Dear Sirs,

on behalf of Members of the Management Board of Bank Millennium I wish to invite you to read the 2016 Annual Report.

For us and for the whole sector 2016 was the year of growth, but also the year of challenges in the economic environment as low interest rates and uncertainty about potential regulations regarding mortgage loans in foreign currencies granted in the past. Banks also came under pressure from the new bank tax, which significantly trimmed their earnings, and from growing capital requirements. Functioning of the Polish banking sector was also affected by economic-political international events e.g. BREXIT and the US presidential elections as well as consumer trends characteristic for the entire financial market. From the point of view of a bank focusing on innovation, what turned out to be most important for us, was the unfolding mobility and omnichannel nature of services provided as well as the growing role of the Internet, which becomes increasingly important sphere of the Bank’s interaction with customers.

In 2016 we generated consolidated net profit of PLN 701 million. The strong result supported by one-off proceeds from sale of VISA Europe shares, came also as a result of a well-functioning business. The Group’s financial situation allows us to realistically think about further stable development in 2017.

Core revenues, consisting of net interest income and commissions, grew at a stronger pace than costs. Consequently, cost to income ratio fell below 50%. Good loans portfolio quality, allowing credit risk provisions to be lower than in previous year, which was another driver of profit increase.

In 2016 we also further significantly strengthened the capital base so the capital ratio TCR reached the level of 17.4%, comfortably above regulatory requirements.

Another medium-term objective, we reached, was to accelerate the rate of acquisition of retail customers via all available channels, traditional and digital, with their profitability sustained. By the end of 2016 the number of active customers went up reaching level of nearly 1.5 million. Among new customers the biggest group was that of young people aged under 26 who were attracted to the Bank by the comprehensive offering of online services and the friendly mobile app.

I can definitely say last year was a year of mobility – the number of people choosing the mobile app as their banking service channel grew nearly by a half, while the number of online banking customers went up and reached 1 million. This was also a year of innovation. Among other things we created Poland’s first motor insurance offered in a phone where we used the technology of scanning data from the vehicle’s registration certificate. We were also the first in Poland to enable online registration of pre-paid phone SIM cards without the need to visit an operator’s outlet.


As part of the digital revolution in Polish administration our customers began to use online banking to submit applications in the “Family 500+” programme, to use ZUS Electronic Services Platform and Trusted Profile, which opens safe and convenient access to a number of public administration websites. This is an excellent example of the positive role the whole banking sector plays in digitalisation of Polish government offices as well as the banks’ response to the growing needs of Polish families.

In fact we went even further. Using our internal technological power as well as business capabilities of examining paths, which may generate new revenue streams, in 2016 we launched “goodie”, the opened smartshopping platform. The new platform aggregates shopping discounts according to context, blending the experience of Bank Millennium Group in building the best banking systems with a completely new area of shopping apps.

Innovation is not just about products and services offered to customers. Innovation also involves the process of developing a new approach and forging an idea into a product or service. The idea we had to contribute to the debate about innovation was publication of the “Millennium Index – Regional Innovation Potential” report. Perceiving differences in the innovation potential of individual regions we are analysing the broad business context.


Bank Millennium is a versatile institution whose activity reaches above and beyond the financial business. We are consistently implementing a programme of supporting culture and are acting for local communities and the environment. We are training staff in principles of ethical sales and marketing, adjusting offered services to the needs of disabled persons. Currently all cash machines and 90% of branches are adapted to their requirements. By reducing the consumption of materials, electricity, fuel and water we take care of the natural environment. The high standards in running responsible business were confirmed in many surveys as well as the long-standing presence in RESPECT Index – an index of public companies, which follow the best standards of CSR and corporate governance. We offer our Employees a stable working environment as well as the possibility to develop skills by attending specialist training and community actions. We implement social programmes via Bank Millennium Foundation focusing on three areas: financial education, culture and employee volunteering.

The number one priority of the Bank is to provide customers with the highest quality of service. In our activities we are always driven by the customer and his voice. Every year we hold more than twelve thousand interviews and analyse each claim to see what else we can improve further. Introducing new solutions is a success only when customers not only accept them but also come to like them – then they will start to use the solutions. For some years now we have been working in accordance with “design thinking”, applying service design methodology, which is oriented at customer experience focusing on understanding and satisfying their specific needs. We believe that listening to customers and service quality, which reflect this, are fundamental to business – allowing relations with existing customers to be developed and new customers to be acquired.

Solutions already implemented have contributed not only to growth of customer satisfaction but have also been appreciated by the market. In 2016 Bank Millennium won recognition in the Newsweek’s Friendly Bank competition – it was the only bank to make it to the top three in all four categories: mortgage, internet, traditional and mobile banking. This is best proof of the quality of the services we offer and of the strategy we are successfully implementing.

Joao Bras Jorge

President of Bank Millennium

[GRI 102-14]

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