Bank Millennium Reports 40% Surge in Quarterly Net Profit Amid Lower FX Mortgage Provisions

Bank Millennium, one of Poland’s largest lenders, reported a 40% year-on-year jump in first-quarter net profit on Monday, driven by a significant drop in provisions set aside for potential foreign currency mortgage legal risks and strong ongoing bank operations.

Quarterly Earnings Reflect Improved Market Conditions

Bank Millennium, majority-owned by Portugal’s Millennium bcp, announced its net profit for the first quarter reached 804 million zlotys ($204 million), up from 572 million zlotys posted in the same period a year earlier. The bank’s strong results surpassed analysts’ expectations, signaling a favorable shift in Poland’s banking landscape, especially regarding historical foreign currency loan exposures.

The positive outcome comes as the bank faces ongoing challenges connected to Swiss franc-denominated mortgages—legacy loans that have troubled Polish banks since the 2008 global financial crisis, leading to numerous legal disputes and substantial financial provisions in recent years.

Reduced Provisions for FX Mortgages

A primary driver behind the profit surge was a notable reduction in legal provisions for foreign currency-linked mortgage loans. In the first quarter, Bank Millennium set aside 179 million zlotys for these provisions, marking a 74% decline compared to the 690 million zlotys reserved in the same quarter of 2024.

"The bank remains focused on resolving legacy FX mortgage exposures, but improved legal outcomes and settlement rates have contributed to a lower risk profile in this area," Bank Millennium’s CEO Joao Bras Jorge stated in the earnings announcement.

The decline in provisions is in line with a broader trend among Polish banks, as more customers settle their disputed Swiss franc loans through voluntary settlements or court decisions, gradually reducing the industry’s legal overhang.

Core Business and Revenue Growth

Aside from lower provisions, core banking performance and operating revenues remain strong. Net interest income—the difference between what banks earn on loans and pay for deposits—grew by 22% year-on-year, supported by higher lending volumes and stable interest rates.

Fee and commission income advanced as well, with the bank citing increased retail banking activity and expanded digital services. Operating costs rose modestly, mainly reflecting inflation-driven wage pressures.

CFO Wojciech Rybak explained: "We continue to see strong customer engagement in our retail and SME segments, with digital adoption reaching new highs. This positions us well for continued growth as the Polish economy expands."

Polish Banking Sector Shows Resilience

Bank Millennium’s results come amid a period of robust profitability across the Polish banking sector after years of turbulence caused by low interest rates and legal uncertainty around foreign currency loans. Recent data from the Polish Financial Supervision Authority (KNF) shows that sector-wide profits have rebounded, buoyed by rising rates, improved loan quality, and a decline in litigation risks.

However, analysts warn the sector is not without risks. The persistently high number of unresolved Swiss franc mortgage cases and the potential for unfavourable court decisions remain concerns for investors and regulators alike.

Outlook: Bank Millennium’s Strategy for 2025

Looking ahead, Bank Millennium plans to maintain its focus on expanding digital banking capabilities and enhancing customer experience while gradually resolving remaining FX mortgage exposures. The bank reaffirmed its commitment to maintaining a prudent capital base and supporting Poland’s economic recovery.

In its earnings release, Bank Millennium noted that credit risk remains manageable and loan demand is expected to rise modestly as consumer and business confidence recovers.

CEO Joao Bras Jorge concluded:

"We believe our strong balance sheet, digital innovation, and proactive management of legal risks position us for sustainable growth in 2025 and beyond."

Sources Used

Reuters: Bank Millennium posts 40% jump in quarterly net profit on lower FX mortgage provisions

Statements and press releases from Bank Millennium

Data from the Polish Financial Supervision Authority (KNF)

Market analyst commentary from sector reports