Raport półroczny Bank Millennium S.A. 2025

Bank Millennium S.A. Capital Group – Key Financial and Business Highlights for 1st Half of 2025

Bank Millennium S.A. Capital Group reported strong results for the first half of 2025, despite ongoing legal risks related to FX mortgage loans and a challenging economic environment. Below is a summary of the most important information for investors, with explanations of key terms at the end.

*Adjusted for FX-mortgage legal risk costs and other extraordinary items

Key Business and Strategic Developments

• Strong profit growth: Net profit rose by 43% year-on-year, mainly due to lower costs of legal risk related to FX-mortgage loans and solid core banking income.
• FX-mortgage legal risk: Costs related to legal risk of FX-mortgage loans remain high, but are down 28% y/y. The Bank continues to actively offer settlements to borrowers, with over 28,000 settlements reached since 2020 (about 46% of the original active portfolio).
• Loan portfolio: Total loans were stable, with corporate loans growing (+6% y/y) and retail loans slightly down due to the shrinking FX-mortgage book and lower new PLN mortgage sales.
• Deposits and liquidity: Customer deposits grew by 4% y/y, with a very strong liquidity position (loan/deposit ratio at 61% – a new low).
• Cost control: Operating costs rose 15% y/y (mainly due to regulatory charges and inflation), but the cost/income ratio remains at a healthy 37.2%.
• Asset quality: Non-performing loan (NPL) ratio improved to 4.22% (from 4.45% at end-2024), with high coverage by provisions (75.9%).
• Capital position: Total Capital Ratio (TCR) at 15.6% (down from 17.2% at end-2024, mainly due to regulatory changes and higher risk weights), still well above regulatory minimums.
• Dividend: No dividend for 2024; all profit allocated to reserve capital, in line with supervisory guidance.
• Digitalisation: Continued strong growth in digital users (2.97 million, +5% y/y), with 2.76 million active mobile users (+8% y/y).
• Strategic focus: The Bank continues to prioritise digital transformation, customer experience, and risk reduction (especially in the FX-mortgage portfolio).

Risks and Challenges

• Legal risk related to FX-mortgage loans remains the main challenge. The Bank has set aside provisions covering 142% of the gross active FX-mortgage book, but further negative court verdicts or regulatory changes could require additional provisions.
• Macroeconomic uncertainty (global trade tensions, political risk in Poland, and potential economic slowdown in the EU) could impact loan demand and asset quality.
• Regulatory costs (e.g., contributions to the Bank Guarantee Fund) and inflation continue to put upward pressure on costs.

Opportunities

• Further reduction of FX-mortgage risk through settlements and portfolio run-off.
• Growth in corporate lending and investment products.
• Continued digitalisation and efficiency improvements.

Other Notable Events

• Auditor’s review: KPMG reviewed the interim financial statements and found no material issues.
• ESG and social responsibility: Bank Millennium continues to be recognised for its customer service, digital innovation, and sustainability initiatives.

Explanations of Key Terms

• Net interest income: The difference between interest earned on loans and interest paid on deposits.
• Net commission income: Income from fees for services (e.g., account maintenance, cards, investment products) minus related costs.
• FX-mortgage legal risk: The risk and costs related to court cases and settlements with customers who took out mortgages in foreign currencies (mainly Swiss francs) and are challenging the terms of their contracts.
• Provisions: Money set aside to cover expected future losses (e.g., from legal cases or bad loans).
• Cost/income ratio: Operating costs as a percentage of total income – a measure of efficiency (lower is better).
• Return on Equity (ROE): Net profit as a percentage of shareholders’ equity – a measure of profitability.
• Total Capital Ratio (TCR): A measure of the bank’s capital strength, calculated as regulatory capital divided by risk-weighted assets. Higher is safer.
• NPL ratio: The share of loans that are not being repaid on time (non-performing loans) as a percentage of total loans.
• Loan/deposit ratio: Total loans divided by total deposits – a measure of liquidity (lower means more deposits than loans, which is safer).
• Adjusted net profit: Net profit excluding extraordinary or one-off items (e.g., legal risk costs, credit holidays) to show underlying business performance.

Summary for Investors

Bank Millennium delivered strong underlying results in the first half of 2025, with profit growth, solid capital and liquidity, and improving asset quality. The main risk remains the legal uncertainty around FX-mortgage loans, but the Bank is actively reducing this risk. The Bank is well positioned for further growth in corporate lending and digital services, but investors should monitor legal developments and the macroeconomic environment.