Poland’s Bank Millennium third-quarter results hit by payment holidays

WARSAW, Oct 24 (Reuters) – Bank Millennium (MILP.WA), part of Portuguese banking group Millennium bcp (BCP.LS), reported a net loss of 1.0 billion zlotys ($205.31 million) on Monday. dollars) in the third quarter as the bank counted loan repayment holiday fees.

Earlier this year, Poland introduced measures to allow borrowers hit by rising interest rates to take advantage of so-called payment holidays. These would suspend repayments for up to eight installments, four per year in 2022 and 2023.

Sharp increases in interest rates by the central bank to fight inflation have hurt many borrowers in a country where variable rate mortgages are the norm.

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Bank Millennium said the cost was estimated at 1.423 billion zlotys ($292.16 million) before tax and 1.153 billion zloty after tax.

If excluded, the BM Group would post a net profit of 152 million zlotys, despite high costs related to its portfolio of foreign currency mortgages (a total of 640 million zlotys before tax) and some large one-off items, a indicated the bank. .

“These costs were the direct cause of a significant net loss in the third quarter of 2022,” he said, referring to payment holidays.

Millennium estimated that if all eligible borrowers took advantage of the payment holidays, the maximum impact on the group’s results would be 1.799 billion zlotys.

Millennium said that in the third quarter, the actual level of loan holiday usage averaged 66% of eligible borrowers, and September’s numbers were higher than August’s.

Millennium also said its results were down due to additional regulatory contributions and the cost of provisions for the reimbursement of commissions levied on certain mortgages.

As in previous quarters, costs related to its foreign currency mortgage portfolio remained high and continued to reduce the profitability of the group’s core business, the bank said.

“Total provisions for legal risk related to foreign currency mortgages in the third quarter amounted to 498 million zlotys,” he said.

Millennium also said that excluding all mortgage portfolio costs and loan holiday costs, the group would have made a net profit of 743 million zlotys in the third quarter.

As a result of the provisions, Millennium’s capital ratios fell below required levels, prompting the company to develop a turnaround plan to improve operating profitability and optimize capital by better managing risk-weighted assets.

It will not pay more than 80 million zlotys in bank tax per quarter during the recovery period.

($1 = 4.8706 zlotys)

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Reporting by Pawel Florkiewicz and Anna Koper; Editing by Jane Merriman and Louise Heavens

Our standards: The Thomson Reuters Trust Principles.

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