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2018 Financial and Social Report

In 2018 the Bank Millennium Group was engaged in executing its 2018-2020 mid-term strategy based on the following objectives:

  • Adding new drivers (investments, consumer loans, microbusinesses and SMEs and corporates) to the current growth driver in Retail Banking (acquiring current accounts).
  •  Launching a project to set up a mortgage bank.
  • Accelerating growth in Corporate Banking through lending activity and higher efficiency in the sales network.
  • Growing by tending to client satisfaction with mass personalization in the retail segment and a sectoral approach in the business segment.
  • Strongly harnessing the digital component in banking and outside banking as a competitive advantage.
  • Taking a flexible approach to the inorganic growth option.
  • Acquiring talents by tapping into our inspiring work environment.
  • Acting responsibly toward clients, employees and the society.
  • Retail accounts – number of active clients up 200 thousand.
  • Cash loans – 39% sales growth.
  • Mortgage loans – 31% sales growth.
  • Double-digit growth in loan volume in the corporate segment.
  • No growth was recorded in the balance of acquired non-deposit investment products as this market underwent very adverse global (falling stock prices on most markets) and local (dwindling trust in the market precipitated by the troubles of one debt collection company) factors.
  • The separation of a specialized area in the Bank’s structure is to strengthen its position in the micro business segment.
  • Focusing on client satisfaction accompanied by mass personalization in the retail business and a sectoral approach in business. Strongly harnessing the digital component in banking and outside banking serves this purpose as an important part of its competitive advantage. In 2018 the Bank’s leading position was affirmed: it took first place in many of the categories in the ranking prepared by ARC Rynek i Opinia, including the most important one testing client satisfaction using the net promoter score (NPS=61 for the Bank – the highest score on the market). The success achieved stems largely from new and effectively implemented digital solutions.
  • Attracting talent by offering an inspiring work environment and responsible activities in contact with employees, clients and the overall society.
  • Enhancing the organic growth strategy by executing the Euro Bank acquisition.

Specific information regarding the execution of the strategy can be found in “Management Board Report on the activity of Bank Millennium and Capital Group of Bank Millennium for 2018”.

The Bank Millennium Group’s goal in 2019 is to blend the effective execution of the transaction involving the Euro Bank acquisition with sustaining robust organic growth and retaining a high level of innovation.

After obtaining all the necessary consents and finalizing the transaction, Bank Millennium assumes that it will conduct the legal and operational merger with Euro Bank in the second half of 2019. The full operational merger will be preceded by migrating all data of Euro Bank clients and products to Bank Millennium’s platform. Bank will operate under the Millennium logo.

The Bank presumes that its major targets specified in the organic growth strategy for the 2020s will be achieved at least in line with the magnitude of its intentions or may undergo significant acceleration thanks to the merger. The first group consists of tasks for the micro and corporate segment in which the plan is to maintain the high pace of growth despite the anticipated slight economic slowdown in Poland. A database of 1.4 million new clients forming the basis for offering the Bank’s current products will be added in the retail segment to augment the current rapid growth in client and product numbers. Thanks to the merger there should be a particularly high amount of acceleration in the sales of consumer loans. First, the current portfolio will double in size in a single moment; and second, the Bank will acquire Euro Bank’s competences in extending these loans to new clients. The Bank is also getting poised to ratchet up its exposure to mortgage loans, driven both by the acquired portfolio and by maintaining the fast clip of sales of new loans. To support business development in this area, last year the Bank launched a project to set up a mortgage bank. The plan calls for obtaining the pertinent licenses and launching operational business in 2019 whereby the Bank Millennium Group will gain the capability of issuing covered bonds.

The execution of the growth strategy relating to investment products will hinge on capital market trends and the method and consequences of implementing the MiFID2 regulation, which may precipitate continuation of the unfavorable trend seen on this market since last year. The Bank is also positioning itself in 2019 to face the challenges related to the full-scale implementation of the PSD2 payment services directive. Operating in the face of greater exposure to competition posed by other banks and players moving into payment services will depend to a greater extent on the effectiveness of maintaining relations with clients whose expectations are on the rise and require more extensive personalization of services while leveraging the latest solutions and digital techniques. Retaining a leading position in the quality of services and their digitization continues to be an unwavering goal of the Bank Millennium Group and will have the necessary backing in 2019 and subsequent years in the form of the indispensable investments focused on innovation.

Effectively combining the merger with sustaining rapid organic growth should enable the Bank to achieve or surpass its major mid-term targets under the 2020 strategy, including in particular the reduction of its cost/income ratio to 40%, generation of net profit totalling PLN 1 billion and generation of ROE that would place the Bank among the top three leading banks in Poland.