Results of business segments
The following information provide Profit and Loss data as well as business volumes for the Group’s two main business segments: Retail and Corporate. Retail segment includes services to mass market individual Clients, affluent Clients, individual entrepreneurs and small businesses (of annual turnover below PLN 5 million). Corporate segment includes services to medium and large companies as well as public sector entities.
For the purpose of presentation of current year results comparable with the previous year results, the liquidity premium has not been applied to below presented Net interest income for 2016 (implemented by the recommendation of KNF since 1 January 2016). Accordingly, the pre-tax income does not include a charge of a new tax on financial institutions (imposed since 1 February 2016).
The total operating income of the Retail segment in 2016 (without liquidity premium) amounted to PLN 1,655.1 million and increased by 5.7% yearly mainly thanks to Net interest income increase by 10.7% year-on-year. Net commission income fell by 4.3% year-on-year. Operating expenses of retail segment increased slightly in 2016 by 1.5% yearly. Net impairment provisions increased by 15.4% yearly in line with growing share of consumer loans in retail portfolio. As a result of above factors, pre-tax income of Retail segment increased in 2016 by 8.6% year-on-year to the level of PLN 591.1 million.
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Retail segment (PLN million) |
2016 | 2015 | Change
2016/2015 |
|---|---|---|---|
| Net interest income * | 1184.1 | 1069,8 | 10.7% |
| Net commission income | 429.2 | 448,5 | -4.3% |
| Other income | 41.8 | 47,3 | -11.7% |
| Total operating income | 1655.1 | 1565,6 | 5.7% |
| Total operating expense | (835.4) | (823,2) | 1.5% |
| Net impairment provisions | (228.5) | (198.0) | 15.4% |
| Pre-tax income | 591.1 | 544,5 | 8.6% |
(*) without liquidity premium, which in financial statement was recognized in the third segment of “Treasury, ALM and other” (in accordance to Recommendation P of the local regulator KNF)
The total operating income of Corporate segment (without liquidity premium) in 2016 amounted to PLN 472.3 million and increased by 6.8% yearly, thanks to increase all income groups: Net interest income (by 3.7% year-on-year), Net commission income (by 5.5% year-on-year) and other income (by 30.8% year-on-year). Operating expenses increased by 6.1% year-on-year. The value of net impairment provisions on loans to companies decreased significantly during 2016 year by PLN 42.5 million, to a net release of PLN 0.7 million, which reflects improving asset quality and recovery activities. The abovementioned factors resulted in a significant growth of pre-tax profit of Corporate segment by 31.4% to the level of PLN 249.8 million.
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Corporate segment (PLN million) |
2016 | 2015 | Change
2016/2015 |
|---|---|---|---|
| Net interest income * | 270.9 | 261.4 | 3.7% |
| Net commission income | 147.1 | 139.4 | 5.5% |
| Other income | 54.2 | 41.5 | 30.8% |
| Total operating income | 472.3 | 442.3 | 6.8% |
| Total operating expense | (223.1) | (210.3) | 6.1% |
| Net impairment provisions | 0.7 | (41.8) | – |
| Pre-tax income | 249.8 | 190.1 | 31.4% |
(*) without liquidity premium, which in financial statement was recognized in the third segment of “Treasury, ALM and other” (in accordance to Recommendation P of the local regulator KNF)
Total Customer funds collected by Bank Millennium Group as at 31 December 2016 amounted to PLN 63,092 million. Customer funds of retail segment amounted to PLN 46,899 million and accounted for 74% of total Group’s Customer funds. The funds comprised deposits (PLN 39,682 million), bonds for individuals (PLN 403 million) and investment products, including own and third party mutual funds, insurance-saving products etc. (PLN 6,814 million). Deposits of companies as at 31 December 2016 amounted to PLN 16,194 million and accounted for 26% of total Group’s Customer funds.
Total gross loans of the Group as at 31 December 2016 amounted to PLN 48,385 million. Loans to individual Customers to PLN 34,084 million and accounted for 70% of total Group’s loans. The loans comprised mortgage loans (PLN 27,816 million) and other retail loans, including cash loans, credit card loans, overdrafts etc. (PLN 6,269 million). Loans to companies as at 31 December 2016 amounted to PLN 14,301 million and accounted for 30% of total Group’s loans. These loans, besides different groups of loans and overdrafts for companies, included also leasing receivables (PLN 5,261 million).
Structure of Group’s Customer Funds
Structure of Group’s Loan Portfolio (gross)