Covered Bonds Investor Presentation March 2018 1 Index 01 - - PDF document

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Covered Bonds Investor Presentation March 2018 1 Index 01 - - PDF document

Covered Bonds Investor Presentation March 2018 1 Index 01 EXECUTIVE SUMMARY Bankia Results . 3 Covered Bonds


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Covered Bonds Investor Presentation

March 2018

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Index

01 EXECUTIVE SUMMARY Bankia Results……………………………………………………………………. 3 Covered Bonds Ratings…………………………………………………….. 5 02 MORTGAGE COVER POOL Cover Pool Metrics…………………………………………………………….. 6 Residential Sub-Pool……………………………………..…………………. 8 Commercial Sub-Pool……………………………………………………….. 9 03 WHOLESALE MATURITIES Wholesale Maturities profile………………………………………..… 10 04 ANNEXES Macroeconomic Indicators……………………………………………. 11 Spanish Real Estate Markets…………………………………………. 12

Disclaimer

This documenthas beenpreparedbyBankia,S .A. (“Bankia”) and is presentede xclusive ly for information purposes. It is nota prospectus and doesnot constitute an offer

  • r re commendation to invest.

This documentdoes not constitute a commitment to subscribe,or an offer to finance,or an offer to sell,or asolicitation ofoffers to buyse curities ofBankia, allof which are subject to internal approval by Bankia. Bankia does not guarantee the accuracy or comple teness of the information contained in this document. The information contained here in has been obtained from sources that Bankia conside rs re liable ,butBankia doesnot representor warrant that the information is complete or accurate, in particular with respect to data provided by third parties. This documentmay contain abridged orunaudited information and re cipients are invited to consult the publicdocuments and information submitted byBankia to the financial marke tsupervisory authorities. All opinions and estimates are given as of the date stated in the document and so maybe subject to change. The value of any investment may fluctuate as a result of changes in the marke t. The information in this document is not intended to predict future results and no guarantee is given in that respect. Distribution of this document in other jurisdictions may be prohibited, and there fore re cipients of this documentor any persons who maye ventually obtain a copy of it are responsible for being aware ofand complying with said restrictions. By accepting this documentyou accept the foregoing restrictions and warnings. This document does not reveal all the risks or other material factors relating to investments in the securities/ transactions of Bankia. Before entering into any transaction, potential investors mustensure that they fully understand the terms of the securities/ transactions and the risks inhe rent in them. This document is not a prospectus for the securities described in it.Potential investors should only subscribe forse curities ofBankia on the basis of the information published in the appropriate Bankia prospectus, noton the basis of the information contained in this document.

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1Q18 HIGHLIGHTS

NON-PERFORMING LOANS(1)

11.6

11.0

NPL COVERAGE RATIO

55.1% 53.7%

NPL RATIO

8.7% 9.5%

ATRIBUTABLE PROFIT

229

3M18

FULLY LOADED CET1

12.7% 13.6% %

ASSET QUALITY MAR 2018 MAR 2107 PROFITABILITY & CAPITAL MAR 2018 MAR 2017 COST OF RISK(3)

23

3M18

bps % % €bn

ROE

€mn % %

CURRENT ISSUER RATINGS LONG TERM OUTLOOK SHORT TERM S&P GLOBAL RATINGS FITCH RATINGS

BBB Stable A-2 BBB- Positive F3

  • 01. EXECUTIVE SUMMARY

Bankia Results 1

COMMERCIAL ACTIVITY

€635mn

New residential mortgages

3M18

65%

Average LTV new mortgages

2

EFFICIENCY & PROFITABLITY

51.7%

Cost to Income ratio Mar18

0.8%

Operating expenses

1Q18 vs 1Q17 proforma Bankia+BMN

3

LIQUIDITY

92.7%

LTD ratio

Mar18

€33.6bn

Liquid Assets

Mar18

4

CAPITAL

+533bps

CET1 Phase in Buffer vs SREP 2018 requirements DBRS

BBB (high) Stable R-1 (low)

304

3M17

7.5%

3M18

10.2%

3M17

15.67%

Total Solvency Ratio Fully Loaded

Mar18

SCOPE RATINGS

BBB+ Stable S-2

31

3M17

(1) As of 31/12/2017 was €9.7bn before effect of consolidating BMN. Post BMN the amount as

  • f 31/12/2017 was €12.1bn
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ATTRIBUTABLE PROFIT (2)

€816mn

NET INTEREST INCOME

€1,968mn

PHASE IN CET1

14.15%

FULLY LOADED CET1(4)

12.46%

  • 01. EXECUTIVE SUMMARY

Bankia Results

CUSTOMER FUNDS (3)

+22.8%

€ BRANCHES

> 2,400

CUSTOMER FUNDS

€175,960mn

GROSS CUSTOMER LOANS

€128,782mn

2017 HIGHLIGHTS

(1)

UNIVERSAL BANKING MODEL, based on multi-channel management, with a presence throughout Spain and high market shares in historical core regions, strengthened with the mergerof Banca Mare Nostrum(BMN). BEST IN CLASS CORPORATE GOVERNANCE, optimal

  • rganizational structure and highly respected management

team. SOLVENT, EFFICIENT AND PROFITABLE INSTITUTION, the Groupended2017 with anROE of 6.6%. CLEAN BALANCE SHEET, with continuing asset quality dynamics post merger with BMN, with a reduction of € 0.5bnin NPLs in1Q18. SUSTAINABLE CAPITAL AND LIQUIDITY GENERATION. Comfortable solvency levels with a Phase In CET1 ratio of 14.15% and Fully Loaded CET1 ratio of 12.46%, as of December2017. POSITIVE COMMERCIAL DYNAMICS, reflected in the growth of fee and commission income (+3.2% year-on-year at Dec17 and +2.4% year-on-year at Mar18 vs proforma Bankia+BMN), offsetting part of the pressure that the euriborcontinues to exerton net interestincome.

(1) Dec.17 data post merger between Bankia and BMN. (2) The “Profit/(loss) attributable to the group as reported” amounts to €505mn after including integration cost with BMN for €312mn. The Bankia Group reported income statement, includes BMN’s contribution to the results for the month of December

  • nly.

(3) Includes the off-balance sheet products marketed by BMN, w hich as from 2018 will be managed by Bankia. (4) Includes IFRS9 impact of-20 bps

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  • 01. EXECUTIVE SUMMARY

Covered Bonds Ratings

2013 2014 2015 2016 2017 2018

BBB A- A S&P Global Ratings DBRS

2014 2015 2016 2017 2018

A- A+ A+ AA A+ AA +

AA-

Positive

AAA

DBRS

A

Positive

AAA

Stable Fitch Ratings A- BBB+ A BANKIA’S COVERED BONDS RATINGS HAVE IMPROVED ON THE BACK OF A STRENGTHENED INTRINSIC ASSESMENT OF BANKIA. AT THE SAME TIME THE MATURITY PROFILE OF THE COVERED BONDS OUTSTANDING AND THE OC LEVEL ALSO IMPROVES. RECENT RATING ACTIONS HAVE IMPROVED THE LCR ELIGIBILITY OF OUR COVERED BONDS TO HQLA LEVEL 1. A+ AAA

2014 2015 2016 2017 2018

A A AA- RECENT RATING ACTIONS

  • FITCH. On 23 January 2018, following the merger through absorption of BMN, Fitch

affirmed Bankia’s covered bonds at “A”, outlook Stable. Aditionally, on 23 March 2018, following the application of the European RMBS Rating Criteria published on 02 February 2018 and the calibration of certain Spanish residential mortgage credit assumptions reflecting the upgrade of Spain’s long-term Issuer default rating (A- /Stable/F1) on 19 January2018, Fitch affirmed Bankia’s covered bonds rating at “A”, and raised the outlook to Positive. S&P. On 27 March 2018, following the upgrade of Spain’s long-term rating (A- /Positive/A-2) on 23 March, S&P raised Bankia’s covered bonds rating to “AA-”,

  • utlook Positive.
  • DBRS. On 22 September 2017 DBRS completed its annual review of Bankia’s

covered bonds raising the rating to “AAA”. Scope Ratings. Scope Ratings assigns a rating of “AAA” with a Stable outlook to Bankia’s covered bonds.

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10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Cartera Base Total Cédulas emitidas

85,368 73,680 56,019 44,815 30,162 14,654

Total Collateral Elegible Legal Issuance Issued

  • 02. MORTGAGE COVER POOL

Cover Pool Metrics (1)

AMPLE ISSUANCE CAPACITY TY HIGH OC OC LEVEL STRONG ELEGIBLE COVER POOL

COLLATERAL AND CB’s OUTSTANDING

88%

Res idential

12%

Commercial

76%

  • f the cover

pool eligible

€ 14,654

million Issuance Capacity X 80%

2014 2015 2016 2017 2018

X 2,44

  • ver-collateralized

Collateral CB’s Outstanding

ACTI TIVE OC MANAGEMENT

(1) Includes BMN`s cover pool.

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  • 02. MORTGAGE COVER POOL

Cover Pool Metrics (1)

Q1 2018 Q1 2017 Collateral Eligible Collateral Eligible Outstanding (million €) 73,680 56,019 60,079 45,969 Number of loans 876,653 735,468 673,226 574,803 Number of debtors 795,549 674.367 605,719 529,085 Average Seasoning (months) 102 110 94 104 Time to maturity (months) 239 224 244 233 Average LTV 59% 47% 58% 48% Q1 2018 Q1 2017 Collateral Eligible Collateral Eligible Residential 63,174 50,514 52.024 42.462 Commercial 10,506 5,505 8,055 3,507 COLLATERAL LTV DISTRIBUTION NPL RATIO

83% OF THE COVER POOL HAS A LTV TV RATI TIO BELOW 80% NPL’S DECLINING TR TREND ALTE TERED BY THE MERGER WITH BMN

2016 2017 2018

5.000 10.000 15.000 20.000 25.000 30.000

0-40% 40%-60% 60%-80% 80%-100% >100% 5,61% 5,48% 5,41% 5,35% 5,31% 5,82%

Q4 Q1 Q2 Q3 Q4 Q1

(1) Includes BMN`s cover pool.

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RESIDENTIAL PORTFOLIO

  • 02. MORTGAGE COVER POOL

Residential Sub-Pool

RESIDENCIAL PORTFOLIO ELIGIBILITY TY STANDS AT T 79% AVERAGE LTV TV OF THE ELIGIBLE PORTFOLIO IS 49%

Q1 2018 Q1 2017 Collateral Eligible Collateral Eligible Outstanding (million €) 63,174 50,514 52,024 42,462 Number of loans 821,432 699,232 634,688 548,106 Number of debtors 756,987 647,735 579,995 510,424 Average Seasoning (months) 106 113 98 105 Time to maturity (months) 256 235 262 241 Average LTV 58.4% 48.7% 56.4% 49.2% MATURITY DISTRIBUTION GEOGRAPHIC DISTRIBUTION

Collateral (€mn)

Q1 2018 Madrid 17,240

  • C. Valenciana

9,798 Andalucía 8,840 Catalunya 7,773 Castilla La Mancha 2,736 Canarias 2,615 Castilla y León 2,105 Rest 12,067

87%

LOANS FOR PRIMARY RESIDENCE

98%

FIRST RANKED MORTGAGES

5.000 10.000 15.000 20.000 25.000 30.000

1-5 5-10 10-20 20-30 >30 27% 12% 16% 4% 3% 4% 1% 1% 1% 1% 1% 1% 1% 14% 6% 7%

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COMMERCIAL PORTFOLIO

RESTRICTIONS TO REAL ESTA TATE TE LENDING IN RECENT YEARS AVERAGE LTV TV OF TH THE ELIGIBLE COMMERCIAL PORTFOLIO STANDS AT T 36%

Q1 2018 Q1 2017 Collateral Eligible Collateral Eligible Outstanding 10,507 5,506 8.055 3.508 Number of loans 55,221 36,236 38.538 26.697 Number of debtors 38,562 26,632 25.724 18.661 Average Seasoning (months) 76 80 67 83 Time to maturity (months) 133 125 132 134 Average LTV 63,6 36,3 68,1% 36,7% SPLIT BY INDUSTRY CODE MATURITY DISTRIBUTION

  • 02. MORTGAGE COVER POOL

Commercial Sub-Pool

Real Estate Building & Materials Business Services Retail Food / Beverage / Tobacco Lodging/ Restaurants Consumer Products Healthcare Leisure / Entertainment Utilities Farming/ Agricultural Services Others

21% 18% 12% 9% 6% 4% 3% 3% 3% 3% 3% 15%

500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500

1-5 5-10 10-20 20-30 >30

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2.501 2.764 418 2.025 12.381 260 983 35 101 1.000 175 1.250

2018 2019 2020 2021 >2021

  • 03. WHOLESALE MATURITIES

Wholesale Maturities Amortizing Profile

2,761 4,747 418 2,235 13,731 Amount Outstanding (€mn) 23,892 Covered Bonds (1) 20,088 Senior Debt 1,379 Subordinated debt 2,425

(1) Not including re tained covered bonds

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  • 04. ANNEXES

Macroeconomic Indicators

SPAIN SOVEREIGN DEBT RATING

LONG TERM OUTLOOK DATE STANDARD & POOR’S FITCH RATINGS

A- Positive Mar18 A- Stable Jan18

MOODY’S DBRS

Baa1 Stable Apr18 A Stable Apr18

“GROWTH CONSOLIDATION ” “FAVOURABLE EMPLOYMENT TREND” “HOUSEHOLD SPENDING, MAIN DRIVER OF THE ECONOMY”

Sales (deflated and seasonally adjusted)

RETAIL TRADE INDEX (Annual Rate %) UNEMPLOYMENT RATE IN SPAIN QUARTERLY SERIES GDP. PREVIOUS QUARTER RATE (%)

0,2 0,5 1,1 1,7 2,3 1,7 0,7 0,6 1

  • 0,4

1,3 0,6 2,2 2 1,9

JAN17 FEB17 MAR17 APR17 MAY17 JUN17 JUL17 AUG17 SEP17 OCT17 NOV17 DIC17 ENE18 FEB18 MAR18

0,7 0,7 0,9 0,8 0,7 0,7 0,8 0,7 0,9 4T 2017 3T 2017 2T 2017 1T 2017 4T 2016 3T 2016 2T 2016 1T 2016 4T 2015

0% 5% 10% 15% 20% 25% 30%

1T 2018 4T 2017 3T 2017 2T 2017 1T 2017 4T 2016 3T 2016 2T 2016 1T 2016 4T 2015 3T 2015 2T 2015 1T 2015

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  • 04. ANNEX

Spanish Real Estate Market

MORTGAGES CONSTITUTED OVER DWELLINGS EVOLUTION OF THE QUARTERLY RATE OF THE GENERAL HPI

“Mortgages

  • ver dwe

wellings increase 2% vs Q4 Q4-2016” “Second-hand housing prices increased by 1,1%”

EVOLUTION OF THE QUARTERLY RATE OF THE HPI BY TYPE OF HOUSING

1,1 1,9 1,9 2,1 0,7 1 1,5 1,3

  • 0,3
  • 0,6

1,6 2,6 3,7

  • 1,4
  • 0,5

3,7 2,600 1,300

Q4-2017 Q3-2017 Q2-2017 Q1-2017 Q4-2016 Q3-2016 Q2-2016 Q1-2016 Q4-2015

2 4 6 8 10 12 14

4Q 2017. ANNUAL VARIATION RATE (%) OF THE HPI BY AUTON. COMMUNITY

New housing Second-hand housing

10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017

0,9 1,8 2 2,3 0,4 0,8 1,8 1,5

  • 0,1

0,7

Q4-2017 Q3-2017 Q2-2017 Q1-2017 Q4-2016 Q3-2016 Q2-2016 Q1-2016 Q4-2015 Q3-2015

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