Bank Millennium Sa · GPW:MIL
Bank Millennium Sa — Q3 2023 Earnings Presentation
40 slides from Bank Millennium Sa's earnings presentation, Oct 27, 2023
Slide 1: Presentation 3Q23/9M23 results
Presentation 3Q23/9M23 results 27 October 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: Main achievements during the first 9 months of 2023
MAIN ACHIEVEMENTS DURING THE FIRST 9 MONTHS OF 2023 CAPITAL & MREL PROFITABILITY • Significant improvement of capital ratios. At the end of September’23 • The fourth quarter in a row with positive net result. YTD net profit of Group’s TCR/T1 ratios were 16.6%/13.5% respectively, 4.0ppt/3.3ppt above
Slide 5: Presentation of 3Q23/9M23 results: Financial performance
01 PRESENTATION OF 3Q23/9M23 RESULTS Financial performance 5
Slide 6: Key profit & loss items
KEY PROFIT & LOSS ITEMS PLNmn 9M23 9M22 Change Y/Y 3Q23 2Q23 Change Q/Q Net interest income 3 970 1 988 100% 1 372 1 336 3% Net interest income without credit holidays 3 970 3 411 16% 16% 1 372 1 336 3% Net commission income 592 606 -2% 188 203 -7% Total operating income (without credit 32% 5 156 3
Slide 7: Key balance sheet and business items
KEY BALANCE SHEET AND BUSINESS ITEMS PLNmn Sep. 23 Sep. 22 Change Y/Y June 23 Change Q/Q Active customers (ths) 2 981 2 859 122 2 949 32 inc. on-line and mobile 2 664 2 483 181 181 2 618 46 Customer Funds 113 593 104 169 9% 107 831 5% Deposits 106 176 97 771 9% 100 597 6% Deposits of individuals 74
Slide 8: Financial highlights of 9M23
FINANCIAL HIGHLIGHTS OF 9M23 Strong core profitability, efficiency and asset quality. Fourth consecutive quarter of material positive net results despite elevated costs related to FX-mortgage portfolio. Material net profit in 9M23 Adjusted net profit** NII and NIM strongly up* PLN461mn +44% y/y +16%
Slide 9: Strategy 22-24: on the way through Inspired by People strategy
STRATEGY 22-24 | ON THE WAY THROUGH “INSPIRED BY PEOPLE” STRATEGY We are on the right track to achieve the strategic objectives CLIENT FINANCE RISK & CHF KEY ACHIEVEMENTS (3Q23) • successful EUR500mn issue MREL bonds • conclusion of leasing securitisation transaction NUMBER OF SHARE OF SHARE OF ANNU
Slide 10: Financial highlights of 9M23
FINANCIAL HIGHLIGHTS OF 9M23 Material positive reported net result of PLN 461mn in 9M23. Adjusted profit of PLN2,252mn, up 44% y/y. Reported ROE of 10%. Net profit Net profit w/o extraordinary* items (PLNmn) +30% 20.7% 22.6% ROE adjusted* 4% 776 804 -28.1% 10.0% ROE reported 619 671 672 491 458 +44%
Slide 11: Interest and commission income
INTEREST AND COMMISSION INCOME NII still grew 3% q/q, although y/y growth rate decelerated to 16%. NIM slightly lower in 3Q23 due IEA mix change; cost of deposits was kept unchanged Net interest income* Interest on loans* and deposits (quarterly average) (PLNmn) 16% 8.33% 8.62% 8.76% 8.82% 7.76% 6.3
Slide 12: Cost efficiency
COST EFFICIENCY Operating costs (without BFG/IPS) grew 14% y/y. C/I at record low of 29%, supported by considerable growth in operating income. Operating cost (PLNmn) Employees -2 -10% 14% w/o BFG/IPS 16% 7,035 6,942 6,842 6,735 6,778 6,860 6,815 6,746 6,776 13% 6,366 6,245 6,211 6,219 6,325 6,306 6
Slide 13: Asset quality
ASSET QUALITY Strong credit quality, low cost of credit risk and much increased coverage of NPLs Cost of risk (bp) Impaired loans (IFRS9 stage 3 &POCI) 44 40 11.2% 10.6% Total loans 10.4% 10.3% 10.1% 10.2% 10.1% 10.4% 9.7% 54 49 Retail 10 9 Companies 4.7% 4.4% 4.4% 4.3% 4.5% 4.5% 4.7% 4.5% 4.7% 3.1%
Slide 14: Capital ratios, MREL requirements and liquidity
CAPITAL RATIOS, MREL REQUIREMENTS AND LIQUIDITY Capital adequacy ratios improved further, widening the surplus above regulatory thresholds. Interim MREL requirements met. Group capital ratios Capital requirement vs. actual ratios as on 30 Sep. ’23 (Group) • Widening capital surplus (3.3/4.0 ppt of T
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 less alloc. legal risk provisions) 20.4%19.1% 4,698 Active agreements: 18.3% 4,406 17.0% 4,094 34.1k (-4% q/q /
Slide 16: FX-mortgage portfolio (2/2)
FX-MORTGAGE PORTFOLIO (2/2) Number of amicable settlements to date exceeded 20k, equivalent of >1/3 of active agreements at YE19 Provisions against legal risk as % of FX-mortgage book* Legal risk provisions/outstanding FX-mortgage book** (% of gross loans) 73.5% 70.8% 73.5% 64.7% 59.8% 55.8% 46.8% 4
Slide 17: Presentation of 3Q23/9M23 results: Business development
02 PRESENTATION OF 3Q23/9M23 RESULTS Business development 17
Slide 18: Business highlights of 9M23
BUSINESS HIGHLIGHTS OF 9M23 Good dynamics of deposits and customer acquisition despite deceleration in lending. RWA management in focus. Customer deposits Retail deposits Cash loan sales in 9M23 +9% y/y +11% y/y +19% y/y Payment cards Active retail customers Companies’ Active digitalportfolio custom
Slide 19: Loans and customer funds
LOANS AND CUSTOMER FUNDS Contraction in corporate loans, consumer loans +5% y/y. Growth in deposits +9% y/ydriven by retail segment. Loan portfolio of the Group (net) Customer deposits (PLNmn) -1% y/y without FX -6% +9% mortg. loans +5% +3% -12% +11% +2% (PLNmn) 78,965 100,876 100,597 106,176 76,565
Slide 20: Retail business – loans and customer funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS Growing consumer loans but growth in PLN mortgages decelerated. Deposits grew visibly by 11% y/y. Retail loans (gross) Retail customer funds -4% +11% (PLNmn) +4% y/y without FX loans +5% +16% +3% (PLNmn) +30% +4% 60,815 59,903 58,613 58,047 58,308 78,948 81
Slide 21: Retail banking - number of customers and accounts
RETAIL BANKING - NUMBER OF CUSTOMERS AND ACCOUNTS Considerable growth of new customers, cards and accounts Active retail clients Active micro-business clients (thousand) (thousand) +122 +12 +32 137 2,949 2,981 134 2,859 2,887 2,923 131 128 125 30/09/22 31/12/22 31/03/23 30/06/23 30/09/23 30/09/22 31
Slide 22: Digital users
DIGITAL USERS Convenient and secure solutions, available every day, are the key to digital channels success DIGITAL CHANNELS ACTIVE USERS 2.66mn 4.8 Active digital users* 231mn 500K (+7% y/y) transactions times users logged in 4.8 per month with to mobile app in 3Q biometric authorization 4.9 2.43mn
Slide 23: Online sales and new initiatives
ONLINE SALES We optimise processes so that customers can benefit from the bank's offering end to end remotely CASH LOAN ACCOUNTS New initiatives For individual and business customers 82% 37% Digital share in cash Digital share in MILLENNIUM ACCOUNTING loan sales in 3Q23 current accounts acqusition i
Slide 24: Mobile payments and VAS
MOBILE PAYMENTS AND VAS We respond to changes in behaviour of customers that choose mobile banking every day MOBILE PAYMENTS 640,000 of our customers pay by phone or smartwatch on regular basis. Monthly they make 20 million transactions for the amount of PLN 1 billion. Customers can use HCE The numb
Slide 25: Goodie - smartshopping platform of Bank Millennium
GOODIE - SMARTSHOPING PLATFORM OF BANK MILLENNIUM Development of goodie cashback and increase in sales of goodie gift cards 3Q23: PLN3mn refunds were paid to the users 560% increase y/y the number of transactions made in „Refunds for purchases” service in Bank Millennium 12% increase y/y sales of go
Slide 26: Companies business – deposits and loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Contration in corporate portfolio due to RWA limitations. Corporate deposits grew +3% y/y. Growing transactions and wider focus on SME Loans to companies (gross) Companies' deposits (PLNmn) -12% (PLNmn) +3% -17% +7% -5% 0% -15% -2% +11% 20,690 30,903 30,774 31
Slide 27: Companies business – leasing, factoring and transactions
COMPANIES BUSINESS – LEASING, FACTORING AND TRANSACTIONS Some contraction in leasing and factoring due to tight RWA management. Modest growth of transactions. Leasing – new sales Factoring – turnover (PLNmn) (PLNmn) -16% -6% 2,698 20,527 19,307 2,266 856 905 937 845 804 6,661 7,006 6,860 6,764 6,527
Slide 28: Corporate banking
CORPORATE BANKING We support our customers' green transformation and digital solutions Ecological loan We develop digital customer service We launched a loan with support in the form of a non- returnable ecological bonus, covering up to 80% of We have introduced further functionalities in the eligib
Slide 29: Novelties and improvements for corporate banking clients
NOVELTIES AND IMPROVEMENTS FOR CORPORATE BANKING CLIENTS Elevating the digital customer experience NEW MOBILE APP DIGITALISATION In May, we implemented a new mobile application, which we continue to develop and 61% ofa qualified loan agreements are signed with electronic signature expand with new fu
Slide 30: Presentation of 3Q23/9M23 results: Appendices
03 PRESENTATION OF 3Q23/9M23 RESULTS Appendices 30
Slide 31: Macroeconomic overview: Economy
MACROECONOMIC OVERVIEW Economy High-frequency data for Jul-Sep’23 suggest Data from real economy (% y/y) Consumers’ sentiment indicators (pts) that the Polish economy is passing the bottom of the business cycle. We estimate that in 3Q23 GDP growth rate (both q/q and y/y) returned to a positive terri
Slide 32: Macroeconomic overview: Financial markets
MACROECONOMIC OVERVIEW Financial markets Evolution of FX rates WIBOR 3M and market expectations (%) The Monetary Policy Council started in 3Q23 an interest rates cut cycle. It has been adopted due to the faster than expected drop of CPI inflation. Because of the aggressive monetary policy loosening
Slide 33: Macroeconomic overview: Monetary aggregates
MACROECONOMIC OVERVIEW Monetary aggregates Loans to households Mortgage loans Loans to companies (PLN bn, % y/y) (PLN bn, % y/y) (PLN bn, % y/y) The total value of loans in the economy increased by PLN 8.5 bn in 3Q23. This was primarily due to the increase in loans to households. The value of loans
Slide 34: Ratings and market ratios
RATINGS AND MARKET RATIOS 3Q23 brough a correction on WSE but ytd banks were up nonetheless Annual change of Bank Millennium share performance vs. WIG Banks index Ratings of Bank Millennium On March 24th, 2023 Moody’s rating agency confirmed Bank’s long- and short- term deposit ratings at Baa3/P-3 a
Slide 35: ESG activities
ESG ACTIVITIES Eco-volunteering activity, i.e. a consecutive stage of sports and environmental challenge under • During the two-month Our People'23:Save the Planet campaign, Millennium employees collected PLN 250,000 for eco-volunteering for the Bank • Bank Millennium acceded to the United Nations M
Slide 36: The most important awards and achievements in 3Q2023
THE MOST IMPORTANT AWARDS AND ACHIEVEMENTS OF BANK MILLENNIUM IN 3Q2023 Best digital banking, excellent communication with clients and successes in actions for sustainable development http://swiatmillennium.pl.bcp corp.net/wp- content/uploads/2022/10/przy jazny-bank-newsweeka-24- Bank Bank Millenniu
Slide 37: Award for digital channels
AWARD FOR DIGITAL CHANNELS Best Digital Bank in Poland for 2023 and 12 subcategories won in 2023 Global Finance magazine ranking • The Best Consumer Digital Bank in Poland for 2023 • The Best SME Banking in Poland for 2023 • The Best Consumer User Experience (UX) Design in Central and Eastern Europe
Slide 38: Synthetic P&L account
SYNTHETIC P&L ACCOUNT SYNTHETIC P&L ACCOUNT Reported results 9M22 9M23 Change Y/Y 2Q23 3Q23 Change Q/Q Net interest income 1 988 3 970 100% 1 336 1 372 3% Net interest income without credit 3 411 3 970 16% 1 336 1 372 3% holidays Net commission income 606 592 -2% 203 188 -7% Other non-interest incom
Slide 39: Balance sheet
BALANCE SHEET PLNmn 30.09.2022 30.06.2023 30.09.2023 Change y/y ASSETS Cash and balances with the Central Bank 10 132 6 769 4 581 -55% Loans and advances to banks 1 186 532 534 -55% Loans and advances to customers 78 965 74 152 73 983 -6% Amounts due from reverse repo trans. 5 48 2 012 44359% Debt s
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