Bankia posts attributable profit of 556 million euros through June, - PDF document

BFA Group records net profit of €1,393 million Bankia posts attributable profit of 556 million euros through June, a gain of 11.5%  Return on equity (ROE) rises to 9.8%  Efficiency ratio continues improving and reaches 40.5% in the quarter  Balance of non-performing loans (NPLs) drops 1,239 million euros in the first half of the year, bringing NPL ratio down to 12.2% while the coverage ratio increases to 60.6%  Fully-loaded CET1 ratio improves from 10.6% to 11.31% in the first six months of year  Profitability, efficiency and risk control ratios are on track to meet the Strategic Plan 2012-2015 targets  New lending to the self-employed, SMEs and companies grows 53.8% in the first half of the year to reach 7,333 million euros  Market share of business loans, consumer finance and mutal funds rises  The distribution of POS terminals increases 70%, while payroll accounts gain 11% Madrid, 27/07/2015. Bankia recorded net attributable profit of 556 million euros in the first half of 2015, 11.5% more year-on-year. Profit for the second quarter of this year came in at 311 million euros, a gain of 27.3% over the 244 million euros recorded in the first quarter. Bankia chairman José Ignacio Goirigolzarri explained that “Bankia has closed the first half of the year with a return on equity of close to 10%, in line with the target for the entire year and with clear improvement during the second quarter in earnings performance”. @Bankia @PressBankia www.facebook.com/bankia.es 1

“We confront the last semester of the Strategic Plan 2012-2015 on track to meet the targets we set three years ago: an efficiency ratio in the order of 40% and provisioning charges of only 0.5% of our loan portfolio”. The chief executive officer of Bankia, José Sevilla, emphasised that “the results show clear progress in all lines: higher revenues, less expenses and lower provisions thanks to the decline in non-performing loans”. Sevilla added that “Bankia has demonstrated its capacity to maintain dynamic growth in our commercial activity, achieving higher figures in key business areas for the bank. We have boosted our market share in consumer finance and lending to businesses with respect to one year ago, and the marketing of value added products such as investment funds and insurance is recording healthy numbers”. Profit Growth Net interest income improved in the second quarter with respect to the previous three months and reached a cumulative 1,388 million euros for the year thus far (-2.8% with respect to the first half of 2014). Stripping out the effect of the depreciation of the Sareb bonds, which went from contributing 202 million euros in the first half of 2014 to only 88 million euros this year, net interest income would have risen by 6%. This increase was achieved, despite the low-interest rate environment, because the reduction in the cost of liabilities offset the lower return on the loan portfolio caused by the repricing of mortgages. The customer margin rose from 1.2% in the second quarter of 2014 to 1.44% in the same period in 2015. Fee and commission income reached 481 million euros for 1H2015, 2.9% higher than one year earlier, buoyed by higher revenues from the sale of mutual funds and insurance products. The bank's gross income totalled 2,029 million euros, in line (+0.1%) with the figure reported in the previous year. There was a notable gain in the second quarter, with 1,037 million euros, some 4.6% more than recorded in the first three months of the year. Lower Expenses @Bankia @PressBankia www.facebook.com/bankia.es 2

Cost containment remains a constant. Operating expenses declined 3.8% in 1H2015 to 843 million euros. This helped improve the efficiency ratio to 40.5%, from 41.2% one year earlier. This brought pre-provision operating income for the first six months of the year to 1,186 million euros, a gain of 3.1% year-on-year. With respect to the second quarter of 2015, this came in at 617 million euros, a full 8.6% higher than the first quarter. The decline in NPLs that Bankia has achieved in the last six quarters allowed provisioning charges to be brought down to 430 million euros for the half year, some 23.8% lower. Pre-tax profit thus hit 753 million euros, which, after stripping out the tax effect and non-controlling interests, leaves net attributable profit for 1H2015 at 556 million, a gain of 11.5%. This profit brings return on equity through the first half to 9.8%, up from 7.9% one year earlier. Increase in new Lending In the first half of the year, Bankia extended 8,600 million euros in new financing to households and businesses, an increase of 35.4%. Some 7,333 million euros of this total was lending to the self-employed, SMEs and businesses, a gain of 53.8%. This stepped-up lending, combined with the increase in consumer finance, boosted the balance of loans to these segments from 46,000 million euros to 47,000 million euros, discounting the effect of the sale of loan portfolios. The increase for the previous year is 1,800 million euros. With respect to customer funds, the cut in yields on term deposits explains the shift toward mutual funds. Managed customer funds, including on and off-balance sheet funds, grows in 1H2015 by 1,400 million euros to reach 117,300 million euros. @Bankia @PressBankia www.facebook.com/bankia.es 3

The bank's dynamic commercial performance is also reflected in the sale of value added products. For example, the distribution of credit and debit cards is up 33%, with POS terminals for retail payments up 70% and payroll accounts up 11%. Another key factor for Bankia is service quality. In this respect, the "mystery shopper" study performed by the consultancy Stiga to gauge the quality of the service rendered to customers shows that Bank has widened its advantage over the sector average and scored 7.09 points, nearly half a point higher than in 2014, and 0.44 above the average for the financial system. Improved Balance Sheet The balance of doubtful loans declines 1,239 million euros through June 2015, after dropping 776 million euros in the second quarter. This brings the NPL ratio down to 12.2%, compared with 12.86% at year-end 2014 and 14.03% at the end of June 2014. This reduction in non-performing assets was accompanied by an increase in the coverage ratio, which measures the provisions existing to cover NPLs. This ratio rises to 60.6%, versus 57.6% this past December. The amount of non-performing loans has been falling at the same time as Bankia has been managing to reduce its volume of foreclosed properties, which declined to a net book value of 2,875 million euros. During the first six months of the year, the bank sold 4,135 properties, more than double the 1,919 sold in the same period of 2014. More Solvent With respect to the bank's solvency, on a 'fully loaded' Basel III basis, that is, moving future requirements up to the present date, the CET1 ratio rises to 11.31%, a gain of 71 basis points in the first half of the year from 10.6% last December. And the fully loaded capital ratio increases 73 basis points to 12.87%. On a phase-in basis, as required by regulation, the CET1 ratio is up 49 basis points in 1H2015 to 12.77%, while the total capital ratio moves up 51 basis points and is now 14.33%. @Bankia @PressBankia www.facebook.com/bankia.es 4

At the end of June the commercial gap stood at 12,536 million euros, 9% lower than in December 2014, allowing the bank to improve its loan-to-deposit ratio another 60 basis points to 104.9%. BFA Group Bankia’s parent, the BFA Group, posted first half net profit of 1,393 million euros, versus 827 million euros for the same period in 2014. In terms of solvency, BFA improved its phase-in CET1 ratio from 13.28% in December 2014 to 14.33% at June 2015, an increase of 105 basis points. The total solvency ratio increased 107 basis points in the first half of the year to reach 15.86%. The fully loaded CET1 ratio climbed 149 basis points in the period to end the first half of the year at 11.84%. @Bankia @PressBankia www.facebook.com/bankia.es 5