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
Domestic Peers: Three biggest domestic banks ex Bankia
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%
Domestic Peers Bankia
RE LoansOther Loans (incl. public sector)IndividualsCorporates & SME'sResidential Mortgages
Gross Loans breakdown (%)
2.99% 2.10%
2Q15
Blended new business yield
2.68%
Domestic Peers: Three biggest domestic banks ex Bankia
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
• Installed capacity
• Productivity
• Specialization of networks
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%
Domestic Peers Bankia
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
• Installed capacity
• Productivity
• Specialization of networks
• Adequate levels of coverage
• Focus on recoveries
• Controlled risk standards
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
• Adequate levels of coverage
• Focus on recoveries
• Controlled risk standards
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
Domestic Peers Bankia
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