- Net Profit (YTD): PLN 547 million, a 19% improvement YoY.
- Net Profit (Excluding Extraordinary Items): Almost PLN 2.3 billion, a 3% improvement YoY.
- Net Interest Income Growth: 5% YoY and 5% QoQ, excluding credit holidays impact.
- Cost to Income Ratio (Excluding Extraordinary Items): Approximately 31%.
- Cost of Credit Risk: 53 basis points over total loans.
- NPL Ratio: Stable at 4.6%.
- Tier One Ratio: Improved to 15.3%.
- Total Capital Ratio: Improved to 17.9%.
- Senior Non-Preferred Bond Issue: EUR 500 million.
- Net Profit (Q3): PLN 190 million.
- Reported ROE: 10.1%.
- Adjusted ROE: 18.1%.
- Net Fee and Commission Income: Stable YoY, 4% growth QoQ.
- Operating Costs Growth: 13% YoY.
- Active Retail Customers: 3,120,000, with 91% digitally active.
- Cash Loans Growth: 12% YoY.
- Mortgage Loans Growth: 50% YoY.
- Leasing Origination Growth: 26% YoY.
- Total Deposits Growth: 7% YoY.
- Consumer Loans Growth: 9% YoY.
- Investment Funds Portfolio Growth: 41% YoY.
- Loan Portfolio Growth (Excluding FX Mortgage): 5% YoY.
- Retail Deposits Growth: 14% YoY.
- Corporate Deposits Decline: 8% YoY.
- Digital Users Growth: 7% YoY.
- Mobile App Users Growth: 15% YoY.
- FX Mortgage Legal Risk Provisions: PLN 470 million in Q3.
- FX Mortgage Portfolio Reduction: 22% decrease YoY.
- Amicable Settlements: 1,081 signed in Q3.
Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bank Millennium SA (WAR:MIL, Financial) reported its eighth consecutive quarter with a positive net result, achieving a year-to-date net profit of PLN 547 million, a 19% improvement from the previous year.
- The bank's net interest income, excluding the impacts of credit holidays, grew by 5% year-over-year and quarter-over-quarter, demonstrating strong financial performance.
- Capital ratios improved, with the tier one ratio reaching 15.3% and the total capital ratio at 17.9%, providing a significant surplus over minimum regulatory requirements.
- The bank successfully issued its first green bond in September, raising EUR 500 million, which enhances its financial stability and commitment to sustainable finance.
- Customer acquisition and digital engagement remain strong, with 91% of retail customers being digitally active and significant growth in digital transactions and services.
Negative Points
- Operating costs continue to grow at a double-digit rate, with a 13% year-over-year increase, which could pressure future profitability.
- The non-performing loan (NPL) ratio remained stable at 4.6%, but there was a noted increase in NPLs within the corporate segment, indicating potential credit risk concerns.
- The bank faces ongoing legal risks related to FX mortgages, with provisions totaling PLN 7.7 billion, representing 111% of the total gross loan outstanding.
- Despite improvements, the cost of credit risk increased to 53 basis points over total loans, higher than the previous year, reflecting ongoing challenges in credit quality.
- Corporate deposits decreased by 8% year-over-year due to tighter price management, which could impact liquidity and funding strategies.
Q & A Highlights
Q: Did you book any impact from the floods in the first quarter, or do you foresee any such events in the future?
A: Fernando Cardoso Rodrigues Bicho, CFO: We analyzed our portfolio and found no material impact from the floods on our customer base. There was no impact on provisions in the third quarter.
Q: What drove the quarter-over-quarter improvement in your capital position?
A: Fernando Cardoso Rodrigues Bicho, CFO: The main driver was the incorporation of first-half results into our own funds, which also triggered additional benefits due to a smaller excess over 10% of funds.
Q: The NPL ratio in the corporate segment spiked in the third quarter. Was this an isolated situation?
A: Fernando Cardoso Rodrigues Bicho, CFO: It was an isolated situation involving one or two cases, unrelated to previous quarters. We do not see this as a trend.
Q: Regarding the FX mortgage saga, what are your model assumptions for active and repaid portfolios?
A: Fernando Cardoso Rodrigues Bicho, CFO: We assume 86% of active loans and 24% of closed loans will be in court. We continue efforts for amicable settlements, which could reduce future legal costs.
Q: What is your long-term funding ratio at the end of Q3?
A: Fernando Cardoso Rodrigues Bicho, CFO: It was slightly above 27%, including recent bond issues. We aim for a 40% ratio by December 2026, and recent steps show our capacity to achieve this target.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
