital banking for corporate
DIGITAL BANKING FOR CORPORATE Our solutions, built based on the highest CX standards, are winning customer and market recognition UX CHANGES IN CREDIT PRODUCTS DISPLAY We have improved the handling of working capital, investment and revolving loans in Millenet for 4.6 Companies - we have added a vie
Slide 31: 1Q24 Results: Appendices
03 1Q24 RESULTS Appendices 31
Slide 32: Macroeconomic overview: Economy
MACROECONOMIC OVERVIEW Economy 1Q24 was a period of economic activity improvement in the Polish economy, Data from real economy (% y/y) Consumers’ sentiment indicators (pts) however the scale of recovery turned out to be slightly weaker than initial expectations. The main driver of the GDP growth wa
Slide 33: Macroeconomic overview: Financial markets
MACROECONOMIC OVERVIEW Financial markets Evolution of FX rates WIBOR 3M and market expectations (%) The Monetary Policy Council turned into more hawkish bias and communicates the stabilization of interest rates in coming months. In the Bank’s opinion the interest rates might be stable for whole 2024
Slide 34: 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 slowed in 1Q24. In March 2024, their value was higher by 7.2% y/y vs. 9.9% y/y in 4Q23. This slowdown is mainly
Slide 35: Ratings and market ratios
RATINGS AND MARKET RATIOS In 1Q24 on WSE good investor sentiment continued. Bank Millennium’s shares outperformed WIG Banks index. Ytd change of Bank Millennium share performance vs. WIG Banks index Bank Millennium shares +24% +22% No of shares: 1 213 116 777 (listed 1 213 008 137) Listed: on Warsaw
Slide 36: ESG activities
ESG ACTIVITIES Spreading awareness of sustainable development • The Bank's year-long internal proprietary Continued cooperation with Bank development program for the sales network and Gospodarstwa Krajowego the headquarters employees cooperating with ESG report of Bank Millennium and Bank • BiznesMa
Slide 37: Most important awards and achievements of Bank Millennium in 1Q2024
THE MOST IMPORTANT AWARDS AND ACHIEVEMENTS OF BANK MILLENNIUM in 1Q2024 Top Employer Poland 2024, the best bank in Poland, awards for best practices and standards in the area of sales and customer service http://swiatmillennium.pl.bcp corp.net/wp- content/uploads/2022/10/przy Bank Millennium employe
Slide 38: Synthetic P&L account
SYNTHETIC P&L ACCOUNT SYNTHETIC P&L ACCOUNT PLN million 1Q23 1Q24 Change Y/Y 4Q23 Change Q/Q Net interest income 1 262 1 354 7% 1 284 5% Net commission income 201 200 -1% 190 5% Other non-interest income 594 -137 - 92 - Operating Income 2 057 1 417 -31% 1 567 -10% General and administrative costs -4
Slide 39: Balance sheet
BALANCE SHEET 31.03.2023 31.12.2023 31.03.2024 Change y/y ASSETS Cash and balances with the Central Bank 5 452 5 095 4 937 -9% Loans and advances to banks 586 793 427 -27% Loans and advances to customers 75 380 73 643 73 911 -2% Amounts due from reverse repo trans. 0 1 163 431 - Debt securities 28 7
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