Quarterly Results Presentation 2Q14 28 th July 2014 Trabajamos - - PowerPoint PPT Presentation

1 of 28 / July 2014

Quarterly Results Presentation 2Q14

28th July 2014

“Trabajamos desde los principios para poner la mejor banca a tu servicio”

2 of 28 / July 2014

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 28 / July 2014

Contents

1. Highlights of 1H14 2. 2Q14 results 3. Asset Quality and Risk Management 4. Liquidity and solvency 5. Conclusions

4 of 28 / July 2014

Highlights of 1H14

+€3.8Bn Customer Funds +26.8% New Credit 1 3

IMPROVED PROFITABILITY COMMERCIAL ACTIVITY DYNAMIZATION

Net Profit Bankia: €431Mn Net Profit BFA: €827Mn 2 4

BALANCE SHEET STRENGTH

NPL: -€1.4Bn CET 1: +113pbs Issuances: €3.3Bn

MARKETS CONFIDENCE

5 of 28 / July 2014

COMMERCIAL ACTIVITY DYNAMIZATION 1

DEC 13 MAR 14

€bn

JUN 14

90.0 90.7 QUARTERLY PERFORMANCE OF STRICT CUSTOMER FUNDS 20.8 21.7

+0.7

92.3 22.3

+1.6 +0.6 +0.9

110.8 112.4 114.6

Strict customer deposits Off-balance-sheet customer funds

+2.2 +1.6

Total strict dep. + off-balance

(0.4) +1.1 +0.7

SEP 13

90.4 19.7 110.1

Total strict customer funds up 3.9% year on year

+ 3.9%

JUN 13

91.7 18.6 110.3

(1.3) +1.1 (0.2)

Highlights of 1H14

6 of 28 / July 2014

New credit grows 26.8% quarter on quarter. In businesses, new credit rises 46.9%

€ Mn

NEW CREDIT

Significant increase in market shares

2,800

1,931

1Q 14 2Q 14

3,551

869 2,837 714

+ 26.8 %

Businesses Individuals

CREDIT MARKET SHARES – NEW CREDIT

9.33% 11.69% +236 bps

%

Source: ICO

ICO Financing

DEC 13 JUN 14

8.50% 10.90% +240 bps

%

Source: BdE

Businesses >€1MM

DEC 13

9.52%

MAY 14

10.39% +87 bps

%

Source: BdE

Businesses <€1MM

+ 46.9 %

COMMERCIAL ACTIVITY DYNAMIZATION 1

Highlights of 1H14

DEC 13 JUN 14

7 of 28 / July 2014

NPL down €1.4bn during 1H14

NPL

€bn

DEC 13

20.0

• 1.4 bn

NPL RATIO

%

NPL COVERAGE

%

NPL DECREASE AND COVERAGE INCREASES 2

JUN 14

18.6

DEC 13

14.7%

• 0.7 p.p.

JUN 14

14.0% NPL ratio falls to 14% NPL coverage increases to almost 59%

DEC 13

56.5%

+ 2.4 p.p.

JUN 14

58.9%

Highlights of 1H14

8 of 28 / July 2014

LTD RATIO CET 1 BIS III - PHASE IN

%

DEC 13

115.4%

• 5.7 p.p.

%

LTD ratio falls below 110% 113 bps of capital generation during 1H14

SIGNIFICANT LIQUIDITY AND CAPITAL GENERATION

2

LTD ratio: (Net credit / (strict customer deposits + ICO/EIB deposits + single-certificate covered bonds)

JUN 14

109.7%

DEC 13

10.69%

+ 113 bps

JUN 14

11.82%

Highlights of 1H14

9 of 28 / July 2014

Efficiency ratio ex-NTI at 46.1% (43.4% including NTI)

PRE-PROVISION PROFIT EX NET TRADING INCOME EFFICIENCY RATIO EX-NTI (1) INCREASE IN RECURRING RESULTS AND A NEW IMPROVEMENT IN THE EFFICIENCY RATIO

3

€ Mn

2Q13

338

3Q13

397

4Q13

419

1Q14

468

2Q14

514

+ 54.6% + 10.0%

53

(1)

1Q13

297

89

(1)

982 635

Highlights of 1H14

(1) Figures adjusted excluding the finance cost (€89Mn in 1Q13 and €53Mn in 2Q13) of the subordinated loan from BFA to

Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower.

%

(1) Efficiency ratio ex-NTI and exchange differences

62.1% 60.1% 54.2% 52.6% 49.3% 46.1%

1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14

10 of 28 / July 2014

…WHICH LEADS TO A CONTINUED IMPROVEMENT IN PROFITABILITY 3 PROFIT AFTER TAXES BANKIA GROUP

1H13

291

2H13

317

1H14

431

ROE

5.94% 7.92%

+ 48%

Highlights of 1H14

(1)

(1) Figures adjusted excluding the finance cost (€142Mn in 1H13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profit for that period was €192Mn.

11 of 28 / July 2014

MARKETS CONFIDENCE 4

SALE OF BANKIA’S 7.5%

Total amount €1,304 Mn Selling price (€) €1.51 % of Bankia’s capital 7.50% Amount Maturity Spread Oversubs. €1,000 Mn 17/01/2019 MS + 235 bps 3.5x # Orders > 250 orders

SENIOR DEBT

Oversubscription ≈ 2.0x Amount Maturity Spread Oversubs. €1,000 Mn 22/05/2024 MS + 316.6 bps 3.5x # Orders > 270 orders

SUBORDINATED DEBT More than €3.3bn raised in wholesale markets during 1H14: senior debt issuance (€1Bn), sale of 7.5% of Bankia (€1.3Bn) and subordinated debt issuance (€1Bn)

Highlights of 1H14

12 of 28 / July 2014

Contents

1. Highlights of 1H14 2. 2Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions

13 of 28 / July 2014

2Q14 Results

Pro forma income statement – Bankia Group

A B C Net interest income Gross income Operating expenses Pre-provision profit Provisioning & others D 2Q13 633 958 (488) 470 (257) 2Q14 730 1,002 (435) 567 (241) Diff %

15.3% 4.6% (10.9%) 20.7% (6.2%)

Profit after tax 157 245

56.1%

€Mn

Fee and commission income 225 237

5.5%

Gross income ex NTI 826 949

14.9%

E Taxes (56) (81)

44.6%

Pre-provision profit ex NTI 338 514

52.1%

1H13 1,234 1,915 (982) 933 (529) 1H14 1,427 1,932 (876) 1,056 (462) 291 431 449 468 1,617 1,858 (113) (163) 635 982

The pro forma income statement for 1H 2013 excludes the cost of the subordinated loan by BFA to Bankia in the amount of €89 million in 1Q 2013 and €53 million in 2Q 2013, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower.

Diff %

15.7% 0.9% (10.8%) 13.2% (12.7%) 48.0% 4.1% 14.9% 44.2% 54.6%

14 of 28 / July 2014

Quarterly performance of net interest income

€Mn

2Q13

633

3Q13

643

4Q13

690

1Q14

698

(1)

53

2Q14

730

+ 15.3%

Net interest income upward trend started in 2Q13 continues: +4.6% in the quarter Net interest income up 15.7% compared with 1H13

A

Core banking business: net interest income

Interest margin positive trend consolidates

+ 4.6%

Half-year performance net interest income

1H13

1,234

1H14

1,427

+15.7%

€Mn

142

(1)

2Q14 Results

(1) Figures adjusted excluding the finance cost (€89Mn in 1Q13 and €53Mn in 2Q13) of the subordinated loan from

BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower.

(1) Figures adjusted excluding the finance cost (€89Mn in 1Q13 and €53Mn in 2Q13) of the

subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower.

15 of 28 / July 2014

Cost of stock term deposits vs. new additions The cost of new deposits in 2Q14 is 1.10% A

Core banking business: net interest income

Growth in net interest income driven by an improvement in spreads

Stock and new additions - quarterly average. Excludes City National Bank.

Loan yield vs. cost of deposits (1)

Gross customer spread up another 10 bps in the quarter

(1) Excludes City National Bank from the series

2Q14 Results

% %

1.17% 1.17% 1.07% 0.99% 1.00%

16 of 28 / July 2014

Quarterly performance fee and commission income Core banking business performance

€Mn

2Q13

225

3Q13

237

4Q13

249

1Q14

231

2Q14

237

+ 5.5%

Fee and commission income up 5.5% quarter

• n quarter, due to an increase in the sale of
• ff-balance-sheet products

2Q13

857

2Q14

967

+12.8%

Core banking business: fee and commission income

Fee and commission income generation performs better than previous year

€Mn

Core banking business = net interest income + fee and commission income

A

Core banking business up 12.8% compared with 1H13

53

(1)

2Q14 Results

(1) Figures adjusted excluding the finance cost (€89Mn in 1Q13 and €53Mn in 2Q13) of the

subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower.

17 of 28 / July 2014

Quarterly performance of gross income Gross income ex NTI

€Mn

826

2Q13

958

861

3Q13

945

878

4Q13

912

909

1Q14

930

(1)

949

2Q14

1,002

+ 7.7%

Recurring gross income excluding net trading income up 14.9% quarter on quarter and half on half

Gross income ex net trading income up 4.4% compared to previous quarter

132 84 34 21 53 NTI GI ex NTI

Gross income

Solid growth of gross income

53

2Q13

826

2Q14

949

+14.9%

€Mn

B

53 + 4.4%

(1)

GI

2Q14 Results

(1) Figures adjusted excluding the finance cost (€89Mn in 1Q13 and €53Mn in 2Q13) of the subordinated loan from BFA to Bankia,

which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower.

(1) Figures adjusted excluding the finance cost (€89Mn in 1Q13 and €53Mn in

2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower.

18 of 28 / July 2014

Quarterly performance of operating expenses Efficiency ratio ex net trading income

€m

2Q13

488

3Q13

464

4Q13

459

1Q14

441

2Q14

435

• 10.9%

Continued quarter on quarter reduction in operating expenses

• 1.5%

Efficiency ratio ex NTI falls 3.2 p.p. in quarter, reaching 46.1%

Operating expenses

Continued cost reduction

%

(1) Efficiency ratio excluding net trading income and exchange differences

C

• 14.0 p.p.

2Q14 Results

60.1% 54.2% 52.6% 49.3% 46.1%

2Q 13 3Q 13 4Q 13 1Q 14 2Q 14

19 of 28 / July 2014

Pre-provision profit

Recurring pre-provision profit ex net trading income up 10% quarter on quarter and 52.1% compared with 2Q13

2Q13

470

2Q14

567

+ 20.7%

Pre-provision profit

Very positive performance of pre-provision profit

Pre-provision profit ex net trading income

€Mn

2Q13

338

3Q13

397

4Q13

419

1Q14

468

2Q14

514

+ 52.1% + 10.0%

€Mn

53

D

(1)

53

2Q14 Results

(1)

(1) Figures adjusted excluding the finance cost (€89Mn in 1Q13 and €53Mn in 2Q13) of the subordinated loan from BFA to

Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower.

(1) Figures adjusted excluding the finance cost (€89Mn in 1Q13 and €53Mn in

2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower.

20 of 28 / July 2014

Net profit reaches €431 million in the first half of the year, up 48% from 1H 2013

RECURRING COST OF RISK 2Q14 (CREDIT)

63 bps Pre-provision profit Profit from sales and others Profit from discont. op.(2) Provisions 567 3 17 (262) 2Q14 Profit after tax 245

Profit after tax

Significant increase in net profit compared to same quarter of previous year

(1) Figures adjusted excluding the finance cost (€89Mn in 1Q13 and €53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. (2) Includes recurring profit of Aseval

+56.1%

€Mn

E 470 296 32 (585) 2Q13 157

(1)

481 21 21 (294) 3Q13 161 453 53 24 (353) 4Q13 156 489 62 21 (303) 1Q14 186

2Q14 Results

21 of 28 / July 2014

Contents

1. Highlights of 1H14 2. 2Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions

22 of 28 / July 2014

Performance of NPL, NPL ratio and NPL coverage

NPLs Total risk assets NPL ratio

NPL coverage (1)

€Bn

DEC 2013

136.7 14.7% 56.5%

(1) Loan loss provisions / NPLs

Asset Quality and Risk Management

Credit quality

Decrease in NPL and reduction of NPL ratio

JUN 2014

132.4 14.0% 58.9%

Organic reduction

NPL performance NPL ratio reduces to 14%, while NPL fall by €1.4 Bn in 1H14 NPL coverage up 2.4 p.p. in 1H14

28 bps 151 bps

20.0 18.6

€0.6 bn

• 45 bps

NPL Formation

+ 17 bps

Denominator effect

MAR 2014

134.0 14.3% 57.4% 19.2 NPL March 2014

+ Gross additions

• Recoveries

19.2

• Write-offs

NPL June 2014 + 0.9

• 1.4
• 0.1

18.6

Net additions

• 0.5
• Sales
• €Bn

23 of 28 / July 2014

Balance of credit exposure and coverage ratios

Asset Quality and Risk Management

Credit quality

Coverage increased in almost all segments

Coverage ratios increase in RE developers and businesses segments Coverage ex RE developers reaches 7.3%

MAR 14

81.1

JUN 14

80.8

3.5% COVERAGE RATIOS

Individuals

3.5%

MAR 14

36.8

JUN 14

35.8

16.4%

Businesses

16.9%

MAR 14

3.5

JUN 14

3.3

44.7%

Real estate developers

45.3%

MAR 14

127.6

JUN 14

125.6

8.2%

Total portfolio

8.3% GROSS EXPOSURE

MAR 14

124.1

JUN 14

122.3

7.2%

Total portfolio

(ex RE developers)

7.3%

€bn

24 of 28 / July 2014

Contents

1. Highlights of 1H14 2. 2Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions

25 of 28 / July 2014

LTD ratio (%) Commercial gap LTD falls to 109.7%, while commercial gap is down 37% year on year 109.7

2Q13

118.2

€Bn %

3Q13 4Q13 1Q14 2Q14

116.7 115.4 111.9

18.7

29.6 27.6 25.1 21.6

2Q13 3Q13 4Q13 1Q14 2Q14

• 36.7%
• 8.5 p.p.

Liquidity and Solvency

Liquidity indicators

Good liquidity management leads to improved ratios

• 2.2 p.p.
• 13.1%

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

26 of 28 / July 2014

Liquidity and Solvency

Significant organic capital generation

Continued high level of capital generation

CET 1 BIS III fully loaded ratio

JUN 14 DEC 13

9.95% 8.60% CET 1 BIS III fully loaded ratio almost 10%

+ 57 bps

↑Profit ↓RWAs

Generated organically: + 135 bps + 78 bps

11.43% 8.98%

TOTAL SOLVENCY

CET 1 BIS III phase-in ratio CET 1 BIS III phase-in ratio close to 12%

JUN 14 DEC 13

11.82% 10.69%

+ 68 bps

↑Profit ↓RWAs

Generated organically: + 113 bps + 45 bps

13.29% 11.06%

TOTAL SOLVENCY

27 of 28 / July 2014

Contents

1. Highlights of 1H14 2. 2Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions

28 of 28 / July 2014

Conclusions

Important commercial capabilities acceleration Strong push to recurrent results generation (pre-provision profit: + 54.6%)

1H14: First half of our Strategic Plan concluded…

Efficiency ratio already stands at 46% NPL ratio reduction and coverage increases Additional progress in the capital ratio Normalization of Bankia in the financial markets

…with ROE close to reaching 8%

29 of 28 / July 2014

Investor Relations ir@bankia.com

“Trabajamos desde los principios para poner la mejor banca a tu servicio”