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1 / March 2015
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Morgan Stanley European Financials Conference
March 2015
Mr. Leopoldo Alvear - CFO Bankia
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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.
3 / March 2015
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Contents
1. Strategic Plan evolution
2. 2014 results and main drivers
3. Balance sheet considerations
4. Conclusions
4 / March 2015
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On track to meet the goals of our Strategic Plan
Recapitalisation and clean up the balance sheet
The Turnaround Year
Developing our commercial model
2012
2013
IN PROCESS
2015 Target ROE 10%
2014 2015
Strategic Plan evolution
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Strategic Plan evolution Working on the Network’s segmentation …
Transforming our commercial footprint
New branch composition based on client segmentation
~1,850 Commercial branches (SMEs & retail)
150 Transactional branches (Oficina Ágil)
30 Recovery Centres
Extended opening hours
Oriented to provide services to high frequency transactions
Sale of basic products (credit cards, term deposits, etc..)
Target of reaching 150 “oficinas ágiles” in 2015
Concentrated on medium and high value customers
Selective segmentation for self employees – micro SMEs
Improved productivity (+35% vs. 2013)
Improved sale of products (+12% vs. 2013)
Currently managing 29% of
Group NPLs (vs.16% 2013).
2015 Target of a total of 30 recovery centres managing +70% of Group NPLs
Controlled cost of risk thanks to specialization
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Strategic Plan evolution … improving productivity and the quality of our service …
5.55
5.88
6.61
6.01 6.03 6.29
BANKIA GLOBAL SECTOR
In the last quarter of the year, the number of New Customers reached 21,600/month, representing a 50% increase vs. the first quarter of the year
MYSTERY SHOPPING RANKING PRODUCTIVITY (products sold per employee/month) – quarterly average
Average: Dec 2013 – Jun 2014: 22.4
Includes data from all the retail branches: includes at-sight deposits, cards, direct debit and credit, risk insurance, pension plans, mutual funds and others.
Does not include term savings. 3Q data seasonally adjusted for August
21.7 22.3 23.3
26.7
31.0
4Q 13 1Q 14 2Q 14 3Q 14 4Q 14
9th 9th 4th Ranking
2012 2013 2014
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Strategic Plan evolution
Strengthened relationship with our customers leads to a 6.6% increase in
customer funds
DEC 13
€Bn
90.0
18.7
108.7
Strict customer deposits
Off-balance-sheet funds
DEC 14
94.9
21.0
115.9 + 6.6 %
Steady improvement in market share of new customer funds
SHARE OF NEW CUSTOMER FUNDS CUSTOMER FUNDS
(1) Figures excluding contribution of Aseval (€2.1bn), sold in 4Q 2014
(1)
9.52% 9.58% 9.79% 9.84%
10.21%
Dec 13 Mar 14 Jun 14 Sep 14 Dec 14
Households & businesses time deposits market share
4.74% 4.85% 4.88% 4.92%
4.98%
Dec 13 Mar 14 Jun 14 Sep 14 Dec 14
Mutual funds market share
… increasing Customer Funds volumes … while reducing the cost of funding
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NEW LENDING
New lending volume up 10.1% compared to 2013, with a 48.2% increase in number
of loans
€Mn
11,997
10,767
2013 2014
13,211
1,230
11,588
1,623
+ 10.1%
Businesses Individuals
+ 7.6%
+ 31.9%
Note: Does not include forbearance
New lending volume up in key segments …
Strategic Plan evolution
TOTAL LOANS - €Bn
Total loans stabilised in key business segments
Total gross loans ex portfolio sales
SEP 14
122.8
Total gross loans ex portfolio sales
122.6
Mortgages + developer
Businesses + Consumer
Mortgages + developer
Businesses + Consumer
77.0
45.8
75.3
47.3
The balance of Businesses includes public sector
DEC 14
+€1.5bn loans in key segments
(+3.3%)
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… with consistent improvement in the Cost to Income and Pre-Provision Profit
Strategic Plan evolution
Recurring Cost to Income at 43.7% Recurrent PPP Increase of 42.5% year on year
(1) Actual figures excluding 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. (2) Pre-provision profit ex NTI and Exchange differences.
Recurring pre-provision profit (2)
2013
1,432
2014
2,041 + 42.5%
€Mn
142
(1) 62,10%
60,10%
54,20% 52,60%
49,30%
46,10% 45,40%
43.70%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
Recurring cost to income ratio (1)
%
(1) Cost to income ratio ex NTI and Exchange differences
- 18.4 pp.
10 / March 2015
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Contents
1. Strategic Plan evolution
2. 2014 results and main drivers
3. Balance sheet considerations
4. Conclusions
11 / March 2015
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2014 results and main drivers Pro forma income statement – Bankia Group
€Mn 2014
2,267
The pro forma income statement for 2013 excludes: i) 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, and ii) the effect of the restatement of the accounts based on Regulation (EU) 634/2014 and the letter of 23 December 2014 from the D.G. of the BdE. Thus the reported profits for these periods were lower.
Diff % vs 2013
+ 21.4% Pre-provision profit
966 + 58.0% Attributable profit
747 + 83.3% Profit att. to the Group
Attributable net profit reaches €966 million before IPO contingency charge Recurrent ROE reaches 8.6%, in line with our target of 10%.
(2) 2013 published results include DGF and the subordinated loan effect , while 2014’s include the IPO contingency Provision.
(2)
(1)
(1)
Core banking business Cost reduction
+10.7% -8.5%
Provisions
-13.9% Recurring cost of risk at 60pbs
IPO contingency
-218 mn
(1)
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2014 results and main drivers Decline in cost of deposits leads to improvement in gross customer margin
Cost of term deposits – Back book vs. Front book
%
117 bps 107 bps
99 bps 100 bps
98 bps
Back book and front book, quarterly average (excluding impact of City National Bank)
117 bps 111 bps
94 bps
3.54% 3.29%
3.14% 2.84%
2.37% 2.10%
1.83% 1.58% 2.43%
2.12% 1.97%
1.77%
1.38% 1.10%
0.85% 0.64%
1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14
Back book Front book
Gross Customer Margin(1)
Term deposit repricing leads to:
Higher customer margin and
Offsetting headwind coming from bond portfolio
(1) The impact of City National Bank has been excluded from the series.
%
1.41%
1.26%
1.22% 1.12%
0.82% 0.68%
0.81% 0.81%
4Q 143Q 142Q 141Q 144Q 133Q 132Q 131Q 13
Gross Customer Margin
Term deposits:
Volume of ~55 bn
Average maturity 16-18 months
Spread back vs front book around 100bps
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2014 results and main drivers Reducing cost to income and cost of risk
2015 Target ROE of 10%
Operating Expenses
Recurrent cost of risk
2013
74 bps
1Q 2014
69 bps
2Q 2014
63 bps
3Q 2014
59 bps
4Q 2014
50 bps Recurring cost to income ratio already
at 43,7% in Q4 2014
Critical to maintain pressure on expenses in this low rates environment
Average 2014 60bps
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Contents
1. Strategic Plan evolution
2. 2014 results and main drivers
3. Balance sheet considerations
4. Conclusions
15 / Marzo 2015
Balance sheet – asset quality NPL reduction and increase in NPL coverage
NPLs
€Bn
DEC 13
20.0
- €3.5 bn
DEC 14
16.5
NPL ratio
%
DEC 13
14.7%
- 180bps
DEC 14
12.9%
%
DEC 13
56.5%
+ 110 bps
DEC 14
57.6%
NPL coverage
Sales
€ -1.6bn Organic reduction
€ -1.9bn
Sustained reduction of NPLs with only €0.2bn of writte-offs and €0.2bn of net foreclosed increase, leading to an increase in NPL coverage (+110 bps)
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Quarterly performance of LTD ratio Quarterly performance of commercial gap
At 2014 year end, LCR ratio and NSFR ratio stand at > 100%
109.7
€Bn %
4Q13 1Q14 2Q14
115.4 111.9 18.7 25.1 21.6
4Q13 1Q14 2Q14
- 45.5% - 9.9 pp
Balance sheet - liquidity Relentless improvement in liquidity every quarter
- 0.3 pp - 4.7%
LTD ratio: (Net credit / (Strict customer deposits + ICO/EIB deposits + Single-certificate covered bonds)
105.8
3Q14
14.3
3Q14 4Q14 4Q14
13.7 105.5
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Balance sheet – capital generation Over 200 pbs of organic capital generation in the year in FL
CET 1 BIS III Phase in ratio performance
CET1 BIS III Phase in ratio stands at 12.28% CET1 BIS III Fully loaded ratio stands at 10.60%
DEC 14
12.28%
13.82% TOTAL SOLVENCY
DEC 13
10.69%
11.06%
%
(1)
(1) Includes IPO provision, and Impact of Regulation (EU) 634/2014 on contributions to the Deposit Guarantee Fund
+ 159 bps
CET 1 BIS III Fully Loaded ratio performance
+234 bps
Organic generation
-52 bps
Extraordinary Impacts:
IPO DGF
DEC 14
10.60%
12.14% TOTAL SOLVENCY
DEC 13
8.60%
8.98%
%
(1)
+ 200 bps
+278 bps
Organic generation
-55 bps
Extraordinary Impacts:
IPO DGF
-23 bps
Dividends
-23 bps
Dividends
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Contents
1. Strategic Plan evolution
2. 2014 results and main drivers
3. Balance sheet considerations
4. Conclusions
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Conclusions
Lending volumes stabilized and growth in SMEs and consumer finance in Q4
Increased customer deposits and off-balance-sheet business while reducing prices
Commercial activity experienced a significant improvement in 2014
Improved productivity and efficiency levels
NPLs reduction with increased coverage and cost of risk at target level
Allowing a cash dividend payment of €202Mn (27% payout)
Recurrent ROE at 8.6%, on track to meet the target of 10% in 2015
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Investor Relations
