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The BFA-Bankia Group achieved a profit after tax of 250 million euros in the first quarter of the year, 17.4% more than in the same period of the previous year, when the figure was 213 million. The difference between the income statement of BFA and that of Bankia lies mainly in the dividends that BFA receives from its investees. Bankia recorded a profit after tax of 186 million euros in the first quarter of 2014, an increase of 38.5% compared to the pro forma profit of the same period of 2013. First quarter earnings were up 157.1% on accounting earnings for the first quarter of 2013, which were affected by the subordinated loan granted by BFA to Bankia. The chairman of the BFA-Bankia Group, José Ignacio Goirigolzarri, stated that "these results confirm that the bank is on the right track: core banking business revenue has improved, cost reduction efforts are continuing, and both the balance of non-performing loans and the non-performing loan ratio have been reduced".
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Quarterly results presentation
1Q 2014
28 April 2014
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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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Contents
1. Highlights of the quarter
2. 1Q 2014 Results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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Highlights of the quarter
COMMERCIAL ACTIVITY AND PLAN
DEVELOPMENTS MARKET CONFIDENCE RESTORED
COMMERCIAL ACTIVITY DYNAMIZATION 1
MAJOR PROGRESS IN DIVESTMENT PLAN
FINANCIAL PERFORMANCE
SIGNIFICANT LIQUIDITY AND CAPITAL GENERATION
2 CONTINUED IMPROVEMENT IN CORE BANKING BUSINESS
EFFICIENCY RATIO IMPROVEMENT
NPL RATIO REDUCTION AND INCREASED COVERAGE
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Highlights of the quarter 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
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Highlights of the quarter 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
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Highlights of the quarter MAJOR PROGRESS IN DIVESTMENT PLAN 1
MAIN DIVESTMENTS
More than 50 divestments in participated companies since the beginning of the year
FEB 14
MAR 14
Sale of equity stake in NH Hoteles for €123 million
Restructuring of the life and non-life bancassurance
business with Mapfre (includes sale of 51% of Aseval)
Sale of three portfolios of doubtful and bad loans totalling €713 million
Sale of 70.2% of the capital of Bancofar, S.A. to Banco
Caminos, S.A.
LIQUIDITY GENERATED IN BANKIA GROUP
TO DEC 2013 €1,272 million
DEC 2013 -
TO DATE €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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Highlights of the quarter
SALE OF 7.5% OF BANKIA BY BFA
No. of shares sold
Total amount
Discount on prev. day’s price
863,799,641
€1,304 million
4.4%
Selling price (€) €1.51
% of Bankia’s capital 7.50% Issued volume
Maturity
Spread
Oversubscription
€1,000 million
17/01/2019
MS + 235 bps
3.5x
# Orders > 250 orders
SENIOR DEBT ISSUANCE
Oversubscription ≈ 2.0x
Financial markets believe in Bankia’s project
MARKET CONFIDENCE RESTORED 1
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Highlights of the quarter
Efficiency ratio ex net trading income is already around 49%
PRE-PROVISION PROFIT EX NET TRADING INCOME 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
€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.
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Highlights of the quarter
Cost of risk capped at 69 bps
NPL
€Bn
DEC 13
20.0
MAR 14
19.2
- 0.8 bn
NPL RATIO
%
DEC 13
14.7%
MAR 14
14.3%
- 34 bps
NPL COVERAGE
%
DEC 13
56.5%
MAR 14
57.4%
+ 92 bps
NPL RATIO REDUCTION AND INCREASED COVERAGE 2
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Highlights of the quarter
LOANS TO DEPOSITS EBA CORE TIER 1 RATIO
%
DEC 13
115.4%
MAR 14
111.9%
-3.5 p.p.
%
DEC 13
11.71%
MAR 14
11.96%
+25 bps
Liquidity ratios improve significantly Solid capital generation
SIGNIFICANT LIQUIDITY AND CAPITAL GENERATION 2
LTD ratio: (Net credit / (retail commercial paper + strict customer deposits + ICO/EIB deposits + single-certificate covered bonds)
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Contents
1. Highlights of the quarter
2. 1Q 2014 Results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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The pro forma income statement for 1Q 2013 excludes the cost of the subordinated loan by BFA to Bankia in the amount of €89m in Q1 2013, which was cancelled on 23 May 2013.
1Q 2014 Results Pro forma income statement – Bankia Group
A
B
C
Net interest income
Gross income
Operating expenses
Pre-provision profit
Provisions and others
D
1Q 2013
601
957
(494)
463
(272)
1Q 2014
698
930
(441)
489
(221)
Var. %
16.1%
(2.8%)
(10.7%)
5.6%
(18.8%)
Profit after tax 134 186 38.5%
Var. €
97
(27)
(53)
26
(51)
52
€Mn
Fee and commission income 225 231 2.7% 6
Gross income ex net trading income 791 909 14.9% 118
E Taxes (57) (82) 43.9% (25)
Pre-provision profit ex net trading income 297 468 57.6% 171
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Quarterly performance of net interest income
1Q 2014 Results
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
A Core banking business: Net interest income
Consolidation of the positive trend in net interest income
(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
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Quarterly performance of fee and commission income
1Q 2014 Results
Performance of core banking business
€Mn
1Q13
225
2Q13
225
3Q13
237
4Q13
249
1Q14
231
+ 2.7%
Stable capacity to generate fee and commission income and steady improvement in core banking business: +12.5% compared to 1Q 2013
1Q13
825
1Q14
928
+12.5%
Core banking business: Fees and commissions
Higher fee and commission income compared to same period previous year
€Mn
Core banking business = net interest income + fee and commission income
A
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Quarterly performance of gross income
1Q 2014 Results
Gross income ex net trading income
€Mn
(1) Figures adjusted for the financing cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013.
791
1Q13
957
826
2Q13
958
861
3Q13
945
878
4Q13
912 (1) (1)
909
1Q14
930
+ 1.9%
Positive trend in gross income continues in first quarter of 2014
Gross income excluding net trading income improves 14.9%
166 132 84 34 21
Net trading income
Gross income ex net trading income
Gross income
Gross income evolves positively
89 53
1Q13
791
1Q14
909
+14.9%
€Mn
B
89
+ 3.5%
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Quarterly performance of operating expenses
1Q 2014 Results
Efficiency ratio ex net trading income
€Mn
1Q13
494
2Q13
488
3Q13
464
4Q13
459
1Q14
441
- 10.7%
Proven capacity to continually reduce operating expenses
- 3.9%
Efficiency ratio ex net trading income already at 49.3%
Operating expenses Sustained reduction of operating expenses
62.1%
60.1%
54.2%
52.6%
49.3%
1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014
%
(1) Efficiency ratio excluding net trading income and exchange differences
C
- 12.8 p.p.
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1Q 2014 Results
Pre-provision profit
Strong performance in core banking business, combined with continued decline in costs, drives pre-provision profit growth: +58% 1Q13 vs 1Q14
1Q13
463
1Q14
489
+ 5.6%
Pre-provision profit Solid trend of pre-provision profit
Pre-provision profit ex net trading income
€Mn
1Q13
297
2Q13
338
3Q13
397
4Q13
419
1Q14
468
+ 57.6%
+ 11.7%
€Mn
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.
89
D
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1Q 2014 Results
Net profit rises to €186 million, up 38.5% compared with same period previous year
RECURRING COST OF RISK 1Q 2014 69 bps
Pre-provision profit
Profit from sales and others
Profit on discontinued operations
Provisions
463
0
0
(272)
1Q 2013 (1)
489
62
21
(303)
1Q 2014
Profit after tax 134 186
Profit after tax Profit generation capacity in line with Plan estimates
(1) Figures adjusted for the financing cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013.. +38.5%
€Mn
E
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Contents
1. Highlights of the quarter
2. 1Q 2014 Results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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Trend of NPL, NPL ratio and NPL coverage
NPL
Total risk assets
NPL ratio
NPL coverage (1)
€Bn
DEC 2013
136.7
14.7%
56.5%
(1) Loan loss provisions / NPL
Asset quality and risk management Credit quality Decrease in NPL and reduction of NPL ratio
MAR 2014
134.0
14.3%
57.4%
Organic reduction / sale of portfolios
Trend of NPL
NPL - Dec 2013
+ Gross additions
- Recoveries
20.0
- Write-offs
NPL - Mar 2014
+ 0.9
- 1.4
- 0.1
19.2
Net additions - 0.5
NPL’s down €0.8 bn (€0.5 bn through organic reduction, €0.3 bn through portfolio sales); NPL ratio down 34 bps to 14.3%; and NPL coverage ratio up 92 bps reaching 57.4%
34 bps
92 bps - Sales - 0.3
€Bn
20.0 19.2 €0.8 bn
- 62 bps
NPL formation
+28 bps Denominator
effect
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Bankia Group data. €Mn
Balance of credit exposure and coverage ratios
Asset quality and risk management Credit quality Prudent provisioning allows for steady increase in coverage ratios
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
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Contents
1. Highlights of the quarter
2. 1Q 2014 Results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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Bankia Group data. €Bnn
LTD ratio (%) Commercial GAP
LTD ratio reached 111.9%, while Commercial GAP descends to €21.6 Bn
111.9
1Q13
120.9
€Bnn %
2Q13 3Q13 4Q13 1Q14
118.2 116.7 115.4 21.6 32.8 29.6 27.6 25.1
1Q13 2Q13 3Q13 4Q13 1Q14
- 34.1% - 9 p.p
Liquidity and solvency Liquidity indicators Main liquidity indicators show a positive trend
- 3.5 p.p - 13.9%
LTD ratio: (Net credit / (retail commercial paper + strict customer deposits + ICO/EIB deposits + single-certificate covered bonds)
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Liquidity and solvency Capital generated organically Strong capital generation in the quarter EBA CET1 ratio BIS III phase-in CET1 ratio
EBA Core Tier 1 capital ratio c. 12%
MAR 14 DEC 2013 Organic capital
generation
10.91% 10.69%
MAR 14 DEC 2013 Organic capital
generation
11.96% 11.71%
+25 bps
+22 bps
BIS III fully loaded ratio increases to 9.12%
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Contents
1. Highlights of the quarter
2. 1Q 2014 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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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 (fixed income 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
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