covered bonds investor presentation - bankia€¦ · 14.15% fully loaded cet1(4) 12.46% 01....

1

Covered Bonds Investor Presentation

September 2018

2

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 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 offeror 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 whichare 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 fromsources that Bankia considers reliable, but Bankia does not represent or warrant that the information is complete or accurate, in particular with respect to data providedby third parties. This document may contain abridged or unaudited information and recipients are invited to consult the public documents and information submittedby 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 noguarantee 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 itare 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 anytransaction, potential investors must ensure that they fully understand the terms of the securities/ transactions and the risks inherent in them. This document is not aprospectus for the securities described in it. Potential investors should only subscribe for securities of Bankia on the basis of the information published in the appropriateBankia prospectus, not on the basis of the information contained in this document.

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3Q18 HIGHLIGHTS

NON-PERFORMING LOANS(1) 10.4€

12.1

NPL COVERAGE RATIO(1) 54.8% 56.5%

NPL RATIO 7.8% 8.9%

ATRIBUTABLE PROFIT 744 9M18€

FULLY LOADED CET1(2) 12.46% SEP18

12.46% DIC17

%

ASSET QUALITY SEP 2018 DEC 2107

PROFITABILITY & CAPITAL SEP 2018 SEP 2017

COST OF RISK 18 9M18

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

1COMMERCIAL ACTIVITY

€2,047mnNew mortgages

+4.7% 9M18 vs 9M17

€1,675New consumer

lending +9.8% 9M18 vs 9M17

2EFFICIENCY & PROFITABLITY

51.8%

Cost to Incomeratio Sep18

-2.9%

Operating expenses 9M18 vs 9M17 Pro-forma

Bankia+BMN

3 LIQUIDITY

93.6%LTD ratio

Sep18

€29bnLiquid Assets

Sep18

4 CAPITAL

+527bps

Sep 18 CET1 Phase inBuffer vs SREP

2018 requirements

DBRS BBB (high) Stable R-1 (low)

7399M17

7.9% 9M18

8.1% 9M17

€ 500mn

Issuance of AT1

SCOPE RATINGS BBB+ Stable S-2

24 9M17

(1) BMN added €2.4bn NPLs as of Dec.17 for a total Bankia +BMN of €12.1bn. Coverage ratios include provisions for IFRS 9. If provisions for IFRS9 were excluded the coverage ratio at Dec.17 would have been 50.8%.

(2) In Dec-17, capital ratios post merger with BMN and including IFRS 9 impact

4

ATTRIBUTABLE PROFIT (2)

€816mnNET INTEREST INCOME

€1,968mn

PHASE IN CET1

14.15%FULLY LOADED CET1(4)

12.46%


Bankia Results

€

CUSTOMER FUNDS (3)

+22.8%€

BRANCHES

> 2,400CUSTOMER FUNDS

€175,960mnGROSS CUSTOMER LOANS

€128,782mn€

2017 HIGHLIGHTS (1)

UNIVERSAL BANKING MODEL, based on a multichanneldistribution model with a presence throughout Spain, andwith leading market shares in core regions whichcontributes 38% of Spain’s GDP.

BEST IN CLASS CORPORATE GOVERNANCE, optimalorganizational structure and highly respected managementteam.

SOLVENT, EFFICIENT AND PROFITABLE INSTITUTION, withbest in class efficiency and contained costs, and good speedin capturing cost synergies post-merger with BMN.

SOLID BALANCE SHEET, with proven best class riskmanagement and low real estate developer exposure.Continuing good asset quality dynamics post-merger withBMN, with a reduction of €2.4bn in NPAs in 9M18.

SUSTAINABLE CAPITAL AND LIQUIDITY GENERATION.Strong and consistent capital generation, with best in classsolvency level with a CET1 Fully Loaded of 12.5% as ofSep.18.

A SUCCESSFUL COMMERCIAL APPROACH, combined witheffective cost control and low cost of risk translates intosolid profitability levels.

(1) Dec.17 data post merger between Bankia and BMN.

(2) The “Profit/(loss) attributable to the group asreported” amounts to €505mn after includingintegration cost with BMN for €312mn. The BankiaGroup reported income statement, includes BMN’scontribution to the results for the month of Decemberonly.

(3) Includes the off-balance sheet products marketedby BMN, which as from 2018 will be managed byBankia.

(4) Includes IFRS9 impact of -20 bps

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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

APositive

AAAStable

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 AAA-

RECENT RATING ACTIONS

FITCH. On 23 January 2018, following the merger through absorption of BMN, Fitchaffirmed Bankia’s covered bonds at “A”, outlook Stable. Aditionally, on 23 March2018, following the application of the European RMBS Rating Criteria published on 2February 2018 and the calibration of certain Spanish residential mortgage creditassumptions reflecting the upgrade of Spain’s long-term Issuer default rating (A-/Stable/F1) on 19 January 2018, 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-”,outlook Positive.

DBRS. On 21 September 2018 DBRS completed its annual review of Bankia’scovered bonds confirming the rating at “AAA”.

Scope Ratings. On 12 July 2018 Scope Ratings affirmed its rating of Bankia’s coveredbonds at “AAA” with a Stable outlook.

AAA

6

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

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

Cartera Base Total Cédulas emitidas

82,856

72,054

55,470

44,376

27,692

16,685

Total Collateral Elegible Legal Issuance Issued

02. MORTGAGE COVER POOL

Cover Pool Metrics (1)

AMPLE

ISSUANCE

CAPACITY

HIGH

OC

LEVEL

STRONG

ELEGIBLE

COVER

POOL

COLLATERAL AND CB’s OUTSTANDING

88%Residential

12%Commercial

77% of the coverpool eligible € 16,685

million IssuanceCapacity

X 80%

2015 2016 2017 2018

X 2,60 over-collateralized

Collateral CB’s Outstanding

ACTIVE OC

MANAGEMENT

(1) Includes BMN`s cover pool since 4Q17.

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Cover Pool Metrics (1)

Q3 2018 Q4 2017

Collateral Eligible Collateral Eligible

Outstanding (million €) 72,054 55,470 74,884 57,545

Number of loans 870,090 734,876 883,725 756,245

Number of debtors 775,117 672,517 953,459 827,637

Average Seasoning (months) 105 112 99 107

Time to maturity (months) 237 223 240 230

Average LTV 59% 47% 59% 48%

Q3 2018 Q4 2017


Residential 62,118 50,154 63,982 52,504

Commercial 9,936 5,316 10,902 5,042

COLLATERAL LTV DISTRIBUTION

84% OF THE

COVER POOL

HAS A LTV

RATIO BELOW

80%

NPL’S DECLINING

TREND ALTERED BY

THE MERGER WITH

BMN

2016 2017 2018

(1) Includes BMN`s cover pool since 4Q17. (2) Considering more than 90 days doubtful loans.

0

5.000

10.000

15.000

20.000

25.000

0-40 40-60 60-80 80-100 >100

Mil

lon

es

5,61%5,48% 5,41% 5,35% 5,31%

5,82%5,51% 5,79%

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

NPL RATIO (2)

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RESIDENTIAL PORTFOLIO


Residential Sub-Pool

RESIDENCIAL

PORTFOLIO

ELIGIBILITY

STANDS AT 81%

AVERAGE LTV

OF THE

ELIGIBLE

PORTFOLIO IS

49%

Q3 2018 Q3 2017(1)


Outstanding (million €) 62,118 50,154 51,150 41,902

Number of loans 815,723 698,832 634,618 548,401




Average LTV 58,2% 48,6% 56.2% 48.8%

MATURITY DISTRIBUTION

GEOGRAPHIC DISTRIBUTION Collateral (€mn) Q3 2018

Madrid 17,056

C. Valenciana 9,742

Andalucía 8,599

Catalunya 7,634

Murcia 4,280

Baleares 3,711

Castilla La Mancha 2,680

Canarias 2,584

Castilla y León 2,064

Rest 3,768

83% LOANS FOR PRIMARY RESIDENCE

98% FIRST RANKED MORTGAGES

27%

12%

16%4%

3%

4%

1%

1% 1%1%

1%1%

1%

14%

6%

7%

0

5.000

10.000

15.000

20.000

25.000

30.000

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

(1) Does not include BMN

9

COMMERCIAL PORTFOLIO

RESTRICTIONS

TO REAL ESTATE

LENDING IN

RECENT YEARS

ENDED IN DEC.17

AVERAGE LTV

OF THE ELIGIBLE

COMMERCIAL

PORTFOLIO

STANDS AT 36%

Q3 2018 Q3 2017(1)


Outstanding 9,936 5,316 7,913 3,331

Number of loans 54,367 36,044 37,038 26,475




Average LTV 63.4% 35.7% 70.2% 36.9%

SPLIT BY INDUSTRY CODE

MATURITY DISTRIBUTION


Commercial Sub-Pool

Real Estate Building&

Materials

Business Services

Retail Food / Beverage/ Tobacco

Lodging/ Restaurants

ConsumerProducts

Healthcare Leisure / Entertainment

UtilitiesFarming/ Agricultural

Services

Others

21%

17%

12%9%

6% 4% 3% 3% 3% 3% 3%

16%

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

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

(1) Excluding BMN portfolio

10

251

2.764 418

2.025

12.481

6

1.001

35

100

1.000

175

1.750

2018 2019 2020 2021 >2021

03. WHOLESALE MATURITIES

Wholesale Maturities Amortizing Profile

258 4,765 418 2,235 14,331

Amount Outstanding (€mn) 22,007

Covered Bonds (1) 17,939

Senior Debt 1,143

Subordinated debt 2,925

(1) Not including retained 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 Sep18

A- Stable Jul18

MOODY’S

DBRS

Baa1 Stable Apr18

A Stable Sep18

“GROWTH

CONSOLIDATION

”

“FAVOURABLE

EMPLOYMENT

TREND”

Sales (deflated and seasonally adjusted)

RETAIL TRADE INDEX (Annual Rate %)

UNEMPLOYMENT RATE IN SPAIN

QUARTERLY SERIES GDP. PREVIOUS QUARTER RATE (%)

0,6

1

-0,4

1,3

0,5

2,21,9

1,4

0,4

-0,2 -0,1-0,5

0,3

AUG17 SEP17 OCT17 NOV17 DIC17 ENE18 FEB18 MAR18 ABR18 MAY18 JUN18 JUL18 AGO18

0,6

0,70,70,7

0,9

0,8

0,70,7

0,8

2T 20181T 20184T 20173T 20172T 20171T 20174T 20163T 20162T 2016

0%

5%

10%

15%

20%

25%

30%

3T 20182T 20181T 20184T 20173T 20172T 20171T 20174T 20163T 20162T 20161T 20164T 20153T 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

over dwellings

increase 14% vs

Q2-2017”

“New housing

prices increased

by 2,6%”

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

2,6

1,31,1

1,91,92,1

0,71

1,5

2,6

2,1

-0,6

1,6

2,6

3,7

-1,4

-0,5

3,7

Q2-2018Q1-2018Q4-2017Q3-2017Q2-2017Q1-2017Q4-2016Q3-2016Q2-2016

0

2

4

6

8

10

12

1Q 2018. ANNUAL VARIATION RATE (%) OF THE HPI BY AUTON. COMMUNITY

New housing Second-hand housing

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

100.000

Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018

2,6

1,4

0,9

1,82

2,3

0,4

0,8

1,8

Q2-2018Q1-2018Q4-2017Q3-2017Q2-2017Q1-2017Q4-2016Q3-2016Q2-2016

covered bonds investor presentation - bankia€¦ · 14.15% fully loaded cet1(4) 12.46% 01....

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