Millennium has successfully executed an operational turnaround, reinforcing its financial and capital position despite the adverse setting of the banking sector in the core Portuguese market. This position reflects our relentless path and the compounding of multiple achievements, such as a more than 40% cost reduction in Portugal since 2011, and a 44% reduction in Group NPE since 2013 (from €13.7 billion to €7.7 billion in 2017). Three distinctive competences were at the core of this turnaround: a customer-oriented relationship model, market-leading efficiency, and a competitive international portfolio.
Millennium is now ready to embark on a new cycle of growth with profitability, requiring complementary capabilities to cope with the evolving context and the need to secure a fully sustainable position. These include leading digital, mobile, and analytics capabilities (preparing the organization to be competitive in the new age) and integration in value chains and ecosystems (embedding into our customers' needs and reach), complemented by a robust balance sheet and rigorous capital allocation and shaped by strong governance (continuing Millennium effort to de-risk the portfolio and reinforcing focus on value-added business).
Based on Millennium's core competences and ambitions for the future, it was defined a new strategic Vision: "Partnering with our customers to create and share value." This Vision reflects the desire to generate more value for Millennium's customers (through a convenient, personal, and mobile experience enabling human-centric solutions), for the Bank (by expanding the customer base and strengthening relationships), for shareholders (by achieving strong performance through a resilient business model), and for employees (by promoting a teamwork-driven model and strengthening satisfaction, compensation, and capabilities).
Against this backdrop, Millennium has defined five overarching priorities for the future:
Talent mobilization, which will entail energizing employees to drive the Bank's agenda as a team, promoting greater engagement and proactivity, and empowering decision making in a collaborative model. Bank's talent will also be reinvigorate by developing a merit-based growth model and fostering the development of new capabilities. Finally, the compensation processes will be reviewed across teams to ensure alignment with the new agenda and performance.
Mobile-centric digitization, aspiring to double down on efforts to transform customer experience and enable productivity gains across geographies, reemphasizing Millennium's innovation trademark. The main priorities consist of redesigning the digital experience from a mobile-centric approach, transforming top customer journeys, setting up a convenient and productive omnichannel model, and transforming operations through the deployment of NextGen technologies (such as robotics and natural language processing). In parallel, an IT strategy focused on upgrading technology, data, security, and ways of working will enable these levers.
Growth and leadership in Portugal, aiming to maximize the potential of the unique position in which the Bank emerges out of the financial crisis (the largest private Portuguese bank) implying a renewed commitment to grow the customer base and expand relationships. This will materialize into helping Portuguese businesses thrive (e.g., building a position as the preferred partner for sound small businesses), while serving our individual customers across their full range of needs. Millennium further aspire to capture the full potential of ActivoBank's simple and value-based offer and assess potential internationalization options.
Growth in international footprint, with the objective of capitalizing on the opportunities offered by the high-growth intrinsics of markets where we have a presence and competitive advantage. This implies growing and deepening retail relationships and enlarging the customer business base in Poland; a step change in Switzerland by growing existing business and exploring new markets and digital advice; leveraging market leadership to focus on profitability and capturing the tailwinds of large commodity investments planned in Mozambique; building on our position as a trusted and sound business partner with unique local relationships in Angola; and exploring emerging China-related opportunities (trade and investment flows, payments, private banking).
Business model sustainability, maintaining as a clear priority the improvement of Millennium credit portfolio quality, by reducing the NPE stock (60% reduction by 2021) and simultaneously lowering the cost of risk. Risk and compliance governance will also be strengthened to ensure a sustainable growth of credit volume with a sound risk profile.
The successful execution of these priorities should enable Millennium to accomplish a set of strategic objectives for 2021: franchise growth (>6 million active customers1 until 2021), readiness for the future (from 45% to > 60% digital customers and from 26% to > 45% mobile customers by 2021), a sustainable business model (60% reduction of NPE stock, reaching ~€3 bn), and attractive returns for shareholders (~40% cost-to-income and ~10% ROE in 2021).