Results Presentation 2Q 2013 25 July 2013 1Q 2013 April 2013
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Contents 1. 2Q 2013 highlights 2. 2Q 2013 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions 3 of 30 / July 2013
2Q 2013 highlights Improved net interest income 1 Cost reduction continues Improvement of recurring efficiency ratio FINANCIAL PERFORMANCE Divestment plan proceeds used to reinforce provisions Net profit in line with Plan Capital generated organically Capitalisation process completed 2 RESTRUCTURING Accelerated restructuring plan on going PLAN PROGRESS Divestment plan driving ahead 4 of 30 / July 2013
2Q 2013 highlights 1 BFA Group financial performance Q2 net profit reaches € 215 million in BFA Group, excluding positive effect of hybrids exchange. Cumulative total as of June 2013: € 428 Results million . Profit from sale of investees allows additional € 284 million of non- recurring provisions. NPLs reduced by € 514 million in first half. Asset quality 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 Liquidity and solvency € 525 million to cover contingencies arising from the arbitration process. Bankia increases its capital ratio once again this quarter. 5 of 30 / July 2013
2Q 2013 highlights 2 Restructuring Plan Progress CAPITALISATION PROCESS – FINAL FIGURES BANKIA SHAREHOLDER STRUCTURE 24.6 15.6 CAPITAL GENERATED ( € bn) Free Float • Capitalisation process completed 32% BFA • Share stabilised following listing of new 68% shares • BFA’s Bankia share purchase programme cancelled without having been used Member of the following indices TOTAL No. SHARES (mill.) 11,517 Share price 23 July € 0.643 MSCI Eurostoxx 600 6 of 30 / July 2013
2Q 2013 highlights 2 Restructuring Plan Progress DIVESTMENT PLAN INVESTEES SOLD IN 1H 2013 Divestment plan making headway CASH GENERATED 729 More than € 1,700 million of cash SALES NOT YET COMPLETED generated from sale of investees 995 ESTIMATED CASH PROCEEDS Amounts in € billion 7 of 30 / July 2013
2Q 2013 highlights 2 Restructuring Plan Progress BRANCH NETWORK RESTRUCTURING BRANCH CLOSURES CUMULATIVE CLOSURE SCHEDULE 1,143 ESTIMATED CLOSURES AS OF PLAN 1,143 666 CLOSURES COMPLETED TO DATE 666 212 % OF TARGET 58% 1Q14e 1Q13 Current 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%. 8 of 30 / July 2013
2Q 2013 highlights Income Statement 1H 2013 – BFA Group and Bankia Group BFA Group/ Bankia Group data. € m Net interest income 1,204 1,092 Dividends 105 6 Other revenue 699 675 Gross income 2,008 1,773 Operating expenses (990) (982) Pre-provision profit 1,018 791 (854) (856) Provisions and other expenses 217 214 Profit from sale of investees and other profit 381 149 Profit before tax Tax (39) (43) Profit from discontinued operations 86 86 428 192 Profit after tax Net profit associated with hybrids exchange* 1,269 Profit after tax published 1,697 * In the published income statement the net profit associated with the hybrids exchange is included in “Other revenue” as tra ding income. 9 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 10 of 30 / July 2013
2Q 2013 results Bankia Pro Forma Income Statement 1Q 2013 / 2Q 2013 – Key figures 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 1Q 2013 Net interest income 601 633 A Gross income 958 957 B Operating expenses (488) C (494) Pre-provision profit 470 D 463 Provisions (585) (272) E Profit from sale of investees and other profit 328 0 Profit before tax 213 191 Bankia Group data. € m 11 of 30 / July 2013
2Q 2013 results A Net interest margin – Bankia Net interest income up 5% Loan yield and customer deposits 3.13% 2.99% +5% 2.72% 2.65% (1) 762 (1) (1) 731 633 (1) 18 601 91 1.95% 1.95% 1.86% 53 1.70% 89 1.18% 1.04% 0.86% 0.95% 3Q12 4Q12 1Q13 2Q13 3Q 2012 4Q 2012 1Q 2013 2Q 2013 Loan yield Cost of deposits Customers gross margin (1) Actual numbers, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May. 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 Bankia Group data. € m 12 of 30 / July 2013
2Q 2013 results B Gross income – Bankia Composition and trend of Gross Income 3 (49) 146 225 53 958 (1) 958 (1) 957 (1) 904 (1) 884 (1) 633 (1) Net GROSS GROSS GROSS GROSS GROSS Trading Dividends Other Net fee interest INCOME income and and eq. INCOME INCOME INCOME INCOME income (DGF) exch. diffs method income 2Q 2013 4Q 2012 3Q 2012 2Q 2013 1Q 2013 (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 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). Bankia Group data. € m 13 of 30 / July 2013
2Q 2013 results C Operating expenses – Bankia Quarterly trend in operating expenses Operating expenses/ Gross income (ex tr. income) 560 553 - 1.3% 494 63.3% 62.1% 62.1% 488 60.1% 3Q 2012 4Q 2012 1Q 2013 2Q2013 3Q 2012 4Q 2012 1Q 2013 2Q 2013 (1) Cost-to-income ratio excluding trading income and exchange differences Cost reduction effort continues: recurring efficiency ratio (%) (1) continues improving. Bankia Group data. € m 14 of 30 / July 2013
2Q 2013 results D Pre-provision profit – Bankia (1) (1) 463 470 324 (1) 351 (1) 53 89 18 91 417 374 306 260 3Q12 4Q12 1Q13 2Q13 (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 Pre-provision profit rises for fourth quarter in a row Bankia Group data. € m 15 of 30 / July 2013
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