Financial and
ESG report 2020

Profit and Loss Account

Group’s operating income

2020 2019 Change
Net interest income *  2 583.1  2 499.4  3.3% 
Net commission income  746.1  699.2  6.7% 
Core income   3 329.1  3 198.5  4.1% 
Other non-interest income */**  248.7  273.0  -8.9% 
Total operating income **  3 577.8  3 471.5  3.1% 
(*) Pro-forma data: Net Interest Income includes margin from all derivatives. From 1st January 2006 the Bank started to apply hedge accounting principles. Starting from that date, the margin from these operations is reflected in Net Interest Income. However, as this hedge accounting does not cover all the portfolio denominated in foreign currency, the Bank provides pro-forma data, which presents all margin from derivatives in Net Interest Income caption, whereas in accounting terms part of this margin (PLN34.5mn in 2020 and PLN62.5mn in 2019) is presented in Other Non-Interest Income. In the Bank’s opinion, such approach allows better understanding of the real evolution of this item from economic point of view.
(**) Without fair value adjustment of credit portfolio (PLN42.9mn in 2020 and PLN23.4mn in 2019), which is included in the pro-forma cost of risk


Net interest income (pro-forma) in 2020 reached PLN2,583mn and increased 3% compared to the level recorded in the previous year. The growth was supported by income from transactions with clients of acquired Euro Bank which helped to offset the negative impact of much lower market interest rates in most of 2020. Net interest margin (over average interest earning assets) (NIM) in the whole 2020 reached 2.61% and was lower by 17 basis points than in 2019. 4Q20 showed that the negative trend in margin reverted and average NIM increased slightly by 4 basis points versus the previous quarter to the level of 2.53%. The contraction of NIM stemmed from unprecedented interest rates cuts by the MPC (down 140 basis points in March through May) and leveraged impact of the maximum interest rate (cut by 280 basis points from 10% to 7.2%). The high concentration of the cuts and their immediate impact on remuneration of interest earning assets (especially consumer loans) amplified the impact in the short term due to the time needed for the Bank to adjust its funding (deposit) cost accordingly. Moreover, when compared with the previous year, interest margin was undermined by the return of fees on early repayments of consumer loans. 

Net commission income in 2020 amounted to PLN746mn, growing 7% y/y. The key source of this growth were commissions from insurance and cards. Investment products distribution fees and brokerage fees showed a rebound. On the other hand, loan fees contracted as lending activity decelerated during the reported year, especially in corporate and consumer loans. Management fees on mutual funds and transactional fees decreased as well due to the lowered regulatory cap and significant outflows in 1Q20.  

Core income, defined as a combination of net interest and net commission income, reached PLN3,329mn in 2020, translating into a y/y increase of 4% partially owing to the merger with Euro Bank. 

Other non-interest income, which comprises FX result, results on financial assets and liabilities (without interest margin on derivatives and fair value adjustment on credit portfolio) and net other operating income and costs, amounted to PLN249mn in 2020 and decreased by 9% y/y due to extraordinary items: provisions for the return of commissions from loans repaid earlier by clients which was partly offset by the income from revaluation of shares in VISA in 4Q20 with pre-tax impact of PLN53.7mn and valuation of indemnities provided by Societe Generale in the context of Euro Bank acquisition.  

Total operating income (pro-forma) of the Group reached PLN3,578mn in 2020 showing an increase by 3% y/y). 

Operating costs (PLNmn)

2020 2019 Change
Personnel costs  (856.3)  (836.4)  2.4% 
Other administrative costs *  (896.5)  (889.7)  0.8% 
– o/w Banking Guarantee Fund (BFG) fees  (167.2)  (123.5)  35.4% 
Total operating costs  (1 752.8)  (1 726.1)  1.5% 
– o/w integration and restructuring costs **  (66.1)  (113.0) -41.5%
Total costs without BFG  (1 585.6)  (1 602.6)  -1.1% 
Total costs without integration and restructuring costs **  (1 686.7)  (1 613.1)  4.6% 
Total costs without integr. and restr. costs and BFG **  (1 519.5)  (1 489.6)  2.0% 
Cost/income ytd – reported  49.0%  49.7%  -0.7pp 
Cost/income ytd – adjusted ***  46.7%  46.9%  -0.2pp 
(*) including depreciation
(**) additional administrative costs directly related to Euro Bank acquisition, merger and integration processes
(***) without, one-off income and without integration costs


Total costs amounted to PLN1,753mn in 2020 translating into 2% increase compared to the 2019 level. Apart from higher costs resulting from incorporation of staff and sales infrastructure of former Euro Bank, the Bank created a provision for staff restructuring in the amount of PLN41mn in 2020 (including provisions for group redundancies and retention bonus). The total value of integration costs (a small part of which is also presented in other operating cost) in the reporting period was PLN67mn and it was lower than in 2019 (PLN116mn). Total costs ex-BFG and integration in 2020 amounted to PLN1,520mn showing a 2% increase y/y.  

Personnel costs amounted to PLN856mn and grew 2% y/y. After incorporating employees coming from Euro Bank (2.4 thousand FTEs) the Group reduced its personnel to 7,493 FTEs at the end of December 2020 which translates into an annual reduction of 971 FTEs (-11% y/y). Without employees absent due to long leaves, the number of so called active FTEs was much lower, i.e. at 6,602. 

Employment (FTEs)

31.12.2020 31.12.2019 Change
Bank Millennium (with Euro Bank)  7 164  8 118  -11.7% 
Subsidiaries  329  347  -5.1% 
Total BM Group  7 493  8 464  -11.5% 
Total BM Group (active* FTEs)  6 602  7 646  -13.7% 
(*) active FTEs denote employees not on long-term leaves


Other administrative costs (including depreciation) reached PLN896mn and grew 1% y/y. Costs connected directly with the integration of Euro Bank in 2020 amounted to PLN24.7mn and were 78% lower than in 2019.  

Euro Bank acquisition resulted in an initial very strong increase in the number of outlets which subsequently saw a reduction in line with the Bank’s branch network optimisation policy. At the end of December 2019 the total number of branches (including Euro Bank) was 830 and has since been reduced by 128 units (mostly Bank’s own branches) to 702 outlets at the end of December 2020. 

The Bank currently estimates that total cumulative integration expenses (P&L and capex) connected with Euro Bank acquisition will be c25% below the original plan.  

Effective accomplishment of restructuring process allowed capturing synergies in the amount of PLN168mn pre-tax in 2020 overall (revised upwards from the original budget). First net tangible synergies were achieved already in 4Q19 (PLN23.4mn), while in the whole 2020 these amounted to over PLN100mn pre-tax.  

Cost-to-income ratio without extraordinary items (mainly integration costs, revaluation of VISA shares and the above mentioned provision in other operating income and cost) reached 46.7% in 2020 and was 0.2 percentage points lower compared to the last year level.  

Net profit (PLNmn) 2020 2019 Change
Operating income   3 577.8  3 471.5  3.1% 
Operating costs *  (1 752.8)  (1 726.1)  1.5% 
Impairment provisions and other cost of risk **  (621.3)  (439.0)  41.5% 
 – of which COVID-19 risk related provision  (133.3)     
FX legal risk related provision   (713.6)  (223.1)  219.8% 
Banking tax  (279.1)  (248.0)  12.6% 
Pre-tax profit  210.9  835.3  -74.7% 
Income tax  (188.1)  (274.6)  -31.5% 
Net profit – reported  22.8  560.7  -95.9% 
Net profit – adjusted***  709.5  921.1  -23.0% 
(*) without impairment provisions for financial and non-financial assets
(**) including fair value adjustment on loans (PLN-42.9mn in 2020 and PLN-23.4mn in 2019) and loans modification effect (PLN -13.6mn in 2020 and PLN-11.7mn in 2019)
(***) without extraordinary items


Total cost of risk, which comprised net impairment provisions, fair value adjustment (of a part of credit portfolio) and result on modifications, bore by the Group amounted to PLN621mn in 2020 and was 42% higher than in 2019. The higher level of provisions resulted from the incorporation of the loan book of Euro Bank, changes in the risk model in the retail segment with introduction of more conservative default definition, but also from additional provisions for risk related to COVID19 impact amounting to PLN133mn in 2020.  

Risk charges for retail segment in 2020 stood at PLN408mn, while for the corporate segment and other they amounted to PLN80mn (all excluding extra COVID-19 provisions). In relative terms, the cost of risk (i.e. net charges to average gross loans) for 2020 reached 83 basis points (65 bps without COVID-19 charge) compared to 68 basis points in 2019.  

In 2H20, the Bank sold portfolios of consumer NPLs. The transactions contributed positive PLN19mn to the risk charge line.The bank also recovered receivables at former SKOK Piast formerly classified as NPLs which resulted in cPLN20mn positive contribution to the risk charge line in the P&L.  

Additionally, in 2020 the Bank continued to create provisions for legal risk related to FX-mortgage portfolio which reached PLN714mn in 2020 (PLN677mn excluding loans generated by former Euro Bank as they are subject to indemnity clauses and guarantees), especially in 4Q20 (PLN416mn in total o/w PLN380mn excluding provisions for loans from fomer Euro Bank) and strongly undermined the Group’s profitability in the period. The balance of provisions increased to PLN960mn or PLN924mn excluding loans originated by Euro Bank, the latter being an equivalent of 6.7% of the FX-mortgage portfolio originated by Bank Millennium.  

Pre-income tax profit in 2020 amounted to PLN211mn and in 4Q20 the Group recorded the pre-tax loss of PLN102mn. This was mostly the result of the above mentioned high overall provisions as the pre-provision profit amounted to PLN1,825mn and was up 5% y/y. 

Net profit reported in 2020 decreased to PLN23mn (net loss of PLN109mn in 4Q20) and was 96% lower vs the previous year. Net profit of 2020 adjusted for the abovementioned extraordinary items (first of all, extra provisions for FX mortgage legal risk) would reach PLN709mn compared to PLN921mn adjusted net profit for 2019 which translates into a decrease by 23% y/y.  

Reported 2020 return on equity (ROE) stood at 0.2% but when adjusted for extraordinary items it reached 7.8% compared to 10.6% in 2019. Return on Assets (ROA) reported was 0.02% 

The breakdown of Group’s Net Profit by the Group’s companies is presented in the table below: 

Group’s profit structure (PLN million)

Bank Millennium  18.6 
Millennium Bank Hipoteczny (mortgage bank)  (0.3) 
Millennium Leasing  (9.6) 
Millennium Dom Maklerski (brokerage house)  16.2 
Millennium TFI (mutual fund)  25.0 
Other consolidated companies  34.0 
Summarised profits  83.9 
Consolidation adjustments  (61.1) 
Consolidated Net Profit of the Group  22.8 

Bank's Profit and Loss Account

Changes of particular key items of the Bank’s Profit and Loss Account in 2020 are shown in the table below. 

Bank’s Operating Income
(PLN million)

2020 2019 Change
Net interest income   2 455.9  2 100.2  16.9% 
Net commission income  639.7  593.2  7.8% 
Core Income *  3 095.6  2 693.4  14.9% 
Other non-interest income **  325.9  390.7  -16.6% 
of which dividends  39.3  45.2  -13.1% 
Total operating income **  3 421.5  3 084.1  10.9% 
(*) Sum of net interest income and net commission income.
(**) Excludes fair value adjustment of credit portfolio (PLN42.9 million in 2019 and PLN23.4 million in 2019), which is moved to cost of risk


The Bank’s 2020 net interest income saw significant growth by 17% y/y, partly in result of the takeover from October 2019 of Euro Bank. Net commission income grew 8% y/y, slightly more than in case of the Group. In view of the above, core income grew 15% year-on-year to reach PLN3,096mn in 2020. 

Other non-interest income of the Bank in 2020 stood at PLN326mn and decreased by 17% y/y, first of all due to significant decrease in other operating income and cost line, resulting from provisions created for the return of commissions from consumer loans earlier repaid by the clients. This item includes dividends, largely from the Capital Group’s subsidiaries (eliminated in reports on Group level). Dividend income in 2020 reached PLN39mn, which means a 13% y/y decline.  

As a result of the evolution of the abovementioned items the Bank’s total operating income in 2020 amounted to PLN 3,422mn, which means a robust growth of 11% y/y. 

Bank’s net profit
(PLN million)

2020 2019 Change
Operating income  3 421.5  3 084.1  10.9% 
Operating costs *  (1 693.5)  (1 520.9)  11.3% 
Impairment provisions and other cost of risk **  (541.5)  (235.1)  130.3% 
Provision for legal risk related to FX mortgage loans  (713.6)  (223.1)  219.8% 
Banking tax  (279.1)  (236.9)  17.8% 
Pre-income tax profit  193.7  867.9  -77.7% 
Income tax  (175.1)  (267.3)  -34.5% 
Net profit  18.6  600.7  -96.9% 
(*) without impairment provisions for financial and non-financial assets
(**) including fair value adjustment of loans (PLN42.9mn in 2019 and PLN23.4mn in 2019) as well as the effect of modification of loans (PLN13.6mn in 2020 and PLN11.7mn in 2019)


The Bank’s operating costs reached the total amount of PLN1,693mn in 2020. The growth of the Bank’s costs was 11% year-on-year and was much higher vs the growth rate of costs for the whole Group, which began consolidation of Euro Bank back in June 2019 whereas the merger with the Bank took place in October 2019. Apart from integration of Euro Bank, the growth of costs resulted also from much higher BFG fees by 35% compared to the level of 2019. As in the Group’s case, which was described above in this text, the operating costs include costs incurred in relation to Euro Bank’s integration. Cost/income ratio for the Bank in 2020 was 49.5%, so it was only slightly higher (by 0.2 p.p.) than in 2019. 

Impairment write-offs and other costs of risk of the Bank were PLN542mn in 2020, which means growth by 130% y/y caused by loan portfolio of acquired Euro Bank as well as additional provisions related to the impact of COVID-19 pandemic, as it was explained for the whole Group’s case. 

Besides provisions for credit risk, in 2020 the Bank created a provision for legal risk related to FX mortgage loans in the amount of PLN 714mn, which was explained above in the part referring to the whole Group. 

The Bank’s pre-tax profit in 2020 was PLN 194mn and decreased strongly by 78% vs. the level of 2019 first of all due to extraordinary provisions commented above. 

The Bank’s 2020 net profit was PLN19mn, which means a decrease by 97% y/y. Return on the Bank’s assets (ROA) reached 0.02%. 

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