Bank Millennium Sa · GPW:MIL
Bank Millennium Sa — H1 2023 Earnings Presentation
40 slides from Bank Millennium Sa's earnings presentation, Jul 26, 2023
Slide 1: Presentation 2Q23/1H23 results
Presentation 2Q23/1H23 results 26 July 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: Financial performance
01 PRESENTATION OF 2Q23/1H23 results Financial performance 4
Slide 5: Key profit & loss items
KEY PROFIT & LOSS ITEMS PLNmn 1H23 1H22 Change Y/Y 2Q23 1Q23 Change Q/Q Net interest income 2 598 2 140 21% 21% 1 336 1 262 6% Net commission income 404 427 -5% 203 201 1% Total operating income 3 574 2 497 43% 43% 1 517 2 057 -26% Total costs -970 -1 163 -17% -448 -522 -14% Costs without BFG/IPS -9
Slide 6: Key balance sheet and business items
KEY BALANCE SHEET AND BUSINESS ITEMS PLNmn June 23 June 22 Change Y/Y Mar. 23 Change Q/Q Active customers (ths) 2 949 2 805 144 2 923 26 inc. on-line and mobile 2 618 2 418 200 200 2 598 20 Customer Funds 107 831 102 909 5% 107 701 0% Deposits 100 597 96 122 5% 100 876 0% Deposits of individuals 71
Slide 7: Financial highlights of 1H23
FINANCIAL HIGHLIGHTS OF 1H23 Strong core profitability, efficiency and asset quality. Another quarter of the year (and third since 4Q22) of material positive net results despite elevated costs related to FX-mortgage portfolio. Positive net profit in 1H23 Adjusted net profit* NII and NIM strongly up
Slide 8: Strategy 22-24 | Half-way through "Inspired by People" strategy
STRATEGY 22-24 | HALF-WAY THROUGH “INSPIRED BY PEOPLE” STRATEGY We are on the right track to achieve the strategic objectives CLIENT FINANCE RISK & CHF NUMBER OF SHARE OF SHARE OF ANNUAL NON- SHARE OF FX COST / RETURN ON RETAIL ACTIVE DIGITAL DIGITAL PROFIT PERFORMING MORTGAGE IN INCOME2 EQUITY2 CLI
Slide 9: Strategy 22-24 | Half-way through "Inspired by People" strategy
STRATEGY 22-24 | HALF-WAY THROUGH “INSPIRED BY PEOPLE” STRATEGY We have shown strong customer growth and steady progress in business digitalisation, driven by two key success factors: TOP quality of service and high employees' satisfaction. HIGHLIGHTS: ACHIEVEMENTS DELIVERED INITIATIVES STARTED / RO
Slide 10: Financial highlights of 1H23
FINANCIAL HIGHLIGHTS OF 1H23 Material positive reported net result of PLN 358mn in 1H23. Adjusted profit of PLN1,448mn, up 53% y/y. Reported ROE of 12.4%. Net profit Net profit w/o extraordinary* items (PLNmn) +69% 19.4% 22.7% ROE adjusted* 16% 776 619 671 672 -8.2% 12.4% ROE reported 491 458 +53% (
Slide 11: Interest and commission income
INTEREST AND COMMISSION INCOME Further growth of NII of 6% q/q in 2Q23. 1H23 NII with solid y/y growth of 21%. Record high NIM in 2Q23: 4.85% Net interest income* Interest on loans* and deposits (quarterly average) (PLNmn) 21% 8.33% 8.62% 8.76% 7.76% 6.39% +6% 4.76% 4.78% 4.63% 4.58% 4.85% 3.33% 3.3
Slide 12: Cost efficiency
COST EFFICIENCY Operating costs (without BFG/IPS) grew 15% y/y. C/I improved to record low level of 28.8% supported by strong growth in operating income. Operating cost (PLNmn) Employees +11 -17% 15% w/o BFG/IPS 7,148 7,035 18% 6,942 6,842 6,778 6,860 6,815 6,735 6,746 6,454 6,366 13% 6,245 6,211 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) 37 45 10.9% 11.2% 10.6% Total loans 10.4% 10.3% 10.1% 10.2% 10.1% 9.7% 49 54 Retail 14 14 Companies 4.7% 4.7% 4.4% 4.4% 4.3% 4.5% 4.5% 4.7% 4.5% 3.1
Slide 14: Liquidity and capital
LIQUIDITY AND CAPITAL Capital adequacy ratios improved further, widening the surplus above regulatory thresholds. Strong liquidity position. Liquidity indicators Group capital ratios* 17.1% 16.0% 260% 15.2% 223% 228% 14.4% 14.8% 14.0% 14.1% 13.5% 13.5% 13.5% 158% 165% 12.9% 12.7% 12.7% 150% 151% 12.
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) 5,000 4,698 4,406 20.4%19.1% 4,500 4,094 18.3% 4,000 3,782 17.0% 3,498 -15% 3
Slide 16: FX-mortgage portfolio (2/2)
FX-MORTGAGE PORTFOLIO (2/2) Number of amicable settlements reached 19.5k to date, nearly 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) 64.7% 64.7% 58.0% 55.8% 55.8% 46.8% 49.1% 41.3% 36
Slide 17: Business development
02 PRESENTATION OF 2Q23/1H23 results Business development 17
Slide 18: Business highlights of 1H23
BUSINESS HIGHLIGHTS OF 1H23 Good dynamics of deposits and customer acquisition despite deceleration in lending. RWA management in focus. Customer deposits Retail deposits Cash loan sales in 1H23 +5% y/y +10% y/y +25% y/y Payment cards Active retail customers Companies’ Active digitalportfolio custom
Slide 19: Loans and customer funds
LOANS AND CUSTOMER FUNDS Slowdown in corporate loans, consumer loans +4% y/y. Growth in deposits driven by retail segment. Loan portfolio of the Group (net) Customer deposits (PLNmn) -2% y/y without FX -7% +5% mortg. loans +4% -7% -8% +10% -1% (PLNmn) 79,342 78,965 76,565 75,380 96,122 97,771 98,039
Slide 20: Retail business – loans and customer funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS Growing consumer loans but PLN mortgage decelerated. Deposits grew visibly by 10% y/y. Retail loans (gross) Retail customer funds -6% +10% (PLNmn) +0.3% y/y without FX loans +3% +7% -1% (PLNmn) +54% -2% 61,463 60,815 59,903 58,613 78,948 57,766 73,266 75,21
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) +144 +12 +26 2,923 2,949 134 2,859 2,887 131 2,805 128 125 122 30/06/22 30/09/22 31/12/22 31/03/23 30/06/23 30/06/22 30
Slide 22: Customers digitalisation
CUSTOMERS DIGITALISATION Personalised and contextualised approach to customer activation in digital channels ACTIVE USERS SYSTEMATIC APPROACH TO DIGITALISATION 2.62mn ✓ Extension of digitalisation efforts to all customers – Active digital users activating customers in mobile banking and (+8% y/y) ex
Slide 23: Digital sales
DIGITAL SALES Omnichannel processes and personalised campaigns as a base of stable increase in digital sales CASH LOANS ACCOUNTS TERM DEPOSITS 81% +18% 41% +21% 96% +24% Digital share in cash In number of cash Digital share in In number of accounts Digital share in In number of loan sales in 1H23 lo
Slide 24: New features for retail customers
NEW FEATURES FOR RETAIL CUSTOMERS Convenient and secure solutions for daily banking Biometric authorization New BLIK services We are continuously In the first half of the year, we made available the expanding the use of BLIK P2P transfer request and bill sharing, which biometrics in the mobile app.
Slide 25: goodie – smartshopping platform of Bank Millennium
GOODIE – SMARTSHOPING PLATFORM OF BANK MILLENNIUM Development and promotions for cashback users 1H23: 113% increase y/y The numer of acquired cashback users PLN2bn turnover exceeded in the goodie cashback service PLN40mn cashback paid to goodie cashback users accounts from the beginning of the servi
Slide 26: Companies business – deposits and loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Stagnation in corporate portfolio due to RWA limitations. Corporate term deposits slid in 2Q23 as Bank’s liqudity improves. Growing transactions and wider focus on SME Loans to companies (gross) Companies' deposits (PLNmn) -8% (PLNmn) -7% -12% +15% -2% -20% -1
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. Steady growth of transactions. Leasing – new sales Factoring – turnover (PLNmn) (PLNmn) -10% -4% 13,667 13,149 1,761 1,581 +4% +1% 905 937 6,661 7,006 6,860 6,764 6,527 6,6
Slide 28: New mobile app for companies
NEW MOBILE APP FOR COMPANIES Convenient and intuitive tool for corporate banking ✓ In May 2023 we made available the new Bank Millennium app for companies What will customers find in the app? 400 weekly Biometric login, convenient shortcuts, ✓ We tested the application and its customisable dashboard
Slide 29: 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 30: Appendices
03 PRESENTATION OF 2Q23/1H23 results Appendices 30
Slide 31: Macroeconomic overview: Economy
MACROECONOMIC OVERVIEW Economy Polish, but also global economy, remain under a Data from real economy (% y/y) PMI indices for Poland and Germany (pts) negative impact of high inflation and high interest rates which was mostly reflected in lower consumption, especially of goods. As a consequence, ann
Slide 32: Macroeconomic overview: Financial markets
MACROECONOMIC OVERVIEW Financial markets Evolution of FX rates WIBOR 3M and market expectations (%) The Monetary Policy Council continued in 2Q23 a wait-and-see approach that has been adopted due to the mounting risks for economic activity, but also stubbornly high inflation. The rhetoric of the MPC
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 remained relatively stable in 2Q23. This is due, on the one hand, to the repayment of liabilities, and, on the othe
Slide 34: Ratings and market ratios
RATINGS AND MARKET RATIOS In 2Q23 Polish banks rebounded on a combination of easing concerns over the shape of the European banking sector, strong results of Polish banks and implied attractive valuations. Annual change of Bank Millennium share performance vs. WIG Banks index Bank Millennium shares
Slide 35: ESG activities
ESG ACTIVITIES Premiere of the report "Green Finance in Poland 2023" with the article "Banking in green" by Joao Bras Jorge, President of BM The Bank Millennium • The article discusses the and Bank Millennium bank's commitment to Group ESG Report for sustainable development. 2022 was published - it
Slide 36: ESG activities
ESG ACTIVITIES A range of products aimed at supporting sustainable development: The most important awards for ESG activities: Millennium Docs Against Gravity • Bank Millennium awarded the title of • The jubilee 20th edition of MDAG took place on Europe's Climate Leader 2023 in Financial - Bank Mille
Slide 37: The most important awards and achievements of Bank Millennium after 2Q23
THE MOST IMPORTANT AWARDS AND ACHIEVEMENTS OF BANK MILLENNIUM AFTER 2Q23 The best multi-channel service quality and HR successes confirmed by independent rankings and competitions http://swiatmillennium.pl.bcp corp.net/wp- content/uploads/2022/10/przy We won the Golden Banker! 2nd place in the Best
Slide 38: Synthetic P&L account
SYNTHETIC P&L ACCOUNT SYNTHETIC P&L ACCOUNT Reported results (PLN milion) 1H22 1H23 Change Y/Y 1Q23 2Q23 Change Q/Q Net interest income 2 140 2 598 21% 1 262 1 336 - Net commission income 427 404 -5% 201 203 1% Other non-interest income -70 572 - 594 -22 - Operating Income 2 497 3 574 43% 2 057 1 51
Slide 39: Balance sheet
BALANCE SHEET (PLN milion) 30.06.2022 31.03.2023 30.06.2023 Change y/y ASSETS Cash and balances with the Central Bank 5 810 5 452 6 769 17% Loans and advances to banks 1 080 586 532 -51% Loans and advances to customers 79 342 75 380 74 152 -7% Amounts due from reverse repo trans. 8 0 48 480% 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