BFA-Bankia earnings reach 1,151 million euros in year to September, - PDF document

Group generates 5,472 million euros of capital in seven quarters BFA-Bankia earnings reach 1,151 million euros in year to September, up 77.7%  Bankia posts profit after tax of 696 million euros in year to September, up 53.9%  Return on equity (ROE) reaches 8.4% in third quarter  Core banking revenue (net interest income and fee and commission income) up 11.8% at 2,864 million euros  Recurring cost-to-income ratio (ex NTI and exchange differences) improves 54.2% in year to date, to reach 45.4%, due to increased revenue and reduced expenses  In September each Bankia employee sold 50.8% more products than one year earlier  NPLs drop by 2,356 million euros in year to date, while NPL ratio falls from 14.65% to 13.63%  Strict customer deposits up 4,398 million euros in the year, with off- balance-sheet funds up a further 1,996 million euros  Market share of new lending to SMEs already at 11.8%, and 12.8% in lending to large companies  Common Equity Tier 1 ratio (Phase-In) rises from 10.69% to 12.44% in year to date  Commercial gap decreases by 10,746 million euros in year to September, while LTD ratio falls to 105.8% Madrid, 24/10/2014. The BFA-Bankia Group obtained profit after tax of 1,151 million euros in the first half of the year, 77.7% more than the ordinary profit for the same period of 2013, which was 648 million euros*. @Bankia @PressBankia www.facebook.com/bankia.es * The result is compared with the profit of BFA in 2013 excluding the exchange of hybrids; and in the case of Bankia, the effect of the subordinated loan by BFA is not included. 1

In the case of Bankia, profit after tax for the period from January to September reached 696 million euros, 53.9% more than in the same period of the previous year. Bankia ’ s chairman, José Ignacio Goirigolzarri, said that “ quarterly revenue growth, expense reduction and the sharp decrease in NPLs, making it possible to scale back the level of provisioning, put Bankia on track to meet the target of 10% ROE in 2015 ” . Bankia ’ s CEO, José Sevilla, emphasised that “ the bank ’ s vigorous commercial activity has resulted in significant growth in market share of lending to businesses, the acquisition of 6,400 million euros of new customer funds in the year to date, and the fact that our branches are now selling 51% more products than one year ago ” . Revenue continues to increase Bankia has now posted six consecutive quarters of increases in finance income. In the first nine months of the year net interest income reached 2,163 million euros, up 15.2% compared to the same period of 2013. The customer margin reached 1.26% in the third quarter, compared to 0.68% one year earlier. Fee and commission income was 702 million euros, up 2.3% on last year. As a result, core banking revenue (net interest income plus fee and commission income) totalled 2,864 million euros, up 11.8%. Expense reduction continues Once again this quarter Bankia succeeded in reducing the volume of operating expenses. Accumulated expenses for the first nine months reached 1,307 million, down 9.6% compared to the same period of 2013. As a result, the bank ’ s pre-provision profit reached 1,631 million euros, an increase of 15.3% compared to the first nine months of 2013. Excluding net trading income and exchange differences, recurring pre-provision profit for the period from January to September rose 45.4% to 1,480 million euros. Further increase in efficiency @Bankia @PressBankia www.facebook.com/bankia.es * The result is compared with the profit of BFA in 2013 excluding the exchange of hybrids; and in the case of Bankia, the effect of the subordinated loan by BFA is not included. 2

The increase in core banking revenue, combined with ongoing cost containment efforts, allowed Bankia to once again improve its recurring cost-to-income ratio (excluding net trading income and exchange differences), which in the third quarter of 2014 reached 45.4%, compared to 54.2% one year earlier. The efficiency improvement was accompanied by an improvement in the bank ’ s productivity. The number of products sold per employee (excluding term deposit renewals) was 27 in September, 50.8% more than one year earlier. In the first nine months of the year Bankia charged 817 million euros of provisions against income, 28.9% less than the previous year, due to the improvement in the quality of the bank ’ s balance sheet and the substantial decrease in the volume of NPLs. As a result of all this, Bankia ’ s profit after tax for the first nine months of the year was 696 million euros, up 53.9% on the same period of 2013. Return on equity (ROE) reached 8.4% in the third quarter of the year, compared to 5.9% a year ago, in line with the target of achieving 10% ROE by the end of 2015. Customer funds are growing The improvement in the bank ’ s activity continued this quarter, both in terms of strict customer deposits and in terms of off-balance-sheet customer funds. Managed customer funds increased by 2,700 million euros in the quarter: 2,177 million of deposits and 523 million of off-balance-sheet funds. @Bankia @PressBankia www.facebook.com/bankia.es * The result is compared with the profit of BFA in 2013 excluding the exchange of hybrids; and in the case of Bankia, the effect of the subordinated loan by BFA is not included. 3

In the year to date these two items increased by a total of 6,394 million euros. At the end of September Bankia managed 94,432 million euros of strict customer deposits, 4,398 million more than at year-end 2013, and 22,827 million euros of off-balance-sheet customer funds, representing an increase of 1,996 million. On the lending side, in the first nine months of the year Bankia granted more than 9,000 million euros of new loans and advances, 7,212 million of which were to the self-employed, SMEs and corporates. More credit for business As a result of this trend in the business sector, Bankia ’ s market share of new lending rose from 9.52% (December 2013) to 11.83% (August 2014) in loans of less than one million euros, and from 8.5% to 12.81% in loans of more than one million euros. On 18 September Bankia announced the launch of the new “ Préstamo Dinamización ” line of loans, targeted at the business segment, with interest rate reductions averaging 30%. A total of 474.4 million euros of “ Préstamo Dinamización ” loans were granted in the first month after being launched. At the end of the third quarter the balance of gross loans and advances to customers was 122,866 million euros, 5.4% less than at year-end 2013, mainly due to maturities in the mortgages portfolio, reduction of the stock of non- performing loans and loan sales. In contrast, the volume of consumer lending ticked up during the third quarter, while the volume of business lending remained practically stable, marking an end to the falls seen in previous periods. Sharp reduction in NPLs Another highlight of the year to date is the decrease in non-performing loans. In the first nine months of the year the stock of NPLs fell by 2,356 million euros, from 20,022 million in December 2013 to 17,666 million in September this year. As a result of the drop in NPLs, the NPL ratio improved for the third quarter in a row, falling to 13.63%, down 40 basis points in the quarter and 102 in the year to date, from 14.65% last December. In the nine-month period the coverage ratio increased from 56.5% to 58.6%. @Bankia @PressBankia www.facebook.com/bankia.es * The result is compared with the profit of BFA in 2013 excluding the exchange of hybrids; and in the case of Bankia, the effect of the subordinated loan by BFA is not included. 4

Improved solvency As regards solvency ratios, under Basel III standards, at 30 September Bankia had a Common Equity Tier 1 (CET1) ratio of 12.44%, an increase of 62 basis points in the quarter (from 11.82%) and 175 in the first nine months of the year (from 10.69%). The total capital ratio, meanwhile, rose 283 basis points from the level recorded at year-end 2013, reaching 13.89%. On the liquidity side, the commercial gap decreased by 10,746 million euros (equivalent to 34%) in the first nine months of the year, due to the increase in customer deposits and balance sheet reduction. As a result, the loan-to-deposit ratio reached 105.8%, almost ten points better than at year-end 2013, when it stood at 115.4%. BFA Group At 30 September the BFA Group had a CET1 ratio of 14.48%, up 65 basis points in the quarter (from 13.83%) and 380 in the year to date (from 10.68%). The total capital ratio rose 487 basis points in the nine-month period to reach 15.91%. Since the BFA-Bankia Group started its current Strategic Plan at the beginning of 2013, using the EBA criterion, which was the criterion followed in preparing the Strategic Plan, the bank has generated a total of 5,472 million euros of capital through profit generation and reduction of risk-bearing assets. In the year to date, with the growth of earnings and the sale of non-strategic assets, the bank ’ s EBA Core Tier 1 ratio is 16.06%, compared to 11.81% at the end of 2013. In the 21 months the Strategic Plan has been in effect, the BFA-Bankia Group has reduced its dependence on ECB funding by 31,735 million euros. Of this total, 10,750 million was achieved this year. @Bankia @PressBankia www.facebook.com/bankia.es * The result is compared with the profit of BFA in 2013 excluding the exchange of hybrids; and in the case of Bankia, the effect of the subordinated loan by BFA is not included. 5