Presentation 2Q 2013 25 July 2013 1Q 2013 April 2013 Disclaimer - - PowerPoint PPT Presentation

Results Presentation 2Q 2013

25 July 2013 1Q 2013

April 2013

2 of 30 / July 2013

Disclaimer

This document has been prepared by Bankia, S.A. (“Bankia”) and is presented exclusively for information purposes. It is not a prospectus and does not constitute an offer or recommendation to invest. This document does not constitute a commitment to subscribe, or an offer to finance, or an offer to sell, or a solicitation of offers to buy securities of Bankia, all of which are subject to internal approval by Bankia. Bankia does not guarantee the accuracy or completeness of the information contained in this document. The information contained herein has been obtained from sources that Bankia considers reliable, but BANKIA does not represent or warrant that the information is complete or accurate, in particular with respect to data provided by third parties. This document may contain abridged or unaudited information and recipients are invited to consult the public documents and information submitted by Bankia to the financial market supervisory authorities. All opinions and estimates are given as of the date stated in the document and so may be subject to change. The value of any investment may fluctuate as a result of changes in the market. 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 therefore recipients of this document or any persons who may eventually obtain a copy of it are responsible for being aware of and complying with said restrictions. By accepting this document you 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 must ensure that they fully understand the terms of the securities/transactions and the risks inherent in them. This document is not a prospectus for the securities described in it. Potential investors should only subscribe for securities of Bankia on the basis of the information published in the appropriate Bankia prospectus, not on the basis of the information contained in this document.

3 of 30 / July 2013

Contents

1. 2Q 2013 highlights 2. 2Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions

4 of 30 / July 2013

2Q 2013 highlights

Improved net interest income

FINANCIAL PERFORMANCE

Divestment plan proceeds used to reinforce provisions

RESTRUCTURING PLAN PROGRESS

Improvement of recurring efficiency ratio Cost reduction continues Net profit in line with Plan Accelerated restructuring plan on going Capitalisation process completed Divestment plan driving ahead Capital generated organically 1 2

5 of 30 / July 2013

2Q 2013 highlights

 Q2 net profit reaches €215 million in BFA Group, excluding positive effect of hybrids exchange. Cumulative total as of June 2013: €428 million.  Profit from sale of investees allows additional €284 million of non- recurring provisions.

Results Asset quality Liquidity and solvency

 NPLs reduced by €514 million in first half.  Provision coverage ratios increased to 8.5% of total loan portfolio and 63.6% of NPLs.  LTD ratio improves to 118.7%.  BFA Group maintains core capital ratio at 10.0%, after setting aside €525 million to cover contingencies arising from the arbitration

• process. Bankia increases its capital ratio once again this quarter.

BFA Group financial performance 1

6 of 30 / July 2013

Restructuring Plan Progress

2Q 2013 highlights

CAPITALISATION PROCESS – FINAL FIGURES

CAPITAL GENERATED (€bn)

24.6

• Capitalisation process completed
• Share stabilised following listing of new

shares

• BFA’s Bankia share purchase programme

cancelled without having been used

15.6

BANKIA SHAREHOLDER STRUCTURE BFA 68% Free Float 32% Member of the following indices

2

TOTAL No. SHARES (mill.) 11,517 Share price 23 July €0.643

MSCI Eurostoxx 600

7 of 30 / July 2013

2Q 2013 highlights

INVESTEES SOLD IN 1H 2013 CASH GENERATED 729 Divestment plan making headway

Amounts in € billion

Restructuring Plan Progress 2

SALES NOT YET COMPLETED

ESTIMATED CASH PROCEEDS

995 DIVESTMENT PLAN More than €1,700 million of cash generated from sale of investees

8 of 30 / July 2013

2Q 2013 highlights

CUMULATIVE CLOSURE SCHEDULE

1Q13 Current 1Q14e

212 666 1,143

 Accelerated branch closures above Strategic Plan shedule. Forecast confirmed: restructuring will be

completed in 1Q 2014.

 Restructured network accounts, as of 30 June 2013, for 86% of deposits and 80% of gross income

generated by the network.

 Leading financial institution in traditional home territories, with market shares around 15%.

BRANCH CLOSURES ESTIMATED CLOSURES AS OF PLAN 1,143 CLOSURES COMPLETED TO DATE 666 % OF TARGET 58%

Restructuring Plan Progress 2

BRANCH NETWORK RESTRUCTURING

9 of 30 / July 2013

Income Statement 1H 2013 – BFA Group and Bankia Group

BFA Group/ Bankia Group data. €m

2Q 2013 highlights

Net interest income Dividends Other revenue Gross income Operating expenses Profit before tax Provisions and other expenses Profit from sale of investees and other profit Pre-provision profit Profit after tax Tax Net profit associated with hybrids exchange* Profit from discontinued operations

* In the published income statement the net profit associated with the hybrids exchange is included in “Other revenue” as trading income.

Profit after tax published 1,092 1,204 6 105 675 699 1,773 2,008 (982) (990) 149 381 (856) (854) 214 217 791 1,018 192 428 (43) (39) 1,269 86 86 1,697

10 of 30 / July 2013

Contents

1. 1H 2013 highlights 2. 2Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions

11 of 30 / July 2013

Bankia Pro Forma Income Statement 1Q 2013 / 2Q 2013 – Key figures

A B C D

2Q 2013

The following pro forma income statement excludes the cost of the subordinated loan by BFA to Bankia, in the amount of €89m in 1Q and €53m in 2Q, which was cancelled on 23 May. In 2Q 2013, profit from discontinued operations, in the amount of €113 million before taxes, is included in Profit from sale of investees and other profit.

2Q 2013 results

Bankia Group data. €m

Net interest income Gross income Operating expenses Pre-provision profit 633 958 (488) 470 Provisions Profit before tax (585) 213 Profit from sale of investees and other profit 328

E

1Q 2013 601 957 (494) 463 (272) 191

12 of 30 / July 2013

3.13% 2.99% 2.72% 2.65% 1.95% 1.95% 1.86% 1.70% 3Q 2012 4Q 2012 1Q 2013 2Q 2013 Loan yield Cost of deposits

Net interest margin – Bankia

Bankia Group data. €m

Net interest income up 5%

(1) Actual numbers, adjusted for the finance cost associated with the subordinated

loan from BFA to Bankia, which was cancelled on 23 May.

A

Loan yield and customer deposits

• Net interest income improved in 2Q 2013 due to higher net interest margin
• Asset repricing policies continue
• Cost of customer deposits down 25 b.p. since 4Q 2012

3Q12 18 762

(1)

4Q12 91 731

(1)

1Q13 601 89

(1)

2Q13

633

53

(1)

+5%

1.18% 1.04% 0.86% 0.95%

Customers gross margin

2Q 2013 results

13 of 30 / July 2013

Strong gross income generation, with income from the traditional banking business (net interest income plus fees and commissions) up 3.7% in the quarter (+€32 million).

Gross income – Bankia

Composition and trend of Gross Income

B

Bankia Group data. €m

2Q 2013 results

(1) Actual figures, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled after the Bankia capital increase

GROSS INCOME 1Q 2013

957 (1) 884 (1)

GROSS INCOME 3Q 2012

904 (1)

GROSS INCOME 4Q 2012

633 (1)

Net interest income

225 146 3 (49)

Net fee income

Trading income and

• exch. diffs

Dividends and eq. method

Other (DGF) GROSS INCOME 2Q 2013

958 (1)

53 GROSS INCOME 2Q 2013

958 (1)

14 of 30 / July 2013

Operating expenses – Bankia

Quarterly trend in operating expenses

C

Cost reduction effort continues: recurring efficiency ratio (%) (1) continues improving.

1Q 2013

494

2Q 2013 results

4Q 2012

553

3Q 2012

560 Operating expenses/ Gross income (ex tr. income)

2Q2013

488

• 1.3%

Bankia Group data. €m

(1) Cost-to-income ratio excluding trading income and exchange differences

1Q 2013 4Q 2012 3Q 2012

62.1% 63.3% 62.1% 60.1%

2Q 2013

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2Q 2013 results

Pre-provision profit – Bankia

D

Bankia Group data. €m

Pre-provision profit rises for fourth quarter in a row

(1) Actual figures, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled after the Bankia capital increase

3Q12

324 (1)

18 306

4Q12

351 (1)

91 260

1Q13

463

89 374

(1)

417 53

470

(1)

2Q13

16 of 30 / July 2013

Profit before tax - Bankia

Pre-provision profit 470 (1) Profit from sales and other profit 296

2Q 2013 results

(1) Includes €51m of net interest income due to impact of subordinated loan

E

More than €200 million of profit before tax in 2Q

Bankia Group data. €m

Recurring profit from discontinued operations 32 (2) 2Q 2013 Provisions (585) Profit before tax 213

Recurring provisions (301) Non-recurring provisions (284)

… used to ensure prudent coverage of

• ur portfolio

Extraordinary income…

(1) Includes €89m on 1Q and €53m on 2Q of net interest income due to impact of subordinated loan

Recurring cost of credit risk in 1H ≈73 b.p.

(2) Includes recurring profit of Aseval

463 (1) 1Q 2013 (272) 191

17 of 30 / July 2013

Contents

1. 2Q 2013 highlights 2. 2Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions

18 of 30 / July 2013

Asset quality and risk management

Portfolios Retail Corporates and SMEs 87.6 43.0

Gross amount

Developers 4.8

Credit quality

Bankia Group data. €bn

Total loan portfolio 145.8

Provisions as % gross loans

3.3% 14.8% 44.8% 8.0% Provision coverage ratios continue to improve after additions to provisions Dec 2012 Gross loans and provision coverage ratios 85.7 41.0

Gross amount

4.7 137.7 Jun 2013

Provisions as % gross loans

3.5% 14.9% 51.6% 8.4% Total excluding developers 141.0 6.7% 133.0 6.9%

19 of 30 / July 2013

Asset quality and risk management

Credit quality

Bankia Group data. €bn

NPL coverage ratio improves to 63%, while NPLs fall €0.5 bn NPLs and NPL coverage Reduction in NPLs (€bn) Dec 2012

Total gross assets (€bn)

152.5

NPLs (€bn)

19.8

NPL ratio NPL coverage

13.0% 61.8% Jun 2013 144.5 19.3 13.4% 63.0%

NPLs Dec 2012 + Gross additions

• Recoveries

19.8

• Written off

NPLs Jun 2013

+ 1.8

• 2.1
• 0.2

19.3

Net additions

• 0.3

20 of 30 / July 2013

Asset quality and risk management

Credit quality

Structure of refinanced loans – Jun 2013 Only 8% of total refinanced loans are developer loans. Approximately 87% of refinanced performing loans are loans to individuals. Category Non-performing Total amount refinanced 9.8 22.1

Gross amount

Total gross loans 137.7 16.3% 44.2% 3.6 Substandard

% of refinanced amount

8.7 Performing 39.5% 4.5 5.4

Prov.

23.4% 46.4% 0.9

% Cov.

24.4%

Bankia Group data. €bn

21 of 30 / July 2013

Contents

1. 2Q 2013 highlights 2. 2Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions

22 of 30 / July 2013

Main liquidity indicators - Bankia

Commercial gap Main liquidity indicators show positive trend

Liquidity and solvency

Commercial gap: Net loans – mediation loans – retail commercial paper – strict customer deposits LTD ratio: (Net credit / (retail commercial paper + strict customer deposits + ICO/EIB deposits + single-certificate covered bonds)

Bankia Group data. €bn 1Q2013

32.8

4Q2012

33.3

2Q2013

29.6 LTD ratio

1Q2013 4Q2012

120.4%

2Q2013

120.9% 118.2%

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Liquidity and solvency

Capital generated organically

Bankia increases Core Capital by 26 b.p. to 10.32%. Bankia Group – CORE CAPITAL

+ 37 bp

10.06%

+ 12 bp

+ 0.26% 10.06% 10.32% MAR 2013 Pf JUN 2013 ↑Prof. ↓RWAs

• 23 bp

Aseval Integration

BFA Group maintains solvency ratio at 10.0%, after the provision for arbitration.

• Gener. organically: + 49 bp

24 of 30 / July 2013

Contents

1. 2Q 2013 highlights 2. 2Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions

25 of 30 / July 2013

Conclusions

We are on track to meet the goals of the Strategic Plan

Active commercial strategy has stabilised net interest income earlier than planned Strong momentum in accelerated restructuring plan and pursuit of cost improvement targets Reinforced NPL management in an environment of weakening domestic

• demand. Prudent provisioning policy

Active management of divestment plan: more than €1,700 million of cash generated Organic capital generation model: we continue to increase the solvency ratio

26 of 30 / July 2013

Appendix

27 of 30 / July 2013

Actual and Pro Forma Income Statement Bankia 2Q

Subordinated loan

Bankia 2Q 2013

Bankia Group data. €m

Net interest income Gross income Profit after tax +53 +53 Profit before tax +53 Actual 580 905 120 47 Pro forma 633 958 213 +113 PDO

(1)

+37 (2) 157

(1) Profit from discontinued operations – Aseval (€86 million net as profit from discontinued operations and €113 million gross as profit from sale of investees and other) (2) Adjustment to subordinated loan for tax effect

Corporate income tax (16) (13) (56) Profit from discontinued operations 86 (27)

28 of 30 / July 2013

Actual and Pro Forma Income Statement Bankia 1H

Subordinated loan

Bankia 1H 2013

Bankia Group data. €m

Net interest income Gross income Profit after tax +142 +142 Profit before tax +142 Actual 1.092 1.773 192 149 Pro forma 1,235 1,916 404 +113 ROI (1) +100

(2)

292 Corporate income tax (42) (43) (112) Profit from discontinued operations 86 (27)

(1) Profit from discontinued operations – Aseval (€86 million net as profit from discontinued operation and €113 million gross as profit from sale of investees and other) (2) Adjustment to subordinated loan for tax effect

29 of 30 / July 2013

Actual and Pro Forma Income Statement BFA 2Q

BFA 2Q 2013

BFA Group data. €m

Net interest income Gross income Profit after tax Profit before tax Actual 617 2,280 1,484 1,417

(1) Adjusted for tax effect

Pro forma 617 981 118 215 Trading Income (1,299) (1,299) (1,269)

(1)

30 of 30 / July 2013

Actual and Pro Forma Income Statement BFA 1H

BFA 1H 2013

BFA Group data. €m

Net interest income Gross income Profit after tax Profit before tax Actual 1,204 3,307 1,698 1,680

(1) Adjusted for tax effect

Pro forma 1,204 2,008 381 428 Trading Income (1,299) (1,299) (1,269)

(1)

Results Presentation 2Q 2013

25 July 2013 1Q 2013

April 2013