Covered Bonds Investor Presentation - Bankia€¦ · Covered Bonds Investor Presentation December 2016 . 2 ... (**) If unrealised gains on the available-for-sale sovereign portfolio

1

Covered Bonds Investor Presentation

December 2016

2

Index

01 EXECUTIVE SUMMARY

Bankia Results……………………………………………………………………. 3

Covered Bonds Ratings…………………………………………………….. 5

02 MORTGAGE COVER POOL

Cover Pool Metrics…………………………………………………………….. 6

Residential Sub-Pool in figures………………………………………. 8

Commercial Sub-Pool in figures…………………………………….. 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 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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ATTRIBUTABLE PROFIT

€ 804 mn

NET INTEREST INCOME

€ 2,148 mn

PHASE IN CET1

14.70% FULLY LOADED CET1

13.02%

01. EXECUTIVE SUMMARY

Bankia Results

€

CUSTOMER FUNDS(2)

+2.5% €

BRANCHES

1,855 CUSTOMER FUNDS

€ 145,097 mn

ATMs

5,403 POINT OF SALE TERMINALS

110,518

CUSTOMER LOANS

€ 110,470 mn €

€

2016 HIGHLIGHTS

UNIVERSAL BANKING MODEL, based on multi-channel management, with a presence throughout Spain and high market shares in historical core regions.

BEST IN CLASS CORPORATE GOVERNANCE, optimal organizational structure and highly respected management team.

SOLVENT, EFFICIENT AND PROFITABLE INSTITUTION, the Group ended 2016 with an ROE of 7.3%.*

CLEAN BALANCE SHEET, with minimal real estate developer exposure and high loan loss coverage.

SUSTAINABLE CAPITAL AND LIQUIDITY GENERATION. Comfortable solvency levels with a Phase In CET1 ratio of 14.70% and Fully Loaded CET1 ratio of 13.02%**, as of December 2016.

POSITIVE COMMERCIAL DYNAMICS, with positive performance of the outstanding balances of consumer finance and businesses, showing a 0.8% increase year on year.

(1) New lending to businesses and consumer finance. (2) Strict customer deposits plus off-balance-sheet customer funds.

(*) ROE calculated excluding the net extraordinary provision made in connection with the potential impact of full retroactivity of mortgages’ floor clause nullity following the ECJ judgement on 21 Dec. 2016. If included, then ROE stands at 6.7%. (**) If unrealised gains on the available-for-sale sovereign portfolio were included as of 31 December 2016 in the Fully Loaded ratio, the CET1 ratio would have stand at 13,52%, and Total Solvency at 14,85%.

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2016 HIGHLIGHTS

NON-PERFORMING LOANS 11.5 €

13.0

NPL COVERAGE RATIO 55.1% 60.0%

NPL RATIO 9.8% 10.8%

ATRIBUTABLE PROFIT(2) 804 €

1,040

FULLY LOADED CET1 13.02% 12.26%

%

ASSET QUALITY DEC 2016 DEC 2015

PROFITABILITY & CAPITAL DEC 2016 DEC 2015

COST OF RISK(1) 24 43 bps

%

%

€bn

ROE(3) 7.3% 10.6%

€mn

%

%

CURRENT ISSUER RATINGS

LONG TERM OUTLOOK SHORT TERM

STANDARD & POOR’S

FITCH RATINGS

BBB- Positive A-3

BBB- Stable F3


Bankia Results

1 COMMERCIAL ACTIVITY

+ €2.9bn

Customer Funds(4)

vs. Dec15

+ 0.8%

Organic from Dec15

2 EFFICIENCY & PROFITABLITY

48.9%

Cost to Income

ratio Dec16

-8,2%

Administrative Expenses

3 ASSET QUALITY

€1.5bn

NPL´s reduction vs Dec 15

-€438mn

Reduction foreclosed

assets

4 CAPITAL GENERATION

+76 bps

Capital generation in 2016 (CET1 FL)

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

(1) Cost of risk as of Dec 2016 does not include the release of provisions at year end. (2) Includes net extraordinary provision of €65mn in 2016 due to the mortgage floors retroactivity and €184mn in 2015 due to the IPO net extraordinary provision. (3) ROE excluding mortgages floors net extraordinary provision in 2016 and IPO net extraordinary provision in 2015. (4) Strict Deposits+Mutual Funds+Pension Funds

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Covered Bonds Ratings

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.

RECENT RATING ACTIONS

FITCH. On 26 February 2016, on the back of the upgrade of Bankia’s long term rating to BBB- with a stable outlook, Fitch raised Bankia’s covered bonds rating to “A”, outlook Stable. Later on 5 August and 4 November, Fitch affirmed Bankia’s covered bond rating at “A”, outlook Stable.

S&P. On 15 January 2016, as part of its ongoing surveillance, S&P affirmed Bankia’s covered bonds rating at “A+”, outlook Stable. On 5 April, S&P upgraded Bankia’s issuer credit rating from “BB” to “BB+”, with a Positive outlook. According to the agency’s covered bond rating methodology, S&P’s rating on Bankia's mortgage covered bonds are capped at 'A+', three notches above S&P’s long-term rating on Spain. The Stable outlook on our covered bonds rating, reflects the Stable outlook from S&P’s long-term sovereign rating on Spain (BBB+/Stable/A-2). On 3 November, following a full review of Bankia’s covered bonds rating, S&P affirmed the “A+” rating with an Stable outlook.

DBRS. On 21 January, 14 March and 29 April 2016, DBRS affirmed Bankia’s covered bonds rating at “AA” as a result of two separate covered bond issues and one tap issue, totaling €2.29 billion. On 23 June, following a review of the strength of the Reference Entity DBRS upgraded Bankia’s covered bonds rating from “AA” to “AA (high)”. On 23 September following the completion of a full review of Bankia’s covered bonds rating, DBRS affirmed the rating at “AA (high)”.

Scope Ratings. On 8 July, Scope Ratings assigned a rating of “AAA” with a Stable outlook to Bankia’s covered bonds.

2013 2014 2015 2016

BBB

A-

A

Fitch Ratings Standard & Poor’s

A-

BBB+

DBRS

2013 2014 2015 2016

A-

A+

2014 2015 2016

A+

AA

A+ AA + A

A+ Stable

AA(high)

DBRS

A Stable

AAA Stable

6

74,100

61,073

46,648

37,319

26,474

10,844

Total Collateral Elegible Legal Issuance Issued

02. MORTGAGE COVER POOL

Cover Pool Metrics

AMPLE

ISSUANCE

CAPACITY

HIGH

OC

LEVEL

STRONG

ELEGIBLE

COVER

POOL

COLLATERAL AND CB’s OUTSTANDING

89% Residential

11% Commercial

76% of the cover pool eligible € 10,844

million Issuance Capacity

X 80%

2013 2014 2015 2016

X 2,31 over-collateralized

Collateral CB’s Outstanding

ACTIVE OC

MANAGEMENT

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

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

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Cover Pool Metrics

Q4 2016 Q4 2015

Collateral Eligible Collateral Eligible

Outstanding (million €) 61,073 46,648 66,879 49,501

Number of loans 678,318 577,796 696,811 591,255

Number of debtors 609,860 531,633 624,852 542,585

Average Seasoning (months) 92 102 83 93

Life (months) 337 336 329 333

Time to maturity (months) 245 234 247 240

Average LTV 58% 48% 60% 50%

Q4 2016 Q4 2015


Residential 52,778 43,019 55,771 45,496

Commercial 7,104 3,050 9,507 3,297

Developers 1,032 579 1,395 708

Land 159 0 207 0

COLLATERAL LTV DISTRIBUTION

NPL RATIO

85% OF THE

COVER POOL

HAS A LTV

RATIO BELOW

80%

POSITIVE NPL’S

PERFORMANCE

WITH NPL RATIO

STANDING AT 5.6%

AS OF 4Q16 6,26%5,61%

Dec 15 Dec 16

-65 bps

0

5.000

10.000

15.000

20.000

25.000

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

Mill

on

es

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RESIDENTIAL PORTFOLIO


Residential Sub-Pool in figures

RESIDENCIAL

PORTFOLIO

ELIGIBILITY

STANDS AT 82%

AVERAGE LTV

OF THE

ELIGIBLE

PORTFOLIO IS

49%

Q4 2016 Q4 2015


Outstanding (million €) 52,778 43,019 55,771 45,496

Number of loans 639,098 550,847 654,338 562,318



Life (months) 359 346 356 343


Average LTV 56.5% 49.4% 57.6% 50.7%

MATURITY DISTRIBUTION

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

20.000

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

Mill

on

es

GEOGRAPHIC DISTRIBUTION Collateral (€mn) Q4 2016

Madrid 17,783

C. Valenciana 8,391

Catalunya 7,829

Andalucía 4,877

Castilla La Mancha 2,887

Canarias 2,793

Castilla y León 2,301

Rest 5,915

91% LOANS FOR PRIMARY RESIDENCE

98% FIRST RANKED MORTGAGES

34%

15%

16%5%

4%

9%

5%

2%

1% 1%1%

1%1%

1%

1%

2%

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COMMERCIAL PORTFOLIO

RESTRICTIONS

TO REAL ESTATE

LENDING IN

RECENT YEARS

AVERAGE LTV

OF THE ELIGIBLE

COMMERCIAL

PORTFOLIO

STANDS AT 37%

Q4 2016 Q4 2015


Outstanding 8,295 3,630 11,109 4,005

Number of loans 39,220 26,949 42,473 28,937



Life (months) 198 216 193 216


Average LTV 67.5% 36.8% 74.2% 37.2%

SPLIT BY INDUSTRY CODE

MATURITY DISTRIBUTION

0

500

1.000

1.500

2.000

2.500

3.000

3.500

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

Mill

on

es


Commercial Sub-Pool in figures

Building & Materials

Real Estate

Business Services

Retail Food / Beverage / Tobacco

Lodging/ Restaurants

Consumer Products

Healthcare Leisure / Entertainment

Industrial Farming/ Agricultural

Services

Others

17% 16%

11% 9%

8%

4% 4% 4% 3% 3% 3% 3%

15%

Utilities

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03. WHOLESALE MATURITIES

Wholesale Maturities Amortizing Profile

1,583 2,683 2,719 127 1,512 12,113

Amount Outstanding (€mn) 20,737

Covered Bonds (1) 17,356

Senior Debt 2,381

Subordinated debt 1,000

555

2.436 1.719

127

1.477

11.042

1.028

247

1.000 35

71 1.000

2017 2018 2019 2020 2021 >2021

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04. ANNEXES

Macroeconomic Indicators

SPAIN SOVEREIGN DEBT RATING

LONG TERM OUTLOOK SHORT TERM

STANDARD & POOR’S

FITCH RATINGS

BBB+ Stable A-2

BBB+ Stable F2

MOODY’S

DBRS

Baa2 Stable P-2

A (low) Stable R-1 (low)

“GROWTH

CONSOLIDATION

”

“FAVOURABLE

EMPLOYMENT

TREND”

“HOUSEHOLD

SPENDING, MAIN

DRIVER OF THE

ECONOMY”

€

Sales (deflated and seasonally adjusted)

RETAIL TRADE INDEX (Annual Rate %)

UNEMPLOYMENT RATE IN SPAIN

QUARTERLY SERIES GDP. PREVIOUS QUARTER RATE (%)

2,3

3,64,1

4,44

2,3

5,7

5,1

3,33,1

2,1

3,22,9

DEC15 JAN16 FEB16 MAR16 APR16 MAY16 JUN16 JUL16 AUG16 SEP16 OCT16 NOV16 DEC16

0,7

0,80,80,80,8

1,0

0,9

0,7

0,6

Q3-2016Q2-2016Q1-2016Q4-2015Q3-2015Q2-2015Q1-2015Q4-2014Q3-2014

0%

5%

10%

15%

20%

25%

30%

4T 20163T 20162T 20161T 20164T 20153T 20152T 20151T 20154T 20143T 20142T 20141T 20144T 20133T 2013

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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 2% vs

Q3-2015”

“Second-hand

housing prices

increased by 1%”

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

11,51,3

-0,3

0,7

4,6

-1,0

0,30,0

-0,5

3,7

2,6

1,3

0,6

1,5

2,2

-0,1

1,2

Q3-2016Q2-2016Q1-2016Q4-2015Q3-2015Q2-2015Q1-2015Q4-2014Q3-2014

0

1

2

3

4

5

6

7

8

9

3Q 2016. 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

Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016

0,8

1,81,5

-0,1

0,7

4,2

-0,6

0,20,2

Q3-2016Q2-2016Q1-2016Q4-2015Q3-2015Q2-2015Q1-2015Q4-2014Q3-2014

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Documents

Covered Bonds Investor Presentation - Bankia€¦ · Covered Bonds Investor Presentation December 2016 . 2 ... (**) If unrealised gains on the available-for-sale sovereign portfolio