Bank Millennium (MIL) Q3 2024 earnings summary

Executive summary

• Net profit for 9M24 reached PLN 547m, up 19% year-over-year, with adjusted net profit at PLN 2.3bn, reflecting strong core profitability despite extraordinary costs and resumed banking tax payments.

• The bank exited its recovery plan, launched a new four-year strategy focused on digital leadership, customer acquisition, and corporate lending growth, and aims to double corporate lending and increase primary customer share.

• Digital transformation advanced, with 91% of 3.12m active retail clients digitally active and significant growth in digital sales and payments.

• Strong capital and liquidity positions, with TCR at 17.94% and LCR at 365%, well above regulatory minimums.

• Loan growth resumed, especially in PLN mortgages and consumer loans, while FX-mortgage portfolio continued to shrink rapidly.

Financial highlights

• Net interest income (NII) for 9M24 was PLN 4,025m, up 1% year-over-year; adjusted NII (excluding credit holidays) grew 5% year-over-year and 5% quarter-over-quarter.

• Net commission income for 9M24 was PLN 589m, down 1% year-over-year, but up 4% sequentially.

• Total operating income (reported) was PLN 4,401m, down 15% year-over-year; adjusted operating income rose 6%.

• Operating costs increased 13% year-over-year, with adjusted cost-to-income at 30.8%.

• Reported ROE at 10.1%, adjusted ROE at 18.3% for 9M24.

Outlook and guidance

• Cost of risk expected to remain around 50-53 basis points for 2024, gradually increasing to around 60 basis points as corporate lending grows.

• NII is expected to remain resilient in the short term, with limited sensitivity to interest rate cuts; a 100-125 basis point rate cut is anticipated by end-2025.

• GDP growth in Poland forecast at 3.0% for 2024 and 3.9% for 2025, with inflation expected to trend downward from 2Q25.

• Dividend resumption targeted for 2027, with a payout ratio of 35-50%, subject to regulatory environment.

• Bank plans to meet new long-term funding ratio requirements by 2026 through further covered bond issuances.