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Bankia Overview
UBS Conference
21st May 2014
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Bankia Overview
Extraordinary evolution since Recap Plan (5Qs)
2012
MAY 12
Change in Management
Team and Board of Directors
2013 2014
Recapitalization
& Clean up of balance sheet
Turnaround & Network
restructuring
Profitability
Developing our commercial model
NOV 12
Approval of Recap &
Strategic Plan
MAY 13
Capital Increase in
Bankia
Recap completed
NOV 13
Network restructuring
process completed 2Y
ahead of schedule
JAN 14
Senior debt €1bn issuance
FEB 14
Sale of 7,5% BFA’s stake
DEC 12
Transfer of RE assets and
loans to SAREB
MAY 14
Subordinanted debt €1bn issuance
ONGOING
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2012: Recapitalization & Clean up of Balance Sheet
Liquidity
• Reduction of commercial gap by –35% since December 2012
• LTD reduced to 111.9% from 120.4%
Solvency
• Restructuring plan approved in Nov. 12
• +234 pbs of organic generation of core capital since December 2012
LTD Ratio
Recapitalization Plan settled the basis for the future
4Q2012
120.4%
4Q2013
115.4% 9.12% 111.9%
1Q2014
10.91%
BIS III CET1 RATIO
PHASE IN
BIS III CET1 RATIO
FULLY LOADED
CET1 1Q 2014
-8.5pp
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Major Change in Asset Quality
Provisions undertaken
• Provisions and writedowns in 2012 totalled €23.9bn
• Additional €1.5bn of provisions in 2013
Reduction of RE Risk – Transfer to SAREB
Developers 3%
Retail Others 3%
Public Sector and Others
5%
Corporates 29% Retail
Mortgages 60%
• After transfer of assets to Sareb, only 3% of credit portfolio is related to RE developers
Gross Credit breakdown – 1Q 2014
Coverage Ratios – 1Q 2014
7.2%
2012: Recapitalization & Clean up of Balance Sheet
LLR / Loans Total Loans
Excl. Real Estate
16.4%
LLR / Loans SME & corporates
book
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2013: Turnaround
IT integration and workforce agreement
RECAPITALISATION COMPLETED, RESTRUCTURING PLAN EXECUTED
Active in non-strategic divestments
PROFITABILITY AND CAPITAL GENERATION TARGETS MET
Branch network restructuring completed two years ahead of schedule
1
Commercial momentum picked up
2
Recapitalisation of Bankia completed
Recurring profit improved
Profit in line with expectations
Improved liquidity, sharp increase in capital
Investor and customer confidence in Bankia
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Organisational Restructuring and simplification
Branch network Organisational structure
Branch closures completed two years earlier than planned
Organisational structure simplified
AREA HEAD OFFICES REGIONAL HEAD OFFICES NUMBER OF RETAIL BRANCHES
2,800 2,400
1,900
Q1 2013 Q2 2013 Q4 2013
2,100
Q3 2013
3,000
ORIGIN
CLOSURES PROGRESS
17% 58% 81% 100%
- 38%
35% YoY reduction
33% YoY reduction
2013: Turnaround
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2013: Turnaround
Progress in Divestment Plan
MAIN DIVESTMENTS
+150 divestments in participated companies since 2012
DEC 12
APRIL 14
LIQUIDITY GENERATED IN BANKIA GROUP
TO DEC 2013 €1,272 million
DEC 2013 -
MAR 2014 €197 million
PENDING REGULATORY APPROVAL *
€791 million
TOTAL €2,260 million
More than €2,200 million of liquidity generated to date
* Pending approval: CNB, Bancofar and Aseval
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2014: Highlights of the quarter
COMMERCIAL ACTIVITY AND PLAN
EVOLUTION
MARKET CONFIDENCE RESTORED
COMMERCIAL ACTIVITY DYNAMIZATION
1
FINANCIAL PERFORMANCE
SIGNIFICANT LIQUIDITY AND CAPITAL GENERATION
2 CONTINUED IMPROVEMENT IN CORE BANKING BUSINESS
EFFICIENCY RATIO IMPROVEMENT
NPL RATIO REDUCTION AND INCREASED COVERAGE
CONTINUED PROGRESS IN DIVESTMENT PLAN
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SALE OF 7.5% OF BANKIA BY BFA
No. of shares sold
Total amount
Disc on prev. day
863,799,641
€1,304 mn
4.4%
Selling price (€) €1.51
% of Bankia’s capital 7.50%
Issued volume
Maturity
Spread
Oversubs.
€1,000 mn
17/01/2019
MS + 235 bps
3.5x
# Orders > 250 orders
SENIOR DEBT ISSUANCE
Oversubscription ≈ 2.0x
Continue to rebuild Bankia’s presence in capital markets
MARKET CONFIDENCE RESTORED 1
2014: Highlights of the quarter
Issued volume
Maturity
Spread
Oversubs.
€1,000 million
22/05/2024
MS + 316.6 bps
3.5x
# Orders > 270 orders
T2 ISSUANCE
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COMMERCIAL ACTIVITY DYNAMIZATION
New loans in 1Q 2014 totalled more than €2,800m, 26% more than in the same
period of 2013
€Mn
1
NEW LOANS 1Q 2014 LENDING MARKET SHARES INCREASED
Market shares of new loans in main segments increase sharply
Source: ICO
Source: BdE
Feb 13 Feb 14
CONSUMER 6.28% 9.61% +333 bps
Businesses < €1m 3.45% 11.05% +760 bps
Businesses > €1m 1.62% 11.35% +973 bps
ICO financing 2.30% 11.99% +969 bps
Mar 13 Mar 14
New lending
1.930,9
647,7
221,3
Businesses Retail Mortgages Consumer
2014: Highlights of the quarter
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COMMERCIAL ACTIVITY DYNAMIZATION 1
Total customer funds grew by €1.7 bn compared to year-end 2013, in an environment in which the cost of term deposits fell 46 bps compared to 4Q 2013
TOTAL CUSTOMER FUNDS
DEC 13 MAR 14 Var.
157.5 159.2 + 1.7
ON-BALANCE-SHEET CUSTOMER FUNDS
136.7 137.5 + 0.8
€Bn
20.8 21.7 + 0.9 OFF-BALANCE-SHEET CUSTOMER
FUNDS
Priv. sector deposits mkt. share
%
DEC 13
8.66%
FEB 14
8.75% +9 bps
Mutual Funds market share
%
DEC 13
4.82%
MAR 14
4.92% +10 bps
Source: BdE
Source: BdE
2014: Highlights of the quarter
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Quarterly performance of net interest income Loan yield vs. cost of deposits (1)
€Mn
(1) Figures adjusted for the financing cost associated with the subordinated loan from BFA to Bankia,
which was cancelled on 23 May 2013.
1Q13
601
2Q13
633
3Q13
643
4Q13
690 (1) (1)
89 53
1Q14
698
+ 16.1%
Net interest income up 16.1% in
1Q 2014 vs. 1Q 2013
Significant reduction in cost of deposits
Gross customer spread reached 1.12%, up 30 bps on 4Q 2013
(1) The series exclude the effect of City National Bank, the sale of which is expected to be approved during 2Q 2014
1.89% 1.74% 1.70%
1.57% 1.33%
0.81% 0.81%
0.68% 0.82%
1.12%
2.70% 2.55%
2.38% 2.39% 2.44%
1Q2013 2Q2013 3Q2013 4Q2013 1Q2014
Cost of customer deposits Gross customer spread
Loan yield
CONTINUED IMPROVEMENT IN CORE BANKING BUSINESS 2
2014: Highlights of the quarter
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Efficiency ratio ex net trading income is already around 49%
EFFICIENCY RATIO EX TRADING INCOME (1)
62.1%
60.1%
54.2%
52.6%
49.3%
1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014
%
INCREASE IN CORE BANKING INCOME AND IMPROVEMENT IN THE EFFICIENCY RATIO 2
(1) Efficiency ratio excluding net trading income and exchange differences
PRE-PROVISION PROFIT EX NET TRADING INCOME
€Mn
1Q13
297
2Q13
338
3Q13
397
4Q13
419
1Q14
468
+ 57.6%
+ 11.7%
89 53
(1) Figures adjusted for the financing cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013.
2014: Highlights of the quarter
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Cost of risk capped at 69 bps in the 1Q 2014
Evolution of NPLs
€Bn
4Q 12
19.8
1Q 14
19.2
- 0.8 bn
NPL RATIO REDUCTION AND INCREASED COVERAGE 2
2014: Highlights of the quarter
1Q 13
19.6
2Q 13
19.3
3Q 13
19.0
4Q 13PF
18.6 + 1.4*
4Q 13
20.0
* Transfer of €1,404 million of refinanced loans to non-performing under the new regulations on refinancings
NPL RATIO
%
DEC 13
14.7%
MAR 14
14.3%
- 34 bps
NPL COVERAGE
%
DEC 13
56.5%
MAR 14
57.4%
+ 92 bps
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Bankia Group data. €Mn
Increase in Businesses and RE developers coverage ratios, with Total portfolio (ex-RE developers) coverage ratio standing at 7.2%
DEC 13
82.2
MAR 14
81.1
3.5%
COVERAGE RATIOS
Retail customers
3.5%
DEC 13
37.8
MAR 14
36.8
16.2%
Businesses
16.4%
DEC 13
3.9
MAR 14
3.5
42.7%
Real Estate developers
44.7%
DEC 13
129.8
MAR 14
127.6
8.2%
Total portfolio
8.2%
GROSS EXPOSURE
DEC 13
126.0
MAR 14
124.1
7.2%
Total portfolio (ex-RE developers)
7.2%
€Bn
2014: Highlights of the quarter INCREASE IN COVERAGE RATIOS 2
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LOAN TO DEPOSIT RATIO BIS III - PHASE IN CET1 RATIO
%
DEC 13
115.4%
MAR 14
111.9%
-3.5 p.p.
%
DEC 13
10.69%
MAR 14
10.91%
+22 bps
Liquidity ratios improve significantly BIS III fully loaded ratio increases to
9.12%
SIGNIFICANT LIQUIDITY AND CAPITAL GENERATION 2
LTD ratio: (Net credit / (retail commercial paper + strict customer deposits + ICO/EIB deposits + single-certificate covered bonds)
2014: Highlights of the quarter
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Conclusions
Positive performance in customers deposits, following completion of branch network restructuring
Core banking revenues growing again, with continued reductions in operating expenses
Back to normality for Bankia in the financial markets (senior & subordinated debt and Equity)
Efficiency ratio already below 50%
Capital ratio improves during one more quarter
NPL ratio reduction with increased coverage
We continue to make progress in the accomplishment of the goals of our Strategic Plan
