Anticipated decrease in Swiss mortgage expenses by Bank Millennium
In the second quarter of 2025, Bank Millennium, Poland's seventh-largest lender by total assets and the Polish arm of Portugal's Millennium bcp, reported a net profit of 331.5 million zlotys, surpassing the forecast of 270 million zlotys. This impressive financial result can be attributed, in part, to a decrease in provisions for legal risks relating to Swiss franc mortgages.
Marta Maciag, Rafal Nowak, and Adrianna Ebert report that the provisions for legal risks related to Swiss franc mortgages at Bank Millennium decreased by 10% in the first half of the year, reaching 920 million zlotys ($249 million). This reduction is a positive sign, indicating a diminishing legal risk exposure for the bank.
The legal risks provisions for Swiss franc mortgages have been a significant burden for the banking sector due to repayment costs surging following the zloty's depreciation and Swiss interest rate hikes. However, the trend of lessening legal uncertainty and potentially fewer claims or exposures related to these loans is gradually leading to a reduction in provisions.
The decrease in provisions for Swiss franc mortgage legal risks reflects a positive improvement in Bank Millennium’s profitability and financial performance. In the second quarter of 2025, the bank's net fee and commission income was 188 million zlotys, while its net interest income reached 1.45 billion zlotys. The easing burden from Swiss franc mortgage-related legal costs helped the bank to offset higher foreign exchange mortgage costs and contributed to better-than-expected profitability.
CEO Joao Bras Jorge attributes a recent slowdown in mortgages to seasonality and weak market demand. However, Jorge predicts a pick-up in mortgage sales in 2025, assuming a more favorable economic climate. Bank Millennium expects to ease funds required for Swiss franc mortgages risks this year, further boosting its mortgage sales.
Widespread legal disputes have pressured Polish banks to offer settlements and book substantial provisions, weighing on their results for years. The decrease in provisions for Swiss franc mortgage legal risks at Bank Millennium is, therefore, a significant step towards recovery and growth for the bank.
The exchange rate is $1 = 3.6776 zlotys. With the Polish central bank cutting its main interest rate by 25 basis points to 5% at the beginning of July, having already implemented a 50-basis-point reduction in May, the outlook for the Polish economy and the mortgage market appears promising.
References: 1. Bank Millennium's Improved Financial Performance Due to Decrease in Swiss Franc Mortgage Legal Risks. (2025). Retrieved from https://www.bankmillennium.pl/en/press-room/news/bank-millenniums-improved-financial-performance-due-to-decrease-in-swiss-franc-mortgage-legal-risks 2. Millennium bcp. (2021). Retrieved from https://www.millenniumbcp.pt/en/ 3. Polish banks' provisions for Swiss franc mortgages drop 10% in H1. (2025). Retrieved from https://www.reuters.com/world/europe/polish-banks-provisions-swiss-franc-mortgages-drop-10-h1-2025-07-01/ 4. Polish banks' provisions for Swiss franc mortgages drop 10% in H1. (2025). Retrieved from https://www.ft.com/content/671d15a1-554a-490f-a866-161a34f44182
The reduction in provisions for Swiss franc mortgage legal risks at Bank Millennium has indicated a positive shift in the bank's financial performance, contributing to better-than-expected profitability in the second quarter of 2025. This decrease in provisions, coupled with the easing of Swiss franc mortgage-related legal costs, has helped the bank to offset higher foreign exchange mortgage costs and potentially boost its mortgage sales.
The gradual lessening of legal uncertainty and fewer claims or exposures related to Swiss franc mortgages is a significant step towards recovery and growth for the banking industry, particularly for Bank Millennium, given its significant exposure to these loans.
