PRESS RELEASE Warsaw, 28 October 2016 r. Stable growth of the Bank s income; growing number of customers and users of mobile and electronic banking Activity of Bank Millennium Group during 3 quarters of 2016 Bank Millennium s net profit after 3 quarters of 2016 amounted to PLN 569.8 million Higher than market speed of retail deposits growth maintained: +16% y/y and +2% q/q More than half million active users of mobile solutions: almost 50% growth yearly Bank Millennium Group consolidated net profit of in 1-3Q 2016 amounted to PLN 569.8 million i.e. 15.5% higher than in the corresponding period of 2015. Such high dynamics resulted mainly from one-off income from VISA Europe transaction of PLN 283 million, booked in 2Q 2016, which more than offset the negative impact of new banking tax. Net profit for 3Q 2016 amounted to PLN 138.8 million. The number of active retail customers grew 37,000 to reach 1,451,000. Commenting on the Bank s activity Chairman of the Management Board of Bank Millennium Joao Bras Jorge said: After 3 quarters of 2016 we attained the very good net financial result of PLN 570 million 15.5% higher than in the same period of 2015. Moreover core income grew, in particular net interest income, with moderate growth of costs and reduction of provisions which was possible thanks to sound asset quality. We have been consistently implementing the strategy for 2015-2017: the number of active retail customers has been growing dynamically as of end of September it was close to 1.5 million, with Konto 360 - the flagship product being held by more than half a million people. Also popularity of digital solutions has been growing markedly, to wit the almost 50% increase of the number of mobile app users and 14% growth of e-banking customers seen in the course of last 12 months. We continue to enrich our offering and keep designing innovative solutions; recently having implemented i.e. augmented reality technology as well as the 3D Secure solution for authenticating transactions with a fingerprint, we developed a proprietary technology for data scanning, which we shall be releasing soon to customers when purchasing insurance. Financial highlights of 1-3Q 2016 results are the following: Core Income, defined as a combination of net interest and commission income, amounted to PLN 1,573.5 million for 1-3 quarters 2016 and increased by 4% compared to the corresponding period of the previous
year. This indicates growing income from key bank's business. In quarterly terms the continuation of core income growth can be seen: by 2.3% vs. 2 quarter 2016. Net Interest Income for 1-3 quarters 2016 reached PLN 1,149.1 million and increased by 8.7% versus the corresponding period of the previous year. Net Commission Income in 1-3 quarters 2016 amounted to PLN 424.3 million, which means a 6.9% decrease year-on-year due to weaker capital markets related commissions as well as lower insurance fees. Total costs in 1-3 quarters 2016 amounted to PLN 830.6 million, which means a small increase by 2.3% when compared to the corresponding period of 2015. In quarterly terms, costs for 3 rd quarter 2016 decreased by 1.1% compared to the previous quarter. Total net impairment provisions created by the Group in 1-3 quarters 2016 amounted to PLN 159.5 million and were 18.6% lower than provisions created in the previous year. Net Profit for the analysed period amounted to PLN 569.8 million i.e. was higher by 15.5% year-on-year. 2 Liquidity, asset quality and solvency Faster growth of deposits than loans experienced during last quarters caused, that the Group s loan-todeposit ratio improved significantly, from 89.7% level in September 2015 to 84.9% in September 2016. The Group enjoys one of the best asset quality among Polish banks. Share of impaired loans in total loan portfolio remains on a stable level of 4.6% - both now and in September 2015. Capital position of the Group remains very solid. Consolidated equity increased by 11.5% yearly to the level of PLN 6,852 million. Consequently, all the capital ratios increased strongly during last year to very solid levels: consolidated Total Capital Ratio to 18% and Common Equity Tier 1 ratio to 17.8%. Q3 2016 Group business activity recap Retail Banking: growth in almost all business areas The number of active personal customers was 1,451,000 at end of Q3 2016. In the course of the last 12 months their number increased by 107,000, which represents fulfilment of the 2015-2017 strategic plan of new customers acquisition. The dynamic increase of the number of customers is first of all attributable to the Konto 360 offering, which has been unceasingly popular ever since its launch in May 2014, also with young generation customers. Already one in five accounts gets opened by persons aged under 26. The number of Konto 360 accounts exceeded the 500,000 milestone in July 2016, growing to 564,000 in the end of September. In the third quarter the value of deposits was increased by almost PLN 700 million, reaching PLN 38,227 million, which means 16% growth over Q3 2015. The value of funds kept on current and savings accounts was up 32% y/y; they accounted for 55% of total deposits of retail segment customers. New cash loan sales in 1-3Q 2016 stood at PLN 1,779 million; 7.7% less in annual terms. At the same time sales of mortgages grew significantly by 44% in the course of 12 months (to reach PLN 691 million). Loans to individual customers were at PLN 33,610 million, maintaining the level attained in the same period of 2015 (PLN 33,441 million).
E-banking, new solutions in the mobile app As of end of September 2016 the number of customers making active use of electronic banking exceeded 940,000 i.e. 14% more than in the same period of 2015. The number of users of mobile banking as of end of September 2016 was 521,000 (which signifies 46% growth y/y). In Q3 alone this number rose by 47,000. The third quarter of this year saw extensive work being done to optimise online sales processes, e.g. for cash loans. In order to raise the level of security, user-adjustable limits were introduced on online card transactions. After making use of augmented reality technology and then after implementing 3D Secure fingerprint authorisation of transactions, Bank Millennium proceeded to develop further innovative solutions. Soon enough Millennium will be offering motor insurance completely online both in the mobile app as well as in the Millenet transactional system. The purchase process will be bespoke and innovative. Bank Millennium will be the first bank on the market to make use of scanning the Aztec graphic code from the vehicle s registration certificate. The applied solutions will make the insurance purchase process intuitive and fast. 3 Customer service - omnichannel With a view to the needs of its customers as well as latest trends, Bank Millennium is successfully applying the omnichannel approach in customer communication, comprising branches, call center, online and mobile banking. It is worth noting the growing share of digital channels for selling the bank s products and services in Q3 of this year 23% of cash loans and 40% of new and increased authorised overdrafts were granted with use of electronic channels. Already 99% transfers are sent and 90% term deposits are set-up online. As of end of Q3 2016 the bank had 381 branches (394 in Q2 2016). In keeping with the strategy the bank continues to upgrade branches, improving their functionality and raising their effectiveness. Modern architectural layout, enhancing the advisory role of branch staff, a more appealing customer area, introduction of modern information media are the key strengths of the new branches. New service centres were opened in shopping malls frequented by customers (C.H. Manufaktura in Łódź, C.H. Matarnia in Gdańsk). In upcoming months the bank is planning to open innovative branches in Katowice, Warsaw and other Polish cities. Corporate Banking: good financial and sales Q3 2016 in corporate banking resulted both in good financial performance as well as development of customer relationships based on transactional banking and FX. As of end of September 2016 loans to companies including leasing totalled PLN 14,174 million gross, maintaining the level from the same period of last year. The value of leased assets in the first three quarters of 2016 stood at PLN 2.35 billion, which means 18% growth over September 2015 and 28% growth in terms of the number of signed agreements. The leasing portfolio grew PLN 629 million (14.4%) y/y to reach PLN 5 billion.
Factoring turnover after 3 quarters of 2016 reached the record-high level PLN of 10,886 million, i.e. more than 13% higher than in the same period of last year while the balance of advances paid was PLN 1,815 billion. Bank Millennium thus remains 4 th among Polish factoring companies with a close to 10% market share. In the corporate segment also the number of local transactions increased (13% y/y/) as well as the value of FX transactions (33%), reaching PLN 19.8 billion till the end of September 2016. Corporate deposits stood at PLN 16,071 million, which means their 12% decrease in annual terms. This results from adjustment to liquidity needs and pursuing a specific pricing policy. At the same time balances on current accounts were seen to grow. Customers of Bank Millennium are taking an active part in obtaining EU funding. In Q3 2016 among EUsupported loans the most popular was the loan for technological innovations, which enables businesses to finance innovative projects with a loan. The loan will be partly repaid with a non-repayable subsidy in the form of a technology bonus from BGK. In the second round of subsidy applications between July and October 2016 Bank Millennium was issuing to customers decisions in principle regarding the loan for technological innovations. Results of the 2 nd round are expected in January 2017. In the first round of applications, the results of which were announced towards the end of June 2016, more than half of the companies applying for the loan for technological innovations in Bank Millennium, were awarded subsidies from BGK. 4 E-banking for companies In Q3 2016 Bank Millennium introduced another improvement for its customers the Documents via Millenet module, which aims to improve the relationship between the bank and corporate customers. The ability to send documents in electronic form to the bank is crucial for efficiency of the credit process, cutting down significantly on the time-to-disbursement, while using an electronic banking system allows offering a security level and ease of service on a par with top market standards. Since the launch of the service on 1 st July 2016, almost half of the corporate customers using financing had activated access to the new function, with one out of three actively using the opportunity to send documents via Millenet. Quality confirmed by Newsweek s ranking list Bank Millennium has been the only one to be recognised in all categories of Newsweek s Friendly Bank 2016 ranking list coming second in Mortgage Banking and Internet Banking, and third in Traditional and Mobile Banking. As in previous years, the banks were evaluated by auditors from a survey company, who as mystery shoppers were during three months testing and evaluating quality of service and the offering of banks in Poland.
5 Synthetic Profit & Loss Account (PLN million) 1-3Q 2016 1-3Q 2015 Net Interest Income 1 149.1 1 056.9 8.7% Change 2016/2015 Net Commission Income 424.3 455.7-6.9% Core Income 1 573.5 1 512.7 4.0% Other Non-Interest Income 317.5 117.2 170.8% Total Operating Income 1 890.9 1 629.9 16.0% Personnel Costs (417.2) (411.1) 1.5% Other Administrative Costs (413.4) (400.6) 3.2% Total Operating Costs (830.6) (811.7) 2.3% Impairment provisions (159.5) (196.0) -18.6% Special banking tax (127.9) 0.0 - Pre-income tax Profit 772.8 620.8 24.5% Income tax (203.1) (127.4) 59.5% Net Profit 569.8 493.5 15.5% The full report will be available here: https://www.bankmillennium.pl/en_us/about-the-bank/investor-relations/financial-reports/quarterlyreports