Quarterly Results Presentation 2Q14 28 th July 2014 “Trabajamos desde los principios para poner la mejor banca a tu servicio” 1 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. 2 of 28 / July 2014
Contents 1. Highlights of 1H14 2. 2Q14 results 3. Asset Quality and Risk Management 4. Liquidity and solvency 5. Conclusions 3 of 28 / July 2014
Highlights of 1H14 1 3 COMMERCIAL ACTIVITY IMPROVED DYNAMIZATION PROFITABILITY + € 3.8Bn Customer Funds Net Profit Bankia: € 431Mn Net Profit BFA: € 827Mn +26.8% New Credit 2 4 BALANCE SHEET MARKETS CONFIDENCE STRENGTH NPL: - € 1.4Bn Issuances: € 3.3Bn CET 1: +113pbs 4 of 28 / July 2014
Highlights of 1H14 1 COMMERCIAL ACTIVITY DYNAMIZATION QUARTERLY PERFORMANCE OF STRICT CUSTOMER FUNDS € bn + 3.9% 110.3 (0.2) 110.1 110.8 112.4 114.6 +0.7 +1.6 +2.2 22.3 21.7 18.6 +1.1 +1.1 20.8 +0.9 +0.6 19.7 92.3 91.7 (1.3) (0.4) +0.7 +1.6 90.7 90.4 90.0 JUN 13 SEP 13 DEC 13 MAR 14 JUN 14 Strict customer deposits Total strict dep. + off-balance Off-balance-sheet customer funds Total strict customer funds up 3.9% year on year 5 of 28 / July 2014
Highlights of 1H14 1 COMMERCIAL ACTIVITY DYNAMIZATION NEW CREDIT CREDIT MARKET SHARES – NEW CREDIT € Mn % 2,800 3,551 + 26.8 % ICO 9.33% +236 bps 11.69% Financing DEC 13 JUN 14 Source: ICO 714 869 % Businesses 8.50% 10.90% +240 bps > € 1MM 2,837 DEC 13 JUN 14 + 46.9 % 1,931 Source: BdE % 2Q 14 1Q 14 Businesses 9.52% 10.39% +87 bps < € 1MM DEC 13 MAY 14 Businesses Individuals Source: BdE New credit grows 26.8% quarter on quarter. Significant increase in market shares In businesses, new credit rises 46.9% 6 of 28 / July 2014
Highlights of 1H14 2 NPL DECREASE AND COVERAGE INCREASES NPL NPL RATIO NPL COVERAGE € bn % % - 0.7 p.p. + 2.4 p.p. - 1.4 bn 14.7% 14.0% 56.5% 58.9% 20.0 18.6 DEC 13 JUN 14 DEC 13 JUN 14 DEC 13 JUN 14 NPL down € 1.4bn NPL coverage increases NPL ratio falls to 14% during 1H14 to almost 59% 7 of 28 / July 2014
Highlights of 1H14 2 SIGNIFICANT LIQUIDITY AND CAPITAL GENERATION LTD RATIO CET 1 BIS III - PHASE IN % % + 113 bps -5.7 p.p. 10.69% 11.82% 115.4% 109.7% DEC 13 JUN 14 DEC 13 JUN 14 LTD ratio: (Net credit / (strict customer deposits + ICO/EIB deposits + single-certificate covered bonds) 113 bps of capital generation LTD ratio falls below 110% during 1H14 8 of 28 / July 2014
Highlights of 1H14 3 INCREASE IN RECURRING RESULTS AND A NEW IMPROVEMENT IN THE EFFICIENCY RATIO EFFICIENCY RATIO EX-NTI (1) PRE-PROVISION PROFIT EX NET TRADING INCOME % € Mn + 54.6% 982 635 514 (1) (1) 297 338 397 419 468 62.1% 60.1% + 10.0% 54.2% 52.6% 49.3% 53 89 46.1% 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 (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 Efficiency ratio ex-NTI at 46.1% (43.4% including NTI) 9 of 28 / July 2014
Highlights of 1H14 3 …WHICH LEADS TO A CONTINUED IMPROVEMENT IN PROFITABILITY + 48% 291 431 (1) 317 PROFIT AFTER TAXES BANKIA GROUP ROE 5.94% 7.92% 1H13 2H13 1H14 (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. 10 of 28 / July 2014
Highlights of 1H14 4 MARKETS CONFIDENCE SENIOR DEBT SALE OF BANKIA’S 7.5% SUBORDINATED DEBT Amount € 1,000 Mn Amount € 1,000 Mn € 1,304 Mn Total amount Maturity 17/01/2019 Maturity 22/05/2024 Selling price ( € ) € 1.51 Spread MS + 235 bps Spread MS + 316.6 bps % of Bankia’s capital 7.50% Oversubs. 3.5x Oversubs. 3.5x > 250 orders # Orders Oversubscription ≈ 2.0x # Orders > 270 orders 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) 11 of 28 / July 2014
Contents 1. Highlights of 1H14 2. 2Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions 12 of 28 / July 2014
2Q14 Results Pro forma income statement – Bankia Group 2Q13 2Q14 Diff % 1H13 1H14 Diff % € Mn Net interest income 633 730 1,234 1,427 15.3% 15.7% A Fee and commission income 225 237 5.5% 449 468 4.1% Gross income 958 1,002 4.6% 1,915 1,932 0.9% B Gross income ex NTI 826 949 1,617 1,858 14.9% 14.9% C Operating expenses (488) (435) (10.9%) (982) (876) (10.8%) Pre-provision profit 470 567 933 1,056 13.2% 20.7% D Pre-provision profit ex NTI 338 514 52.1% 635 982 54.6% Provisioning & others (257) (241) (6.2%) (529) (462) (12.7%) E Taxes (56) (81) (113) (163) 44.6% 44.2% Profit after tax 157 245 56.1% 291 431 48.0% 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. 13 of 28 / July 2014
2Q14 Results Core banking business: net interest income A Interest margin positive trend consolidates Quarterly performance of net interest income Half-year performance net interest income € Mn € Mn +15.7% + 15.3% 1,427 1,234 (1) 730 633 (1) 643 690 698 + 4.6% 142 53 1H13 1H14 2Q13 3Q13 4Q13 1Q14 2Q14 (1) Figures adjusted excluding the finance cost ( € 89Mn in 1Q13 and € 53Mn in 2Q13) of the (1) Figures adjusted excluding the finance cost ( € 89Mn in 1Q13 and € 53Mn in 2Q13) of the subordinated loan from subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. profits for these periods were lower. Net interest income upward trend started in Net interest income up 15.7% 2Q13 continues: +4.6% in the quarter compared with 1H13 14 of 28 / July 2014
2Q14 Results Core banking business: net interest income A Growth in net interest income driven by an improvement in spreads Loan yield vs. cost of deposits (1) Cost of stock term deposits vs. new additions % % 1.17% 1.17% 1.07% 0.99% 1.00% (1) Excludes City National Bank from the series Stock and new additions - quarterly average. Excludes City National Bank. Gross customer spread up The cost of new deposits in 2Q14 is 1.10% another 10 bps in the quarter 15 of 28 / July 2014
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