boaml conf oct 15 - bankia · 1 / october 2015 53 38 26 185 200 0 138 205 222 144 128 47 colour...

1 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Bankia 1st October 2015 BoAML 20th Annual Banking, Insurance & Diversified Financials CEO Conference “Shaping a business fit for the post-crisis era”

2 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

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.

This document includes or may include forward looking statements. While these statements represent Bankia’s judgement and future expectations concerning the development of our business and earnings, said development may be substantially affected in the future by certain risks, uncertainties and other relevant factors that may cause current expected developments and earnings to differ materially from our expectations. These factors include, but are not limited to i) general market , macro-economic, governmental and new regulations, ii) variation in local and international securities markets, currency exchange rates and interest rates as well as change to market and operational risk, iii) competitive pressures, iv) technological developments, v) legal and arbitration proceedings and vi) changes in the financial position or credit worthiness of our customers, obligors and counterparties. More information on the potential risks that could affect Bankia’s financial condition can be found in the Prospectus (“Documento de Registro”) approved and registered in the Official Registry of the Comisión Nacional del Mercado de Valores (CNMV).

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.

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 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

The “post-crisis era” brings significant tailwinds …

GDP growth -2.6%

Unemployment

Risk premium

26%

637 bps

Source: INE

Source: EPA

2012

3.1%

20.9%

134 bps Source: Bloomberg. 10YSP spread. Sept 15

Source: IMF

2015 (E)

Source EPA

NPLs 197bn Source: Bank of Spain. System. Dec 13

147bn Source: Bank of Spain. System. July 15

Source: Reuters. Max in Jul 12

LtD 151% Source: Bank of Spain. System Average 12

120% Source: Bank of Spain. System Aver. Jan-Jun 15

4 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Revenues benefiting from macro evolution… With volumes picking up YoY

Consumer Loans New Lending SME New Lending

1Y moving average YoY%

Spanish Leverage (Debt / GDP (%))

Source: Bank of Spain

Significant deleverage, since peak, in the private sector

17.14% 19.97%

Source: Bank of Spain Source: Bank of Spain

84,8 Households

69,9

133,9 Businesses

110,4

30

50

70

90

110

130

150

04 05 06 07 08 09 10 11 12 13 14 15

-17.57%

-17.55%

1Y moving average YoY% -20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Jun-12 Jun-13 Jun-14 Jun-15

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Jun-12 Jun-13 Jun-14 Jun-15

5 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Revenues benefiting from macro evolution (Cont.)…

+ 4.0% organic growth in key business segments: businesses and consumer finance

Significant increase in new lending in key segments in 1H15

BANKIA - 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

BANKIA - 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

With volumes picking up YoY

6 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

… and lower cost of funding…

Back book and front book, quarterly average (excluding impact of City National Bank)

Bankia cost of term deposits – Back book vs. Front book

%

Bankia average cost of term deposits (back book)

2.0%

2015e ≈1.0%

…with a significant scope for improvement in 2016 due to downward repricing of term deposits

2014 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

7 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

… although pressure continues in the “new era”…

Euribor 12M 1.1% Source: Bloomberg/Average 2012

2012

0.16% Source: Bloomberg

2015 (June)

Capital levels ~10% BIS 2 ~12.5% BIS 3

Phased In

Average Yield on new

lending *

SMEs: 5.1% SMEs: 3.7%

Source: three biggest domestic peers Source: domestic peers & Bankia

Corp: 2.7% Corp: 2.0% * Source: BoS, SMEs <€1MM, Corp >€1MM

Domestic Peers: Three biggest domestic banks ex Bankia

8 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

…with uncertainty in the contribution from other revenue generators…

Mortgage floors

Contribution from fixed income portfolios

Contribution from equity stakes

Trading income

*2015E BAML estimates

Customer Total Revenues (gross margin) 2015E*

Gross margins are now hedged by:

When excluding those revenues, customer NII + Fees & Commissions show similar contribution to Total Revenues for all banks


9 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

… and low interest rates moving loan yields… Backbooks impacted by the lowest 12M Euribor (16bps) and pressure has built up in front book

2Q15

Domestic Peers Bankia

Back book yields – Bankia vs Peers

Spanish yields - New loans to SMEs & Corporates

3.72%

2.02%

2.68%

33%

59%

35%

30% 5%

5%

17%

4% 9% 1%


RE LoansOther Loans (incl. public sector)IndividualsCorporates & SME'sResidential Mortgages

Gross Loans breakdown (%)

2.99% 2.10%

2Q15

Blended new business yield

2.68%


other

Source: Companies reports and BAML estimates

Domestic Peers: Three biggest domestic banks

Source: Bank of Spain

1%

2%

3%

4%

5%

6%

Dec

-13

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec

-14

Jan

-15

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

< €1Mn > €1Mn Blended

10 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

…puts the focus in the “lower part” of the P&L to increase profitability

OPERATING COSTS

COST OF RISK

• Installed capacity

• Productivity

• Specialization of networks

• Adequate levels of coverage

• Focus on recoveries

• Controlled risk standards

11 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

…puts the focus in the “lower part” of the P&L to increase profitability

OPERATING COSTS


• Productivity


10

12 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Significant restructuring …

3,128

2013 & today

~ 2,000

2012

20,005 14,099

2012 Jun 15

# branches # employees

-38% -30%

Bankia has restructured its distribution capabilities…

… resulting in improved productivity

€Mn

2012

12.6

+ 28.4 %

2013 2014

12.3 12.9 14.8 13.3 15.8

Peers Bankia

+ 5.1 %

Source: Bankia Research. Business volume: Gross Credit + Demand & Term Deposits + Mutual Funds Peers: Three biggest domestic banks ex Bankia

A successful restructuring of the distribution network has allowed Bankia to increase business volume per employee by 28% vs 5% for domestic peers

11

13 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

… in order to generate productivity gains…

Bankia products sold per branch employee/month

2Q 14

23.3

2Q 15

32.5

+39.5%

With a more efficient branch segmentation…

Recovery centres (RCs)

(managing 80% of NPLs)

~1,750

~ 35

Commercial branches

~ 50

Transactional branches ~ 150

Advisory branches

2015

Retail network

12

14 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Significant effort …

3,128

2013 & today

~ 2,000

2012

20,005 14,099

2012 Jun 15

# branches # employees

… allowing a new and more efficient branch segmentation…

Bankia’s restructuring has no precedent in the market

-38% -30%

Recovery centres (RCs)

(managing 80% of NPLs)

~1,750

~ 35

Commercial branches

~ 50

Transactional branches ~ 150

Advisory branches

2015

Bankia has restructured its distribution capabilities…

13

15 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

…while decreasing our cost base… and increasing efficiency…

2012 2014

2.3 1.7

Reduction in Op. Exp ahead of plan…

-0.6 €Bn

… while continue reducing after restructuring…

1Q15

423

2Q15

420

2Q14

435

-3.5%

2015 Operating Expenses

Target -3% / -4%

€Mn

67 bps 60 bps

2.50 2.58 2.62 2.57 2.60

1.90 1.94 1.97 1.92 1.93

2Q14 3Q14 4Q14 1Q15 2Q15

Domestic peers Bankia

Operating Expenses / RWAs Recurrent* Cost to Income Ratio

*recurrent cost to income: Operating expenses / Gross Margin excluding trading income Peers: Include 3 biggest domestic banks ex Bankia. RWA related to acquisitions excluded when operating expenses not consolidated Excludes extraordinary expenses for peers

53.5%

61.4%

57.1%

46.0% 44.4%

2012 2013 2014 2Q15

Domestic Peers BKIA

-24%

14

16 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

… therefore, increasing the RECURRENT PROFITABILITY of the bank

Pre-provision profit

1Q15

569

2Q15

617 +8.6%

2Q14

620

€ Mn

2012*

456

…

+35% * Average per quarter

1.72%

2.35%


NII + Fees - Operating Expenses / RWAs

Recurrent Operating Profit of Bankia is 63bps higher than Domestic Peers

Peers: Include 3 biggest domestic banks. ex Bankia. RWA related to acquisitions excluded when operating expenses not consolidated

Excludes extraordinary expenses for peers

15

17 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Putting the focus in the “lower part” of the P&L to increase profitability

COST OF RISK OPERATING

COSTS


• Productivity





16

18 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Putting the focus in the “lower part” of the P&L to increase profitability

COST OF RISK




16

19 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

NPL and foreclosed assets change y-o-y

Good evolution of NPL recoveries and sales of NPL assets…

Bankia NPLs sales

NPLs sales carried out without further provisioning effort

NPLs recoveries while reducing foreclosed assets (no transfer from NPLs to foreclosed)

NPL change June 14 – June 15

€ Bn

NPL and foreclosed assets June 14 – June 15

€1.6bn

2014

€1.2bn

2015 YTD

Peers: Include 3 biggest domestic banks ex Bankia

-1.83

-2.45

-3.08

-3.15

-3.5 -3.0 -2.5 -2.0 -1.5 -1.0

Peer 3

Peer 2

Peer 1

Bankia

0.01

-0.66

-0.89

-3.20

-3.5 -2.5 -1.5 -0.5 0.5

Peer 3

Peer 2

Peer 1

Bankia

Millares

SME 47%

Retail Secured

29%

Consumer 9%

Corporates 9%

RE 6%

17

20 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Bankia NPLs & Coverage

Bankia Cost of Risk

2014

60 bps

2Q15

51 bps

1Q 15

55 bps

2013

74 bps

… benefiting from adequate levels of coverage and controlled cost of risk

1H15 Coverage of NPLs

49%

61%

Average coveragepeers

Coverage BKIA

1H15 RE exposure over total loans

1H15 Cost of Risk

Source: semi Annual accounts

9%

1%

Domestic Peers BKIA

127

53


Peers: Include 3 biggest domestic banks ex Bankia. Gross loans related to acquisitions excluded when LLC not consolidated

12.87% 12.15% 12.63% 14.65% € Bn

% NPL ratio

20

16.5 16.1 15.3

56.5% 57.6%

59.4% 60.6%

Dec 13 Dec 14 mar-15 jun-15

NPLs (€bn) NPL Coverage

18

21 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Generating capital…

BANKIA 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

DEC 12

6.82%

Peers: main listed banks included in the Ibex 35 TBV: tangible book value

+71 bps

DEC 14

10.60%

CAPITAL GENERATION CET1 BIS III FL 1H 2015

-0.6

%

0.2 -0.3 0.7

Peer 1 Peer 2 Peer 3 Bankia

Resulting in a sustainable growth in capital and TBV per share

19

22 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Positioning the bank with sound competitive advantages going forward

Bankia starts the “post-crisis era” with a 9.8% ROE based on….

Operating expenses / RWAs

1.93%

EFFICIENCY

NII + Fees - Opex / RWAs

2.35%

PROFITABILITY

NPL coverage

60.6%

COVERAGE

CET1 BIS III FL

11.31%

CAPITAL

20

23 / October 2015

53

38

26

185

200

0

138

205

222

144

128

47

COLOUR

SCHEME

206

201

161

Investor Relations

[email protected]

boaml conf oct 15 - bankia · 1 / october 2015 53 38 26 185 200 0 138 205 222 144 128 47 colour...

Documents