UPDATE: Bank Millennium posts PLN 179.3 mln net profit in Q1 2025, above expectations

The lender's net profit rose by 39.6 percent year on year and by 3.6 percent quarter on quarter.

"The first quarter of 2025 was another quarter of solid operating performance. Loan growth remained moderate (impact of a rapidly shrinking foreign currency mortgage portfolio), but the corporate portfolio showed early signs of recovery (up 2 percent quarter on quarter, up 4 percent year on year), while consumer loan sales reached their second highest level ever with market share rising to a record 13 percent," Millennium said in the report.

The bank added that net profit excluding costs related to foreign currency mortgages would have amounted to PLN 718 million (EUR 169.3 mln), up 7 percent year on year.

Millennium's net interest income stood at PLN 1,423.5 million (EUR 335.7 mln), 2.4 percent below the market expectations. Interest income grew 5.1 percent year on year and fell 5.4 percent quarter on quarter.

The bank pointed out that the year-on-year increase was the result of higher income, which in turn was driven by higher interest-generating assets, improved yields on the bond portfolio and lower deposit costs.

The quarterly decline was largely the result of fewer calendar days, the effect of a high base (reversal of the so-called credit holiday costs of PLN 45 million or EUR 10.6 mln in the fourth quarter of 2024) and the cost of the securitisation transaction completed in December 2024.

The quarterly interest margin decreased to 423 basis points from 437 basis points in the previous quarter.

Net fee and commission income amounted to PLN 182.5 million (EUR 43 mln), slightly below the consensus. Net commission income fell by 8.5 percent year on year and by 2.9 percent quarter on quarter.

The balance of provisions (excluding provisions for foreign currency mortgage litigation) amounted to PLN 96.9 million (EUR 22.85 mln), 5 percent lower than the forecasts of analysts surveyed by PAP Biznes. Provisions fell 30.9 percent year on year and rose 46.9 percent quarter on quarter.

The cost of credit risk is at 45 basis points.

The bank reported that the quality of its loan portfolio was virtually unchanged, with an NPL ratio of 4.5 percent, reflecting a slight improvement in the corporate segment (to 4.4 percent from 4.7 percent at end-December 2024), while the retail segment increased slightly (4.5 percent versus 4.4 percent).

The cost of legal risk provisions for foreign currency mortgages amounted to PLN 444.8 million (EUR 104.9 mln), which was the level previously estimated by the bank.

Total quarterly costs related to Bank Millennium's foreign currency mortgage portfolio (legal risk provisions, amicable settlement costs and legal and court costs) fell by 36 percent quarter on quarter and by 34 percent year on year to PLN 548 million (EUR 129.2 mln) before tax.

The share of the total foreign currency mortgage portfolio in the group's consolidated gross loans fell to 1.6 percent.

The bank's total operating costs amounted to PLN 668 million (EUR 157.5 mln), in line with the market expectations. Costs increased by 12 percent year on year and quarter on quarter. Higher Poland's banking guarantee fund BFG's charges and higher salaries (wage increases) were responsible for the year-on-year increase in costs.

Sales of mortgage loans amounted to PLN 789 million (EUR 186.05 mln) against PLN 1,133 million (EUR 267.16 mln) in the last quarter of 2024. The bank's market share of sales fell to 3.3 percent.

"The loan portfolio declined slightly in the period, while net/gross loans increased by 1 percent year on year. The declining trend in the FX mortgage portfolio remained the main determinant, as the net/gross loan portfolio excluding foreign currency mortgages remained unchanged in the period, with an increase of 3 percent year on year," Millennium reported.

The bank's total capital ratio (TCR) stands at 17.34 percent.

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