Bank Millennium posts strong Q2 results, exceeding expectations

Bank Millennium announced a strong second-quarter performance, reporting a net profit of 407.6 million Polish zloty. This figure represents a significant 22.9% increase compared to the same period last year and a 35.5% rise from the first quarter. The bank's results surpassed market expectations, with analysts surveyed by "Parkiet" anticipating an average profit of 395 million zloty.

Key financial indicators largely aligned with forecasts. The net interest income for the quarter was 1.387 billion zloty, a slight decrease of 4.2% year-on-year but stable compared to the previous quarter. Commission income reached 207.2 million zloty, marking a 10.1% year-on-year increase. The return on equity (ROE) improved to 14.8%, with the year-to-date figure at 13.6%. Bank officials highlighted these strong results, achieved despite lower market interest rates and a higher effective tax rate, attributing them to robust commission income, cost control, and reduced burdens from its Swiss franc mortgage portfolio.

The situation concerning the Swiss franc loan portfolio has notably improved. Quarterly costs related to foreign currency mortgage loans fell by 68% year-on-year to 198 million zloty before tax. The number of active Swiss franc loans also decreased by 1,782 to 10,827 in the second quarter. While new lawsuits related to these loans saw a slight decrease, the number of settlements with clients also declined.

However, the bank is increasingly focused on the emerging risk of "free credit sanctions" (SKD) for consumer loans. Bank Millennium has received 3,043 lawsuits concerning consumer loans. Although the bank won 437 out of 513 finalized cases, uncertainty in judicial rulings led it to book an additional 61 million zloty gross charge. Furthermore, the bank will cease charging interest on financed consumer credit costs like commissions and insurance, resulting in a one-time 35 million zloty reduction in interest income for the second quarter. Management acknowledges the difficulty in fully estimating the potential risk due to inconsistent court rulings.