Poland’s Bank Millennium net profit jumps on lower FX loan provisions

(Reuters) -Poland’s Bank Millennium posted an 85% jump in third-quarter net profit on Tuesday, beating analysts’ estimates, as costs related to its FX mortgage loan portfolio declined.

The Polish unit of Portugal’s biggest lender, Millennium bcp, posted a net profit of 189.8 million zlotys ($47.2 million), as provisions for legal risks related to its portfolio of foreign currency mortgage loans fell by 28% to 532.8 million zlotys ($132.45 million). Analysts had forecast a 30.8% rise in net profit.

FX mortgage loans, primarily in Swiss francs, remain a burden for Polish banks. Initially appealing due to low rates in the 2000s, their repayment costs have surged due the zloty’s depreciation against the franc and Swiss rate hikes, inciting legal disputes and pressuring banks to seek settlements.

Bank Millennium disclosed that its settlements with FX-mortgage borrowers during the quarter remained above the 1,000 mark. To date, settlements have totalled 24,600, an equivalent of 40% of the number of loan agreements active at moment of the full roll-out of amicable settlements effort.

Inflow of FX-mortgage claims against the bank slowed to below 1,500 mark with increasing shares of claims from repaid loans, Bank Millennium said.

Compared to the same period last year, Millennium’s net interest income rose almost 9% to 1.49 billion zlotys, while its net fee and commission income jumped 5.6% to 198.6 million zlotys.

The lender’s return-on-equity (ROE) for the first nine months of 2024 reached 10%. On Monday, the bank said it aims to achieve a ROE level of about 18% by 2028 under its new strategy.

($1 = 4.0227 zlotys)

(Reporting by Rafal W. Nowak; Editing by Jacqueline Wong and Subhranshu Sahu)