Bank Millennium SA · GPW:MIL
Bank Millennium SA — FY2021 Earnings Presentation
40 slides from Bank Millennium SA's earnings presentation, Feb 1, 2022
Slide 1: Presentation 4Q21/FY21 preliminary non-audited results
Presentation 4Q21/FY21 preliminary non- audited results 1 February 2022 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 4Q21/FY21 Results: Financial performance
01 PRESENTATION OF 4Q21/FY21 RESULTS Financial performance 4
Slide 5: 2021 – A transition year before new strategy roll-out
2021 – A TRANSITION YEAR BEFORE NEW STRATEGY ROLL-OUT Quick FY21 check: ✓ Number of own recovery of ✓ Net profit w/o FX- Focus on branches down Full ✓ Share of digital clients >80% mortgage costs up 8% in 2021 business 57% y/y operational digitalisation results ✓ Sales of cash loans up 21% y/y effic
Slide 6: New Strategy 2022-2024
NEW STRATEGY 2022-2024 Millennium Bank inspired by people For years clients have been at the center Pillars of ’Millennium 24’ strategy: of our thinking. We talk, listen, understand and co-create our solutions together. Now, we are to leverage this approach in even more intensive way … 01 02 03 Top
Slide 7: Strategy 2024 ambitions in brief
STRATEGY 2024 AMBITIONS IN BRIEF Profitable growth, doubling Bank Millennium’s recurrent profit while driving scale, strong customer recognition Ambitions by 2024: We plan to continue to We also aspire to … driven by keeping … and to continue … and to boost … significantly increase number of further
Slide 8: Key profit & loss items
KEY PROFIT & LOSS ITEMS Change PLNmn 2021 2020 Change Y/Y 4Q21 3Q21 Q/Q Net interest income 2 713.1 2 583.1 5.0% 767.1 668.9 14.7% 14.7% Net commission income 830.6 746.1 11.3% 11.3% 215.0 201.6 6.6% Total operating income 3 558.1 3 577.8 -0.5% 923.1 845.6 9.2% Total costs -1 642.3 -1 752.8 -6.3% -4
Slide 9: Key balance sheet and business items
KEY BALANCE SHEET AND BUSINESS ITEMS PLNmn Dec. 21 Dec. 20 Change Y/Y Sep. 21 Change Q/Q Active customers (ths) 2 694 2 607 87 2 664 30 incl. on-line and mobile 2 263 2 053 210 2 206 57 Customer funds 100 425 90 264 11.3% 99 820 0.6% Deposits 91 448 81 511 12.2% 90 250 1.3% Deposits of individuals 6
Slide 10: Financial highlights of 4Q21/2021
FINANCIAL HIGHLIGHTS OF 4Q21/2021 Core profitability (ex-FX mortgage) is growing: 2021 ROE at high 13.6%, net income up 45% y/y Net profit Net profit w/o extraordinary* items (PLNmn) (PLNmn) 8.4% 13.6% ROE adjusted * +28% 321 306 238 225 258 0.3% -16.3% ROE reported 193 191 145 54 60 18 1Q20 2Q20 3Q
Slide 11: Financial highlights of 4Q21/2021
FINANCIAL HIGHLIGHTS OF 4Q21/2021 Most of last year’s pandemic impact neutralised Fees up Adjusted net profit* NII rebounded, NIM up +45% y/y +44bp y/y +11% y/y Adjusted ROE Costs reduction Provision coverage up 13.6% -6% y/y DPD>90 133% (*) Extraordinary items: in 2021 FX-mortgage legal risk provis
Slide 12: Interest and commission income
INTEREST AND COMMISSION INCOME NII clearly up in 4Q; gradual growth of quarterly NIM; remarkable growth in fees: +11% y/y Net interest income (PLNmn) Interest on loans and deposit (quarterly average) +5% 4.75% 4.57% 3.94% 3.69% 3.37% 3.22% 3.25% 3.33% 3.32% 2.94% 2.81% 2.58% 2.49% 2.53% +15% 2.98% 1
Slide 13: Cost efficiency
COST EFFICIENCY Operating costs down 6% y/y supported by lower BFG fees and cost saving initiatives (flat w/o BFG and integration) Operating cost (PLNmn) Employees -551 8,412 8,141 7,846 -6% 7,630 7,493 0% w/o BFG and EB integration 7,335 7,238 7,148 7,014 7,035 6,942 +1% costs 6,602 6,450 6,454 6,3
Slide 14: Asset quality
ASSET QUALITY Strong credit quality without signs of deterioration Cost of risk (bp) Impaired loans (IFRS9 stage 3 &POCI) 10.6% 10.6% 10.5% 10.9% 10.9% 11.2% 10.4% 9.9% 83 37 108* 89 80 55 39 28 42 39 Total loans 5.0% 4.7% 4.7% 4.4% 88 48 65 133 91 62 27 52 53 60 Retail 4.8% 4.9% 4.7% 4.85% 4.3% 5.1
Slide 15: FX-mortgage portfolio (1/2)
FX-MORTGAGE PORTFOLIO (1/2) FX-mortgage portfolio continued to decline steadily in CHF terms FX-mortgages* (gross w/o legal risk provisions) FX-mortgages as % of total gross book (gross after legal risk provisions) (CHFmn) 5,000 4,698 -17% 4,406 25.8% 4,500 4,094 4,000 3,782 -6% 3,498 20.4%19.1% 3,5
Slide 16: FX-mortgage portfolio (2/2)
FX-MORTGAGE PORTFOLIO (2/2) Inflow of amicable conversions exceeded inflow of legal cases in 2021 Provisions against legal risk as % of FX-mortgage book* Legal risk provisions - coverage (as % FX-mortgages) 30.0% 30% 25.7% 25% 25.7% 25.0% 19.5% 20% 19.5% 20.0% 14.9% 14.9% 15% 11.3% 15.0% 10.5% 12.0%
Slide 17: New segment reporting
New segment reporting Core business is the main source of pre-provision profits 2020 2021 PLNmn FX - Core FX - Core Total Total • The Bank’s recent financial performance mortgage business mortgage business has been significantly affected by the costs NII 101 2,483 2,583 100 2 613 2 713 related to th
Slide 18: Liquidity and capital
LIQUIDITY AND CAPITAL Good liquidity and strong capital adequacy with surplus of c3.5 ppt despite material provisions burden; Liquidity indicators Group capital ratios * 202% 20.0% 20.0% 177% 178% 184% 19.5% 19.5% 19.4% 174% 18.7% 162% 161% 18.2% 150% 17.0% 17.0% 17.1% 16.5% 16.5% 16.3% 15.6% 15.1%
Slide 19: Presentation of 4Q21/FY21 Results: Business development
02 PRESENTATION OF 4Q21/FY21 RESULTS Business development 19
Slide 20: Business highlights of 4Q21/2021
BUSINESS HIGHLIGHTS OF 4Q21/2021 Retail business growing fast above pre-Covid levels, corporate showing signs of gradual improvement Loans Strong mortgage sales Cash loans sales +7% y/y PLN9.8bn ytd +21% y/y Debit cards Active digital customers Customer deposits +95 ths y/y 2.3mn +12% y/y 20
Slide 21: Loans and customer funds
LOANS AND CUSTOMER FUNDS Robust dynamics of loans especially in retail (ex. FX mortgage); stable growing trend in deposits Loan portfolio of the Group (net) Customer deposits +7% (PLNmn) (PLNmn) +12% +4% +29% +4% +7% +29% +2% +1% 74,636 75,794 77,280 78,603 91,448 73,639 88,255 89,998 90,250 81,511
Slide 22: Retail business – loans and customer funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS High growth of retail loans driven by mortgage with accelerating consumer loans; high dynamics of current accounts volumes Retail loans (gross) (PLNmn) Retail customer funds 8% +6% (PLNmn) +19% y/y without FX loans 4% +3% 29% -11% 61,503 +11% 57,106 58,029
Slide 23: Retail banking - number of customers and accounts
RETAIL BANKING - NUMBER OF CUSTOMERS AND ACCOUNTS Steady growth of customers and cards after completed merger with Euro Bank Active retail clients* Active micro-business clients (thousand) (thousand) +11 +87 +30 115.1 2,664 2,694 111.5 2,607 2,611 2,632 108.6 106.1 103.9 31/12/20 31/03/21 30/06/21 3
Slide 24: Daily banking
DAILY BANKING More and more clients choose to use bank service online 2.26mn 161mn 77% Digital share in cash loan sales +101% Active digital users (+10% y/y) in 4Q21 The increase of loans sold online in Logins to mobile app in 4Q21 4Q21 by number compared to 4Q20. 1.92mn Digital share in Mobile only
Slide 25: Payments and e-commerce
PAYMENTS AND E-COMMERCE Interest in BLIK and Value Added Services is growing the fastest. In 4Q21 as much as 1.58 million clients performed at least one e-commerce payment. +125% y/y P2P transfers Growing interest in mobile app services They made a total 37 million such Public transport tickets +58%
Slide 26: Innovative and eco-friendly
INNOVATIVE AND ECO-FRIENDLY We go beyond market standards, build positive experiences and protect the environment The app for Apple Watch Less paper thanks to Mobile Authorisation We actively encourage clients to use mobile solutions also when visiting the bank. Since We launched an innovative the i
Slide 27: Goodie – smartshopping platform of Bank Millennium
GOODIE – SMARTSHOPING PLATFORM OF BANK MILLENNIUM Development and aquisition of goodie cashback users 2021 4Q21 403,000 130,000 app downloads app downloads PLN593mn PLN208mn Generated cashback turnover Generated cashback turnover PLN12mn PLN3.8mn Amount of cashback Amount of cashback 4.4mn 1.3mn You
Slide 28: Companies business – deposits and loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Gradual growth of loans: +3% y/y with rebound in leasing; steady growth of deposits: C/A up +18% y/y Companies deposits Loans to companies (gross) (PLNmn) +3% (PLNmn) +29% +10% +72% +7% +18% -3% 19,023 19,031 19,250 19,454 19,540 23,991 25,032 25,285 25,425 2,
Slide 29: Companies business – loans and transactions
COMPANIES BUSINESS – LOANS AND TRANSACTIONS Leasing sale rebounded and grows +57% y/y; factoring grew strongly +17% y/y Leasing – new sales Factoring – turnover (PLNmn) (PLNmn) +57% +17% 3,877 27,196 23,228 2,475 1,022 1,017 1,076 7,002 6,487 6,896 6,568 7,245 618 563 774 762 5,208 5,047 5,971 520 1
Slide 30: Novelties and improvements for corporate banking clients
NOVELTIES AND IMPROVEMENTS FOR CORPORATE BANKING CLIENTS • For all payment cards issued to corporate banking customers, we have launched the opportunity to add them to the following external wallets: Google Pay, Apple Pay, Garmin Pay, Fitbit Pay. Adding a card to your favorite wallet ensures that pa
Slide 31: Presentation of 4Q21/FY21 Results: Appendices
03 PRESENTATION OF 4Q21/FY21 RESULTS Appendices 31
Slide 32: Macroeconomic overview: Economy
MACROECONOMIC OVERVIEW Economy Data from Polish economy (% y/y) PMI indicators (pts) According to high frequency data economic activity in Poland moderated in 4Q21 to 1.3% q/q after strong rebound of 2.3% q/q in 3Q21, mainly due to the waning of the previously increased consumer demand amid interest
Slide 33: Macroeconomic overview: Financial markets
MACROECONOMIC OVERVIEW Financial markets EUR/PLN and CHF/PLN exchange rates EUR/PLN and expected changes in interest rates Monetary Policy Council due to mounting risks for inflation decided to raise interest rates in 4Q 2021 much stronger than expected. EUR/PLN reversed from a multi- years high as
Slide 34: Macroeconomic overview: Monetary aggregates
MACROECONOMIC OVERVIEW Monetary aggregates Loans to households Mortgage loans Loans to companies (PLN bn, % y/y) In 4Q21 the value of loans to (PLN bn, % y/y) (PLN bn, % y/y) households continued to grow, driven by FX effect and demand for mortgage loans, which was however less strong than in 3Q21.
Slide 35: Ratings and market ratios
RATINGS AND MARKET RATIOS In 2021 investor sentiment about bank stocks was improved significantly Bank Millennium share performance vs. WIG Bank index Bank Millennium shares 200% 180% The second largest annual growth among 160% listed banks No of shares: 1 213 116 777 (listed 1 213 008 137) 140% + 1
Slide 36: ESG: A bank friendly to people and the environment
ESG: A BANK FRIENDLY TO PEOPLE AND THE ENVIRONMENT S – Society E - Environment • Bank Millennium’s goal is to offer banking without barriers. The Bank has introduced numerous • In line with the adopted environmental policy, the amenities to assist people with impaired vision, Bank Millennium Group d
Slide 37: Most important awards and achievements of Bank Millennium in 2021
THE MOST IMPORTANT AWARDS AND ACHIEVEMENTS OF BANK MILLENNIUM in 2021 The highest quality, innovation, customer relations and social responsibility confirmed by independent rankings and competitions Bank Millennium in 2021 was according to Bank Millennium awarded with Golden Leaf Victory in this yea
Slide 38: Synthetic P&L account
SYNTHETIC P&L ACCOUNT SYNTHETIC P&L ACCOUNT PLNmn 2020 2021 Change Y/Y 3Q21 4Q21 Change Q/Q Net interest income* 2 583 2 713 5% 669 767 15% Net commission income 746 831 11% 202 215 7% Other non-interest income 249 14 -94% -25 -59 137% Operating Income 3 578 3 558 -1% 846 923 9% General and administ
Slide 39: Balance sheet
BALANCE SHEET 31.12.2020 30.09.2021 31.12.2021 Change y/y ASSETS Cash and balances with the Central Bank 1 460 1 978 3 180 118% Loans and advances to banks 625 578 771 23% Loans and advances to customers 73 639 77 280 78 603 7% Amounts due from reverse repo trans. 66 9 269 305% Debt securities 18 97
Slide 40: Investor relations contact
INVESTOR RELATIONS CONTACT: Head of Investor Relations Katarzyna Stawinoga Tel: +48 22 598 1110 Dariusz Górski e-mail: [email protected] Tel: +48 514 509 925, +48 22 598 1115 e-mail: [email protected] Marek Miśków Tel: +48 22 598 1116 e-mail: marek.miskow@bankmille