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 2020 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 2020, 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 2020 with value of loans with deferred exposures totalling PLN 44 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%). The use of credit holidays practically ceased after the first quarter of 2021.
The 4th wave of COVID-19 pandemic caused significant increase of infections and hospitalizations at the end of year 2021. The increase of number of infections did not translate into increase of credit risk level of the Bank (the Group). The inflow of new applications for Public Moratoria remained at very low level – 28 requests in the Q4 2021 with exposure of PLN 6.9 million. All exposures with active moratoria as of end of 2021 were classified as defaults and provisioned accordingly. The Bank closely monitors quality of portfolio, in particular: early delays, demand for rescheduling offers, structure of new defaults. Taking into account the current observations, the Bank (the Group) does not identify any significant risk in its portfolio related to the COVID-19 pandemic.
Detailed information on exposures that are subject to credit moratorium is presented in section 9.3 point (3e) in this financial report.