Bank Millennium's net profit in the second quarter exceeded expectations

The Bank Millennium Group's net profit in the second quarter of 2025 increased to PLN 331.5 million from PLN 228.5 million a year earlier, the bank announced in a report. Net profit was 26 percent above expectations, with the PAP Biznes consensus projecting a profit of PLN 262.8 million. The bank stated that its results were impacted by a larger than usual number of significant and extraordinary events.

The expectations of eight brokerage houses regarding the bank's net profit in the second quarter of 2025 ranged from PLN 238 million to PLN 334 million.

Net profit in Q2 2025 increased by 45% year-on-year and 85% quarter-on-quarter.

In the first half of 2025, net profit amounted to PLN 510.7 million, while a year earlier it was PLN 356.9 million.

"(...) after the first half of 2025, we are well on track to implementing the initiatives of Strategy 2028: Value and Growth, and we have been actively monitoring key business and financial goals. We have focused on sustainable growth in the retail segment, strengthening the bank's position in the medium and large enterprise segment, and improving profitability," said the bank's CEO, Joao Bras Jorge, quoted in the press release.

The bank's results were weighed down by provisions for Swiss franc loans. Provisions for legal risk related to foreign currency mortgage loans totaled PLN 588.8 million in the second quarter. Total quarterly costs recognized in the profit and loss account related to the portfolio of these loans (including provisions for legal risk, settlement costs, and, among other things, the costs of court proceedings, statutory interest, and legal representation) increased by 13% quarter-on-quarter to PLN 619 million before tax.

The bank said its second-quarter results were impacted by a larger than usual number of significant and extraordinary events.

On the positive side, other operating income included a pre-tax profit of PLN 28 million from the sale of real estate, and the result on financial instruments included the revaluation of shares in one of the capital investments (PLN 55 million).

In turn, the seasonal settlement with the card organization (PLN 37 million) reduced administrative costs, while the sale of the NPL portfolio ( cash and mortgage loans in PLN) reduced the cost of risk by a total of PLN 86 million.

On the negative side, in addition to costs related to the foreign currency mortgage loan portfolio, a provision of PLN 37 million for costs related to consumer protection was charged to other operating costs, while an additional provision of PLN 14 million for unused holidays was included in personnel costs (the bank expects that it will be largely resolved by the end of 2025).

The bank's net interest income in the second quarter reached PLN 1,448.3 million, in line with expectations. The PAP consensus was PLN 1,442.4 million. This result increased 23% year-on-year and 2% quarter-on-quarter. The net interest margin fell to 4.1% from 4.2% the previous quarter.

Fee and commission income amounted to PLN 188.1 million, also in line with the consensus (PLN 186.8 million). Fee and commission income fell 1% year-on-year and increased 3% quarter-on-quarter.

The bank said its core operations remained solid and were the main source of its strong quarterly result.

"The growth of the loan portfolio was moderate (no change q/q), however, the dynamics in the corporate segment clearly accelerated (+3% q/q, +6% y/y), with particularly strong growth recorded in the small business segment," the report reads.

In contrast, the retail portfolio showed negative dynamics q/q and y/y, which was the result of a rapid decline in the foreign currency mortgage loan portfolio and low sales of new PLN mortgage loans, which failed to offset the solid sales of consumer loans.

It was reported that the loan-to-deposit ratio reached a new low of 61%.

The balance of provisions (excluding provisions for disputes arising from foreign currency mortgage loans) was positive in the second quarter, reaching PLN 6.1 million. Analysts surveyed by PAP Biznes expected a net provisioning of PLN 3.7 million.

The total NPL ratio was 4.2%, reflecting, among other things, the sale of retail NPLs and a decline in the NPL ratio in the retail segment to 4.3% from 4.5% at the end of March 2025 and a further improvement in the NPL ratio in the corporate segment (to 4.1% from 4.3%).

Total costs amounted to PLN 602 million, 7% higher than expected (PLN 561.6 million). Costs increased 19% year-on-year and decreased 10% quarter-on-quarter.

The bank reported that the number of new settlements with clients with foreign currency loans continued to outweigh the number of new lawsuits. To date, over 28,000 settlements have been concluded, representing 46% of the number of loan agreements active at the time of the full implementation of the settlement program.

The inflow of new court cases concerning foreign currency loans continued to slow down (slightly over 1,000 in Q2 2025 compared to the 2024 quarterly average of 1,461), the number of active lawsuits against the bank continued to decline, and the ratio of legal risk provisions to gross active portfolio exceeded 142%.

The bank announced that its net profit in the second quarter, excluding costs related to foreign currency loans, would amount to PLN 887 million.

At the end of June 2025, the group's total T1/TCR ratio stood at 13.8% and 15.6%, respectively, representing levels 5.0 percentage points and 4.8 percentage points above minimum regulatory requirements. The bank reported that its capital ratios decreased as a result of the implementation of the CRR3 regulatory technical standards.

(PAP Business)

seb/