Bank Millennium (MIL) Q4 2024 earnings summary

Executive summary

• Net profit for 2024 reached PLN 719 million, up 25% year-over-year; adjusted net profit excluding extraordinary items was PLN 3.2 billion, a 7% increase versus 2023.

• Strong net interest income growth of 7% year-over-year, with net interest margin at 4.35% for the year and Q4, excluding credit holidays.

• Cost to income ratio improved to 37.6% reported and 30.8% adjusted; cost of credit risk remained low at 40 basis points.

• Retail customer base exceeded targets, reaching over 3.1 million active customers, with 92% digitally active.

• Exited recovery plan in 2024, achieving strategic goals in profitability, customer growth, and digitalization.

Financial highlights

• Q4 2024 net profit was PLN 173 million; adjusted for extraordinary items, Q4 profit was PLN 904 million, up 20% year-over-year.

• Core income grew 6% year-over-year, excluding credit holidays; net interest income (excl. credit holidays) rose to PLN 5,643 million (+7% y/y).

• Net fee and commission income dropped 1% for the year and 5% in Q4, mainly due to bancassurance and regulatory changes.

• Total costs rose 13% year-over-year, driven by a 16% increase in staff costs and 11% in admin costs.

• NPL ratio improved to 4.5%; sale of NPLs in Q4 generated a pre-tax gain of PLN 74 million.

Outlook and guidance

• Expectation for continued decrease in FX mortgage-related costs in 2025, with 2025 likely being the last year of material impact barring negative legal developments.

• NII outlook for 2025 is cautiously optimistic, with gradual deposit cost adjustments expected.

• Cost of risk expected to trend toward 50-60 basis points as loan mix shifts toward corporate, though current outlook remains benign.

• Double-digit cost growth expected in 2025, with potential for single-digit growth in 2026 as legal costs decline and inflation moderates.

• Fee income expected to remain flat in 2025, with potential for improvement as business activity grows.

• Management intends to propose retaining the full 2024 net profit in own funds at the 2025 AGM, which would add about 90bps to the T1 ratio.

• The Group plans further covered bond issuances in 2025 and 2026 to meet long-term funding ratio targets.

• Macroeconomic outlook for Poland anticipates GDP growth of 2.8% in 2024 and 3.7% in 2025, with inflation expected to trend downward from 2Q25.