Bank Millennium SA · GPW:MIL
Bank Millennium SA — FY2019 Earnings Presentation
36 slides from Bank Millennium SA's earnings presentation, 2020
Slide 1: Bank Millennium Group – Presentation of 2019 results
BANK MILLENNIUM GROUP Presentation of 2019 results
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: Presentation of 2019 results
PRESENTATION OF 2019 RESULTS > Acquisition of Euro Bank > Financial performance > Business development > Appendixes
Slide 4: One of the fastest and smoothest mergers on Polish market ended on November 11th
ACQUISITION OF EURO BANK One of the fastest and smoothest mergers on Polish market ended on November 11th 2019 Transaction Agreement Closing Legal merger Operational merger Day 0 (5 November 2018) Day 1 (31 May 2019) Day 2 (1 October 2019) Day 3 (11 November 2019) • One owner • One owner • One legal
Slide 5: Increase of Bank's market position after merger across majority of key indicators
ACQUISITION OF EURO BANK Increase of Bank's market position after merger across majority of key indicators Bank Millennium before Bank Millennium after June 2019 December 2019 Market Market Area Value position (*) Area Value position (*) # of active Retail 1.9 #8 # of active Retail 2.6 (+32%) #7 (+1
Slide 6: Combined network of branches after acquisition
BANK MILLENNIUM BRANCHES Combined network of 830 branches after acquisition Bank Millennium distribution network After the merger with Euro Bank, Bank Millennium’s presence in smaller towns has been Gdynia significantly extended. Gdańsk 602 own branches Olsztyn 228 franchise branches Szczecin Bydgos
Slide 7: After merger Bank Millennium is a stronger and more competitive bank
BANK MILLENNIUM TODAY After merger Bank Millennium is a stronger and more competitive bank Customer base ✓Merged bank gained access to approx. 1 million additional clients making Bank Millennium bigger in scale of portfolio ✓Profile of acquired portfolio is more focused on lending products, especial
Slide 8: Extraordinary financial impact of Euro Bank acquisition
EXPENSES CONNECTED WITH THE MERGER Extraordinary financial impact of Euro Bank acquisition (excluding on-going results from consolidation) (PLN million) Group’s Profit and Loss extraordinary impact of Euro Bank acquisition Total 1Q19 2Q19 3Q19 4Q19 2019 Integration costs* 2.0 17.8 44.3 52.2 116.3 -
Slide 9: Presentation of 2019 results
PRESENTATION OF 2019 RESULTS > Acquisition of Euro Bank > Financial performance > Business development > Appendixes
Slide 10: Summary of 2015-2019 achievements (1)
SUMMARY OF 2015-2019 ACHIEVEMENTS (1) Profitability under regulatory burden, integration costs and legal risks; Low NPL levels and solid capital position Net Income (PLN million) Core Income (PLN million) ROE** & NIM (PLN million) Recurrent CAGR* +12.9% CAGR* 11,1% +12.2% 10,2% Net profit 9,3% 9,6%
Slide 11: Summary of 2015-2019 achievements (2)
SUMMARY OF 2015-2019 ACHIEVEMENTS (2) Solid organic growth accelerated by the merger of Euro Bank in 2019 Active retail Customers (thousand) On-line active customers (thousand) Mobile active customers (thousand) +1202 +994 +1054 2571 1 838 1 364 1 411 1635 1838 1 144 963 1369 1492 844 980 711 357 51
Slide 12: Financial highlights of 2019
FINANCIAL HIGHLIGHTS OF 2019 Successful integration of Euro Bank marked the end of the year with solid growth; Integration costs and extra provisions impacted 2019 profit Profit affected by integration and extra provisions Income and costs influenced by the merger • Net profit of 2019 at 561 million
Slide 13: Profitability
PROFITABILITY Without Euro Bank integration and provision one-offs, ROE stood at 10.2% level; Operating income grew by 27% with 7 months of the merged bank Net profit (PLN million) Operating income (PLN million) 10.2% ROE adjusted * 9.6% 6.4% ROE reported +27.3% -26.3% +16.9% 0% -87% 561 761 +46% 27
Slide 14: Cost efficiency
COST EFFICIENCY Integrations cost in 2019/20 will be lower than originally planned; Synergies to be relevant from 2020 onwards Operating cost (PLN million) Cost/Income, branches and staff +36% +27% without Cost/Income integration * 46.5% 46.4% 47.4% y-t-d adjusted ** +41% +20% +31% +0.5% without int
Slide 15: Interest and commission income
INTEREST AND COMMISSION INCOME Interest income higher by 33% yearly; NIM limited by cash loan fees return Net Interest Income * (PLN million) Interest on loans and deposit +33% 4,80% 4,75% 4,41% 4,41% 4,47% +0.6% Interest of Loans** 2,99% 2,94% 2,64% 2,78% Interest of Deposits** 2,53% 2 499 Net Inte
Slide 16: Asset quality, liquidity and capital
ASSET QUALITY, LIQUIDITY AND CAPITAL One-off provisions on Euro Bank acquired portfolio; High asset quality and liquidity maintained Cost of Risk (PLN million) Impaired Loans (IFRS9 stage 3/POCI) 48 57 Cost of Risk ratio (b.p.) * 11,3% 9,5% 8,9% +48% without extra provisions* Total loans 439 -44% Mo
Slide 17: FX mortgage loans legal risk
FX MORTGAGE LOANS LEGAL RISK PLN 223 million provision for legal risk connected with FX mortgage loans in 4Q; Pillar 2 Capital Buffer specifically assigned to FX mortgage loans risks; Constructive approach and risk mitigation actions in place for several years Statistics on FX mortgage litigations -
Slide 18: Presentation of results in 2019
PRESENTATION OF RESULTS IN 2019 > Acquisition of Euro Bank > Financial performance > Business development > Appendixes
Slide 19: Business highlights of 2019
BUSINESS HIGHLIGHTS OF 2019 Fulfillment of organic growth targets; Acceleration of growth thanks to the merger Retail business Companies business • 2.6 million active clients (40% y/y), thanks to Euro • Current accounts volumes grew by +19% y/y Bank merger (+494k) and organic growth (+240k) • Growth
Slide 20: Loans and deposits
LOANS AND DEPOSITS Strong growth of volumes accelerated by Euro Bank acquisition Loan Portfolio of the Group (net) (PLN million) Customer Deposits (PLN million) +32% +23% +8% y/y ex EB +10% y/y ex EB +103% +10% +7% +28% +16% y/y ex EB +10% y/y ex EB 69 481 69 755 80 341 81 455 52 712 15 133 15 065 6
Slide 21: Retail business – loans and customer funds
RETAIL BUSINESS – LOANS AND CUSTOMER FUNDS Very strong growth of retail loans and deposits; Above PLN 4 billion sale of cash and mortgage loans in 2019 Retail loans (gross) (PLN million) Retail Customer Funds (PLN million) 44% +9% y/y ex EB +24% 4% 98 % +17% y/y ex EB 16% 58% 33% -5% +20% y/y ex EB
Slide 22: Retail banking - number of customers and accounts
RETAIL BANKING - NUMBER OF CUSTOMERS AND ACCOUNTS Number of active retail clients reached 2.6 million after integration with Euro Bank Active retail clients (in thousand) Active micro-business clients (in thousand) +734k, +40% +555 + 14.8 +69 +50 +59 2 571 89,0 1 838 1 897 1 947 2 016 81,1 76,1 78,0
Slide 23: Retail banking – digital customers and sales
RETAIL BANKING – DIGITAL CUSTOMERS AND SALES Growth in the number of digital users, accelerated by Euro Bank merger; High share of electronic channels in product sales Active digital and mobile clients Traditional and digital channels – Cash loans +32% (in thousand) (in thousand) Digital share in 4Q
Slide 24: Retail banking – online products and services
RETAIL BANKING – ONLINE PRODUCTS AND SERVICES Starting cooperation between Polish Payment Standard (Polski Standard Płatności) and Mastercard in order to introduce BLIK contactless payments. BLIK transactions Mobile contactless payments (in thousand) (in thousand) +362% +99% 8 037 10 827 6 563 9 219
Slide 25: Companies business – deposits and loans
COMPANIES BUSINESS – DEPOSITS AND LOANS Current account balances high dynamics of 19% y/y Companies deposits (PLN million) Loans to companies (gross) (PLN million) +10% +6% +0.5% +3% +19% +5% 19 743 20 363 +8% 18 513 8 946 18 980 19 221 9 771 18 144 8 897 2 539 2 684 Term deposits 2 610 Factoring 6
Slide 26: Companies business – loans and transactions
COMPANIES BUSINESS – LOANS AND TRANSACTIONS Growth in factoring sale maintained but leasing decreased slightly y/y with strong rebound in 4Q; strong trade finance. Leasing – new sales (PLN million) Factoring – turnover (PLN million) -0.9% +6.5% 3 504 3 471 21 043 19 767 862 897 963 4 927 5 301 5 145
Slide 27: New solutions in the Millenet and mobile app
NEW SOLUTIONS IN THE MILLENET AND MOBILE APP Another year of innovations and development; new solutions based on the most modern technologies offer easier and more convenient use of e-banking. Autopay New Digital Experience (NDE) Family 500+/Good Start 300+ apps PSD 2 Automatic payments for New home
Slide 28: Goodie – smartshopping platform of Bank Millennium
GOODIE – SMARTSHOPPING PLATFORM OF BANK MILLENNIUM Maintaining growth rate of app downloads; continued development and new functionalities 1.5 million downloads from app start 825,000 Registered Loyalty Cards and Stamp Cards in 59 different loyalty programs 85 Generated cahsback turnover and million
Slide 29: Presentation of results in 2019
PRESENTATION OF RESULTS IN 2019 > Acquisition of Euro Bank > Financial performance > Business development > Appendixes
Slide 30: Macroeconomic overview
MACROECONOMIC OVERVIEW Economic growth in Poland slowed down on vanishing public investments, but still outperforms most of CEE countries. Inflation accelerated and will remain above NBP target in coming quarters. Interest rates evolution (%) FX rates evolution Q-o-Q (bp) 0 -1 7 Q-o-Q -2.6% -2.6% -5
Slide 31: Macroeconomic overview – deposits and credit
MACROECONOMIC OVERVIEW Growth of deposits decelerated, although it remained solid, especially in households’ sector. Credit dynamics moderated, both in households’ and corporate sector. Loans to households (PLN bln, % y/y) Mortgage loans (PLN bln, % y/y) Loans to companies (PLN bln, % y/y) Deposits
Slide 32: Ratings and market ratios
RATINGS AND MARKET RATIOS Bank shares in the new WIG ESG index Share price under pressure related to FX mortgage legal risk; Bank Millennium share performance vs. other banks Bank Millennium in new WIG-ESG index (annual change as on 30.12.2019r.) 40,2% Banku Millennium shares: According to GPW commu
Slide 33: Market leader in quality
MARKET LEADER IN QUALITY High quality confirmed again by independent rankings; the highest NPS score among Polish banks. Bank Millennium the most Best Web Site Design in Central and often recommended bank Eastern Europe Bank Millennium – Client Relations Star 52 51 46 45 41 36 35 30 29 27 27 Bank Mi
Slide 34: Synthetic P&L account
SYNTHETIC P&L ACCOUNT 2018 2019 Change 3Q 2019 4Q 2019 Change Pro-forma (PLN million) pro-forma pro-forma Y/Y pro-forma pro-forma Q/Q Net interest income* 1 877,9 2 499,4 33,1% 705,2 709,5 0,6% Net commission income 661,1 699,2 5,8% 178,3 182,6 2,4% Other non-interest income ** 188,7 273,0 44,7% 70,
Slide 35: Balance sheet
BALANCE SHEET (PLN million) ASSETS 31/12/2018 30/09/2019 31/12/2019 Change y/y Cash and balances with the Central Bank 2 450 3 198 2 203 -10,1% Loans and advances to banks 731 1 024 784 7,3% Loans and advances to customers 52 712 69 481 69 755 32,3% Amounts due from reverse repo trans. 250 51 205 -1
Slide 36: Investor Relations contact
Investor Relations contact: Head of Investor Relations Katarzyna Stawinoga Artur Kulesza Tel: +48 22 598 1110 Tel: +48 22 598 1115 e-mail: [email protected] e-mail: [email protected] Marek Miśków Dariusz Górski Tel: +48 22 598 1116 Tel: +48 514 509 925 e-mail: marek