Barclays Global Financials Services Conference
New York
17th September 2015
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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.
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Confronting the last semester of the Strategic Plan
GDP growth 2012: -2.6% Cost-to-income ratio
40 – 45%
Cost of risk 50 – 55 bps
10% ROE
Unemployment
Euribor 12M
Risk premium
2012: 26%
2012: 1.1%
637 bps
Source: Bloomberg/Average 2012
Source: Reuters/Maximun July 2012
TARGET for 2015 2012 ENVIROMENT
Source: INE
Source: EPA
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Confronting the last semester of the Strategic Plan
Interest rates Euribor 12M: 0.16%
10Y SPGB: 2.00%
Improving Profitability
GDP growth Unemployment
GDP 2015E: 3.1% Unemployment 2015E:
20.9%
Commercial Activity
Focus
Compression in asset spreads
Productivity Competitive Environment
… to achieve our Strategic Plan Goals
Current environment…
1
2
3
Source GDP: IMF/ Source unemployment: EPA
Source: Bloomberg
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Commercial activity 1
CUSTOMER FUNDS PERFORMANCE
Customer funds up €9bn since December 2012
DEC 12
14.6
93.7*
108.3
Strict cust. deposits
Off-balance-sheet funds
JUN 15
22.3
95.0
117.3
Transfer from term deposits to demand deposits and increased market share in mutual funds
+1.3
+7.7
+9.0
Demand deposits
Strict deposits DEC 12
Term deposits
93.7*
Strict deposits JUN 15
95.0
(6.2) 7.5
MUTUAL FUNDS MKT. SHARE
DEC 12
4.39%
Source: Inverco
DEC 13
4.74%
DEC 14
4.98%
JUN 15
5.27%
+20%
€ Bn € Bn %
* Excludes retail “pagarés”
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+ 4.0% organic growth in key business segments: businesses and consumer finance
Significant increase in new lending in key segments in 1H15
NEW LENDING
4,957
4,566
1H 14 1H 15
7,700
391
7,159
541
+ 55.3%
Businesses Consumer
+ 56.8%
+ 38.4%
Note: Does not include forbearance
TOTAL LOANS PERFORMANCE
Total gross loans 121.8
Mortgages 72.4
119.7
70.2
DEC 14 JUN 15
Gross loans excludes BFA reverse repurchase agreements * Accumulated portfolio sales for the period: Jun 14 – Dec 14 €1.3 bn and Dec 14 – Jun 15 €0.4 bn
125.6
75.4
JUN 14
Developer 3.0 2.5 3.3
-2.1
-2.2
JUN15 vs DEC 14
-0.5
Businesses & consumer 46.4 47.0 46.9 +0.6 Portfolio sales * 1.7
Businesses includes public sector
0.4
€ Mn € Bn
Dec 14
46.0
Jun 15
47.0
Jun 14
45.2
+€1.8 bn (+4.0%)
+€1.0 bn (+2.2%)
Businesses & consumer, Organic
Commercial activity 1
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Productivity
2014-2015 Network segmentation...
…allows us to continue increasing productivity per
employee…
Recovery centres (RCs)
(managing 80% of NPLs)
~1,750
~ 35
Commercial branches
2Q 14
23.3
2Q 15
32.5
+39.5%
PRODUCTS SOLD PER EMPLOYEE/MONTH IN BRANCHES
2
Reestructuring...
3,128
2013 & today
~ 2,000
NUMBER OF BRANCHES
NUMBER OF EMPLOYEES
2012
20,005 14,099
2012
~ 50
Transactional branches
~ 150
Advisory branches
2015
Jun 15
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Gross Customer Margin
%
Loan yield vs. cost of deposits (1)
Back book and front book, quarterly average (excluding impact of City National Bank)
Cost of term deposits – Back book vs. Front book
%
(1) City National Bank has been excluded from the series.
Average cost of term deposits (back book)
2.0%
2015e ≈1.0%
1.22% 1.26% 1.41%
1.40% 1.44%
Gross customer margin
…with a significant scope for improvement in 2016 due to downward repricing of term deposits
2014
Gross customer margin has increased 47% since Dec 2013…
2.10% 2.18%
2.36% 2.34% 2.45%
0.66%
0.9% 0.95%
1.08% 1.23%
2Q 20151Q 20154Q 20143Q 20142Q 2014
Customer yields Customer deposit cost
2.10% 1.83%
1.58% 1.32% 1.13% 1.10%
0.85% 0.64% 0.54% 0.37%
2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015
Back Book Front Book
Improving Profitability through lower cost of funding
Profitability 3
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+ € 0.6Bn cost reduction since 2012 to 2015E …Lower expenses representing+ 0.56%RoRWA or +4% in ROE
EFFICIENCY INDICATORS
Efficiency Cost Control will continue to be key for profitability
Cost-to-income ratio performance
Cost-to-income ratio ex NTI: total expenses / gross income ex NTI and ex exchange differences
COST-TO-INCOME RATIO
Profitability
Ex NTI*
1H 15
1.94%
OPERATING EXPENSES / RWAs BANKIA GROUP
1H 15
2.50%
% OPERATING EXPENSES / RWAs
SECTOR - DOMESTIC
Operating expenses 1H2015 annualised
Sector - Domestic: Includes weighted average of top 10 domestic banks (ex Bankia)
3
Sector - Domestic: Includes top 10 domestic banks (ex Bankia)
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+35% PPP increase in 2Q 2015 vs 2012*
Pre-provision profit Pre-provision profit increases in the second quarter of the year
Pre-provision profit
1Q15
569
2Q15
617 +8.6%
Gross income
1Q15
992
2Q15
1,037 +4.6%
Operating expenses
2Q14
1,055
2Q14
620
€ Mn € Mn
€ Mn
Profitability
2012*
1,030
…
1Q15
423
2Q15
420 -0.7%
2Q14
435
2012*
573
… 2012*
456
…
* Average per quarter
3
+35%
* Average per quarter
* Average per quarter
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NPL June 14 – June 15
NPL ratio NPL and foreclosed assets change y-o-y
NPL coverage ratio stands at 60.6%
Cost of Risk
2014
60 bps
2Q15
51 bps
€ Mn
* Peers: main listed banks included in the Ibex 35
Profitability
Asset quality and Cost of Risk NPL reduction and coverage level key to control cost of risk
1Q 15
55 bps
3
2013
74 bps
2,530
13
-662
-888
-1,524
-3,198
-4.000 -2.000 0 2.000 4.000
Peer 5
Peer 4
Peer 3
Peer 1
Peer 2
Bankia
NPL and foreclosed assets June 14 – June 15
1,373
-1,830
-2,453
-2,789
-3,083
-3,147
-4.000 -3.000 -2.000 -1.000 0 1.000 2.000
Peer 5
Peer 4
Peer 3
Peer 2
Peer 1
Bankia
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Profit after tax
Profitability
Controlled Cost of Risk
53 bps 1H15
Continued pressure on Expenses
+47% since Dec 2013
Improving Gross Customer Margin
Cost to Income: 41.5% 1H15
ROE stands at 9.8% in 1H15
* Annualized attributable profit / average equity.
2Q 14 2Q 15 1Q 15
€ Mn
250 312 245
ROE *
1.9 pp
3
9.8% 7.9%
1Q 14
186
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Cost-to-income ratio
40 – 45% 41.5%
Cost of risk 50 – 55 bps 53 bps
TARGET 2015 1H 2015
10% 9.8% ROE
Delivering the targets of the Strategic Plan…
…while confronting the last semester
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…with an organic capital generation of 449 bps BIS III FL since year-end 2012
Generating capital…
2014 dividend distribution of €202 million
CET1 BIS III FULLY LOADED
DEC 13
8.60%
JUN 15
11.31%
+ 4.49 pp
%
*
The solvency ratios include the profit allocated to reserves for the period and discount a potential Group dividend, based on Decision (EU) 2015/656 of the European Central Bank of 4 February 2015 (assuming the 2014 payout ratio: 27%, which represents €150 million in the semester).
TBV PER SHARE, JUN 2013 – JUN 2015
…and creating value for our shareholders
-28%
-9%
-3%
-2%
1%
16%
-30% -20% -10% 0% 10% 20%
Peer 5
Peer 4
Peer 3
Peer 2
Peer 1
Bankia
DEC 12
6.82%
Peers: main listed banks included in the Ibex 35 TBV: tangible book value
+71 bps
DEC 14
10.60%
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