Financial and
ESG report 2020

Impact of covid-19 pandemic on activity of Bank Millennium group

The outbreak of coronavirus pandemic in 1Q20 resulted in rapid changes in the dynamics of the Group’s business and enforced changes of its strategic priorities. Business dynamics saw significant volatility during the year reflecting the level of the pandemic, anti-pandemic regulations introduced by the government and their impact of activity of customers of the Group.

As a part of customer support, the Group introduced a programme of credit moratoria. After the initial spike in late March/early April and in June when a part of retail customers applied for extensions of credit holidays to six months, the number of applications for credit holidays in the retail segment declined significantly. At the end of June, loans with active and approved credit holidays represented 10% of total loan portfolio, less than 12% of retail portfolio, less than 3% of retail portfolio and around 12% of leasing portfolio. On December 31, 2020 there were 9,367 active ‘Covid-19 credit holidays’ schemes relating to outstanding cash loans and 892 active holidays schemes on mortgage loans with respective loan volumes of PLN 267 million and PLN 250 million. The public credit moratoria introduced in June by the so called ‘Anti-crisis shield 4.0’ enjoyed little
take up so far with merely 444 applications filed by the end of the year (outstanding balance of PLN 53 million). The number of credit holidays for corporate customers also fell significantly (to c50) from levels observed at the end of September with value of loans with deferred exposures totalling PLN44 million. The quality of PLN 7.6 billion worth of exposures that had been subject to credit moratoria was solid with c2.5% delayed over 30 days or with default triggers identified. Cash loans were at YE20 the segment where the proportion was the highest (5.1%), while PLN mortgages showed least quality problems (1.1%).

Detailed information on exposures that are subject to credit moratorium is presented in section 9.3 point (3e) in this financial report.

The impact of pandemic on financial results of Bank Millennium Group

From the perspective of year 2020 overall, the impact of the pandemic on results of the Group was significant despite lower than initially expected negative impact on economic growth and key economic parameters, particularly the unemployment rate. The 2020 net profit was well below our aspirations. Itself, the cumulative NII drop in 2020 compared to the annualised 4Q19 level totalled PLN 223 million or 8%. Owing to mitigating actions the negative impact was eventually smaller than our estimates made in 2Q20 (PLN 240 million to PLN 285 million) but nonetheless it, ceteris paribus, resulted in lower NII than would otherwise have been achieved.

Other significant matters relating to the impact of the pandemic are presented in the Management Board Report on the activity of Bank Millennium and Capital Group of Bank Millennium for 2020

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