Portugal’s largest listed bank, Millennium bcp, posted a 50.3% jump in 2022 consolidated net profit, with interest rate hikes boosting the group’s core income, despite heavy losses at its Polish subsidiary.

The bank netted €207.5 million last year, up from €138 million in 2021. Profit in its domestic business more than doubled to €353.6 million.

Its Polish subsidiary, Bank Millennium (MILP.WA), said last month it reduced losses by 26% to €217 million in 2022, despite 525.6 million euros of costs related to legal risks over its portfolio of foreign currency mortgage loans.

“We are not afraid of the risks and what I’ve seen, quarter after quarter, is that Poland is an interesting market, the business has evolved very positively,” chief executive Miguel Maya told a news conference.

He said that, given the current uncertainty as a result of the war in Ukraine, legal risks in Poland and a much more fragmented world, “the priority is to strengthen capital ratios.”

“It is what we are doing,” he said, pointing out that the common equity Tier 1 ratio – ‘fully implemented’ – improved to 12.5% in December 2022, up from 11.7% a year earlier and “clearly above regulatory requirements.”

After years of record low rates putting pressure on lenders’ financial margins, Millennium bcp benefited in 2022 from interest rate hikes by the European Central Bank and the Polish central bank to control inflation.

Millennium bcp’s consolidated net interest income, or earnings on loans minus deposit costs, rose 35.3% to €2.15 billion in 2022. Its fees and commissions grew 6.1% to €771.9 million.

Its recurring core income grew by 44.4% to €1.86 billion, while its recurring operating costs increased only 3% to around €1 billion.

The bank also reduced total non-performing exposures by 19.4% to €2.22 billion in 2022 from a year earlier.

Original Story: Reuters |Sérgio Gonçalves
Photo: Millennium bcp website
Edition: Prime Yield