Bank Millennium (MIL) Q2 2024 earnings summary

Executive summary

• Net profit for H1 2024 was PLN 357 million, stable year-over-year, with underlying profit (excluding extraordinary items) up 6% to PLN 1.5 billion.

• Exited Recovery and Capital Protection Plans in Q2 2024, restoring capital ratios and profitability above regulatory requirements.

• Maintained strong asset quality, efficiency, and solid capital and liquidity positions.

• Continued high legal risk provisions for FX mortgage portfolio, with coverage exceeding 100% of gross loans.

• Strong business momentum in deposits, investment funds, and consumer loan growth.

Financial highlights

• Net interest income (NII), excluding credit holidays, grew 5% year-on-year and 2% quarter-on-quarter; NIM at 4.32%.

• Total operating costs rose 14% year-on-year, with staff costs up 16% and admin costs up 12%.

• Adjusted cost-to-income ratio at 31%, cost of credit risk at 50 bps, supported by NPL sales.

• Customer funds up 17% year-on-year; deposits up 16% year-on-year; loans up 1% year-on-year.

• Impaired loan ratio at 4.5%, NPL coverage at 74%.

Outlook and guidance

• Expectation for continued strong business performance in H2 2024 and optimism for new strategy to be presented in Q4.

• Cost growth for 2024 will remain double digits but is expected to moderate as inflation stabilizes.

• FX mortgage provisioning burden to remain significant in 2024, with reduction expected in 2025 if no new adverse developments occur.

• Dividend distribution not planned for this year; intention to resume in the next cycle, subject to regulatory and capital conditions.

• Liquidity and capital positions expected to remain strong, supporting ongoing business strategy.