Bank Millennium (MIL) Q1 2025 earnings summary

Executive summary

• Net profit reached PLN179 million in Q1 2025, up 40% year-over-year, with adjusted net profit at PLN718 million, a 7% increase year-over-year, despite higher regulatory and tax costs.

• Strong customer acquisition continued, with 150,000 new customers year-over-year and 94% digital activity among clients; digital and mobile banking usage grew 6-7%.

• Operating income rose 15% year-over-year to PLN1,626 million, driven by higher net interest income and improved non-interest income.

• FX-mortgage related costs remained a significant drag but declined 34% year-over-year to PLN548 million pre-tax.

• Capital ratios improved, with Tier 1 at 15.2% and TCR at 17.3%, well above regulatory minimums and with strong MREL buffers.

Financial highlights

• Net interest income grew 5% year-over-year to PLN1,423 million, while net commission income fell 9% year-over-year to PLN183 million; NIM at 4.23%.

• Total operating costs increased 12% year-over-year, mainly due to higher BFG fees and wage inflation; cost-to-income ratio was 34.5% adjusted, 41% reported.

• Return on equity was 9.1% reported, or 12.3% with linear recognition of resolution fund contributions.

• Asset quality remained strong: cost of credit risk at 45 bps, NPL ratio stable at 4.5%, NPL coverage improved to 74%.

• Total assets rose 8% year-over-year to PLN142.8 billion; customer deposits up 6% year-over-year to PLN119.4 billion.

Outlook and guidance

• The "Millennium 2028 – Value and Growth" strategy targets over 3.7 million retail clients, over 95% digital activity, and Tier 1 ratio above 15% by 2028.

• Cost of risk expected to remain in the 40-50 bps range for 2025, with further NPL sales planned.

• Net interest income for the year expected to remain positive versus 2024, assuming 100-125 bps rate cuts, offset by price management and volume growth.

• Fee and commission income anticipated to recover gradually after a weak Q1, with no significant growth expected for the year.

• Countercyclical capital buffer to be introduced in 2H25 (+1 p.p.); long-term funding ratio to reach 40% by 2026, mainly via covered bond issuance.