Bank Millennium – profit above average, record sale of loans

- In the first two quarters of 2018 we, again, achieved excellent results. The Bank generated net profit at 348 m PLN, acquired 79 thous. new individual Customers and opened one million Konto 360°accounts. Two-digit growth y/y were recorded by majority of key business lines including the portfolio of consumer loans (+14%), PLN mortgages (+23%) and corporate loans (+12%). Excellent business performance help increase revenue and, in consequence, net profit in line with the assumptions of the Bank’s strategy for 2018-2020 said Mr. Joao Bras Jorge, Chairman of the Bank Millennium Management Board.

The most important financial results

Consolidated net profit of Bank Millennium, in the IH 2018, amounted to 348 m PLN i.e. increased by 11% relative to the profit generated in similar period of 2017. Performance in both periods is, however, distorted by one-off payment of annual restructuring contribution to BFG. If results were adjusted for this distortion, the net profit of the Group in IH 2018 would amount to 365 m PLN.

In IH 2018 consistently good business performance was a main factor contributing to profitability improvement: operational income increased by 5.4% annually and exceeded the cost growth rate (+4% y/y). Growing profitability helped maintain ROE at the level of 9.5% and the costs/incomes ratio at the level of 46.4% (both ratios were adjusted to equalise the burden of BFG restructuring fee). Bank Millennium maintained high asset quality (including that of the credit portfolio), liquidity and capital ratios.

The key business results

Retail banking

Since the beginning of the year the number of active individual Customers has increased by 78.7 thous. (only in Q2 by 38.7 thous.) and at the end of Q2 amounted to 1.714 m. Since the beginning of the year in total 196 thous. new bank accounts have been opened with the greatest share held by Konto 360°. In April of this year, in the competition Golden Banker the account Konto 360°was ranked first in the category The best personal account, and in May the millionth account was opened. Continuation of the recommendation programme “Like it? Share it!” contributed to good acquisition results; nearly 270 thous. Customers entered the programme by end of June. The base of active Customers - electronic banking users increased during the period to 1.24 m (by 17% y/y), including the number of active users of mobile banking (application and RWD service) increasing to 817 thous. (increase by 36% y/y).

In the first two quarters of 2018, the internal rivalry between mortgage loans and cash loan business ended in an imposing draw. Both the new mortgage loan and cash loan sales reached a record value of 1.6 bn PLN. The mortgage loans recorded increase by 53% relative to IH 2017 while cash loan sales increased by 41%.

The above provided the Bank with fifth place on the new mortgage sale market, with the share of ca. 7%. During the period the number of agreements signed was greater by 26% and the number of mortgage applications accepted was greater by 16% than a year before. Only in Q2 2018 the sale of new mortgage loans increased by 15% q/q, amounting to 863 m PLN. This good result is an effect of improvement of operational processes and excellent performance of the model of cooperation with intermediaries. Despite market pressures, the success was achieved with no changes in the pricing conditions. In order to ensure medium and long term financing necessary to ensure further development of real estate financing, the Bank filed an application to the Polish Financial Supervision Authority for permission to establish a mortgage bank.

In Q2 2018 only the sale of cash loans reached the amount of 822 m PLN ensuring 7% quarterly growth. Two-digit increases were recorded in all channels selling the product including the highest in electronic channels (+ 140% y/y). This is the effect of excellent presentation of the loan in digital version and the fast process of product delivery to the Customer account. Total loans granted to individual Customers, as on 30 June 2018, amounted to gross 35 bn PLN.

At the end of IH 2018 total Customer funds deposited in Bank Millennium reached the value of 53 bn PLN, growing by 8% y/y. The growth was driven, primarily, by increasing of the value of funds on current and saving accounts by 14% y/y.

Digital improvements:

Account opening from the level of mobile application by persons who are not Bank’s customers yet after downloading application from a store, access to application for Konto 360o is made available and it is enough to fill in application and relevant agreement will be delivered by courier service.

Mobile application enhancements – home page layout has been refreshed and entry into the BLIK transfer to mobile (P2P payment) is available from the screen level upon login. When executing P2P payment, Customer can immediately see friends from the list of contact in the mobile phone, who are registered in the service (BLIK icon appears at the contact item on the form).

Extension of internet payments of PayByLink type by adding BLIK - when shopping in the internet after clicking on „Millennium – internet payments”, Customers can select transaction authorization method. Besides the traditional way (login to internet banking and confirmation with SMS Password) Customer can choose to authorise transaction using BLIK code.

Expansion of e-administration service with online application to the programmes Dobry Start (Good Start) and Rodzina 500+ (Family 500+) for the new period of benefit provision. Within the transaction system Millenet and in mobile application a convenient option to update data from ID.

Option to apply for credit products 24h/day with opportunity to take advantage of promotions. Within investment offer expansion Millenet has now option to purchase and execute transactions of four new, external TFI funds.

Corporate banking

In the IH 2018 further increase of demand for financing could be observed. The gross value of loans granted to companies increased by 1.8 bn PLN i.e. by 12% y/y, and the credit product portfolio, including leasing and factoring, reached the value of 17.1 bn PLN. This increasing trend was triggered, primarily, by further development of cooperation with existing Customer base and acquisition of new relations.

The leasing portfolio increased by 12% y/y to the level of 6.1 bn PLN. The value of leased assets in IH of the year reached the record level of 1.66 bn PLN (15% increase y/y), and with respect to leased assets recovered – it was the best half of a year in the history of Millennium Leasing. Furthermore, factoring turnover also reached new record levels. In the first six months of the year, the Bank’s factoring turnover amounted to 9.44 bn PLN (increase by 18% y/y), and factoring assets reached the value of 2.46 bn PLN. The amount of trade financing transactions (guarantees and L/Cs) active as at the end of IH amounted to 887 m PLN i.e. increased by 31% y/y.

The volume of current accounts reached, at the end of IH 2018, the value of 7.6 bn PLN growing 15% y/y; the number of domestic transfers also increased by 13%, foreign transfers increased by 31% and card transactions – by 31%. The volume of FX transactions increased by 26% relative to similar period of 2017 with revenue growth rate at the level of 10%.

While implementing the long term strategy of supporting innovative enterprises and facilitating financing of various types of Customers the Bank continued cooperation with the Bank Gospodarstwa Krajowego in lending to support technological innovations and granting free-of-charge guarantees to secure investment loans designated to finance, inter alia, innovative projects.

Digital enhancements:

e-guarantee - to ensure faster and safer granting of guarantees to Customers and their counterparties the bank provided access to a new service under the name “e-guarantee”. Unlike the traditional, paper bank guarantee, e-guarantee is issued in the form of electronic PDF file with use of safe qualified electronic signature placed by two Bank employees.

split payment - on 1 July 2018 a split payment mechanism was made available to companies. Under this service the Bank opened additional VAT account for each company and provided access, also online, to a new type of bank transfer – split payment transfer/VAT transfer. Information on the new solution was provided to entrepreneurs, inter alia, during the cycle of 10 business breakfasts.

New SWIFTNet transaction channel - allowing Customers to transfer payment files to banks via the SWIFT FileAct solution. Payments – domestic, internal and foreign transfers – sent out in SWIFT network, after they are accepted by the Bank are immediately delivered for execution. The service helps banks send files to Customers in a similar way.

New cash management module - despite systematically growing card utilisation, managing cash payments and withdrawals continues to be important for Customers generating cash sales. New functionalities facilitate management of open one-off payments and payments in line with schedules.

The Group results are available under the following address:
bankmillennium.pl/documents/10184/26781209/Semi-Annual-Report-of-the-Bank-Millennium-Group-1H2018.zip

On 25 May 2018, the GDPR Regulation entered into force – European Regulation on protection of personal data. In the IH of the year Bank Millennium completed all necessary work connected with implementation of new regulations into Customer information management processes and adjusted its operations to the GDPR requirements in all key areas.