Net Interest Income (pro-forma) in 2019 reached PLN 2,499.4 million and increased by 33.1% versus the previous year. The growth was supported by 7 months interest income of Euro Bank. Blended with Euro Bank, average Net Interest Margin (over average interest earning assets) in 4Q 2019 reached 2.94% which was 30 bps better than NIM in 4Q 2018. The growth of NIM was limited by the provision created to cover potential returns of fees on cash loans.
Net Commission Income in 2019 amounted to PLN 699.2 million, which means an increase by 5.8% y/y. Contribution of Euro Bank to this line of income was small, as most of commissions collected by this bank was recognized in interest income through effective interest rate mechanism. Insurance, loans and cards related fees grew most during the year, while capital market related ones visibly decreased.
Core Income, defined as a combination of net interest and commission income, reached the amount of PLN 3,198.5 million which means a y/y increase of 26%, partially owing to the merger.
Other Non-interest Income, which comprises FX Result, Results on Financial Operations (without interest margin on derivatives and fair value adjustment on credit portfolio) and net other operating income and costs, amounted to PLN 273.0 million in 2019 and increased visibly by 44.7% y/y. This line of results included PLN 27 million one-off tax asset recovery booked in 1Q 2019, PLN 45 million of positive revaluation of Bank Millennium’s shares in PSP company (an owner of BLIK) and PLN 32 million negative impact of provision to cover potential returns of up-front fees on cash loans. The total provision of PLN 66 million was split between Net Interest Income and Other Operating Costs.
Total operating income (pro-forma) of the Group reached PLN 3,471.5 million in 2019 and increased 27.3% y/y and was flat q/q.
Group's Operating Costs (PLN million)
|Other Administrative Costs*
|– of which Banking Guarantee Fund (BFG) fees
|– of which Euro Bank integration costs **
|Total Operating Costs
|Total costs without integration costs**
|Cost/Income – reported
|Cost/Income – adjusted ***
(*) including depreciation
(**) additional administrative costs directly related to Euro Bank acquisition, merger and integration processes
(***) without PLN 27 million extra release of tax asset provision in 1Q 2019 and PLN 45 million of positive revaluation of shares in PSP (3Q 2019), and also without integration costs