Quarterly Results Presentation 2Q th July Trabajamos desde los principios para poner la mejor banca a tu servicio

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1 Quarterly Results Presentation 2Q14 28 th July 2014 Trabajamos desde los principios para poner la mejor banca a tu servicio 1 of 28 / July 2014

2 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. 2 of 28 / July 2014

3 Contents 1. Highlights of 1H Q14 results 3. Asset Quality and Risk Management 4. Liquidity and solvency 5. Conclusions 3 of 28 / July 2014

4 Highlights of 1H COMMERCIAL ACTIVITY DYNAMIZATION + 3.8Bn Customer Funds +26.8% New Credit IMPROVED PROFITABILITY Net Profit Bankia: 431Mn Net Profit BFA: 827Mn 2 4 BALANCE SHEET STRENGTH NPL: - 1.4Bn CET 1: +113pbs MARKETS CONFIDENCE Issuances: 3.3Bn 4 of 28 / July 2014

5 Highlights of 1H14 1 COMMERCIAL ACTIVITY DYNAMIZATION QUARTERLY PERFORMANCE OF STRICT CUSTOMER FUNDS bn + 3.9% (0.2) (1.3) 90.4 (0.4) JUN 13 SEP 13 DEC 13 MAR 14 JUN 14 Strict customer deposits Off-balance-sheet customer funds Total strict dep. + off-balance Total strict customer funds up 3.9% year on year 5 of 28 / July 2014

6 Highlights of 1H14 1 COMMERCIAL ACTIVITY DYNAMIZATION NEW CREDIT CREDIT MARKET SHARES NEW CREDIT Mn 2, % 3, ICO % 9.33% +236 bps 11.69% Financing DEC 13 JUN 14 Source: ICO 869 1, % 2,837 Businesses > 1MM % 8.50% +240 bps 10.90% DEC 13 JUN 14 Source: BdE 1Q 14 2Q 14 Businesses Individuals Businesses < 1MM % 9.52% DEC 13 Source: BdE +87 bps 10.39% MAY 14 New credit grows 26.8% quarter on quarter. In businesses, new credit rises 46.9% Significant increase in market shares 6 of 28 / July 2014

7 Highlights of 1H14 2 NPL DECREASE AND COVERAGE INCREASES NPL NPL RATIO NPL COVERAGE bn % % bn p.p p.p % 14.0% 56.5% 58.9% DEC 13 JUN 14 DEC 13 JUN 14 DEC 13 JUN 14 NPL down 1.4bn during 1H14 NPL ratio falls to 14% NPL coverage increases to almost 59% 7 of 28 / July 2014

8 Highlights of 1H14 2 SIGNIFICANT LIQUIDITY AND CAPITAL GENERATION LTD RATIO CET 1 BIS III - PHASE IN % % -5.7 p.p bps 115.4% 109.7% 10.69% 11.82% DEC 13 JUN 14 DEC 13 JUN 14 LTD ratio: (Net credit / (strict customer deposits + ICO/EIB deposits + single-certificate covered bonds) LTD ratio falls below 110% 113 bps of capital generation during 1H14 8 of 28 / July 2014

9 Highlights of 1H14 3 INCREASE IN RECURRING RESULTS AND A NEW IMPROVEMENT IN THE EFFICIENCY RATIO PRE-PROVISION PROFIT EX NET TRADING INCOME EFFICIENCY RATIO EX-NTI Mn % 982 % % 60.1% % 54.2% 52.6% % 46.1% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 Figures adjusted excluding the finance cost ( 89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profits for these periods were lower. Efficiency ratio ex-nti and exchange differences Efficiency ratio ex-nti at 46.1% (43.4% including NTI) 9 of 28 / July 2014

10 Highlights of 1H14 3 WHICH LEADS TO A CONTINUED IMPROVEMENT IN PROFITABILITY % PROFIT AFTER TAXES BANKIA GROUP ROE 5.94% 7.92% 1H13 2H13 1H14 Figures adjusted excluding the finance cost ( 142Mn in 1H13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profit for that period was 192Mn. 10 of 28 / July 2014

11 Highlights of 1H14 4 MARKETS CONFIDENCE SENIOR DEBT SALE OF BANKIA S 7.5% SUBORDINATED DEBT Amount 1,000 Mn Total amount 1,304 Mn Amount 1,000 Mn Maturity 17/01/2019 Selling price ( ) 1.51 Maturity 22/05/2024 Spread MS bps Spread MS bps Oversubs. 3.5x % of Bankia s capital 7.50% Oversubs. 3.5x # Orders > 250 orders Oversubscription 2.0x # Orders > 270 orders More than 3.3bn raised in wholesale markets during 1H14: senior debt issuance ( 1Bn), sale of 7.5% of Bankia ( 1.3Bn) and subordinated debt issuance ( 1Bn) 11 of 28 / July 2014

12 Contents 1. Highlights of 1H Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions 12 of 28 / July 2014

13 2Q14 Results Pro forma income statement Bankia Group Mn 2Q13 2Q14 Diff % 1H13 1H14 Diff % A Net interest income % Fee and commission income % 1,234 1, % 4.1% B Gross income 958 1, % Gross income ex NTI % 1,915 1,932 1,617 1, % 14.9% C Operating expenses (488) (435) (10.9%) (982) (876) (10.8%) D Pre-provision profit % Pre-provision profit ex NTI % 933 1, % 54.6% Provisioning & others (257) (241) (6.2%) (529) (462) (12.7%) E Taxes (56) (81) 44.6% Profit after tax % (113) (163) % 48.0% The pro forma income statement for 1H 2013 excludes the cost of the subordinated loan by BFA to Bankia in the amount of 89 million in 1Q 2013 and 53 million in 2Q 2013, which was cancelled on 23 May Thus the reported profits for these periods were lower. 13 of 28 / July 2014

14 2Q14 Results A Core banking business: net interest income Interest margin positive trend consolidates Quarterly performance of net interest income Half-year performance net interest income Mn % Mn +15.7% ,234 1, % Q13 3Q13 4Q13 1Q14 2Q14 1H13 1H14 Figures adjusted excluding the finance cost ( 89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profits for these periods were lower. Figures adjusted excluding the finance cost ( 89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profits for these periods were lower. Net interest income upward trend started in 2Q13 continues: +4.6% in the quarter Net interest income up 15.7% compared with 1H13 14 of 28 / July 2014

15 2Q14 Results A Core banking business: net interest income Growth in net interest income driven by an improvement in spreads Loan yield vs. cost of deposits Cost of stock term deposits vs. new additions % % 1.17% 1.17% 1.07% 0.99% 1.00% Excludes City National Bank from the series Stock and new additions - quarterly average. Excludes City National Bank. Gross customer spread up another 10 bps in the quarter The cost of new deposits in 2Q14 is 1.10% 15 of 28 / July 2014

16 2Q14 Results A Core banking business: fee and commission income Fee and commission income generation performs better than previous year Quarterly performance fee and commission income Core banking business performance Mn + 5.5% Mn +12.8% Q13 2Q14 2Q13 3Q13 4Q13 1Q14 2Q14 Core banking business = net interest income + fee and commission income Figures adjusted excluding the finance cost ( 89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profits for these periods were lower. Fee and commission income up 5.5% quarter on quarter, due to an increase in the sale of off-balance-sheet products Core banking business up 12.8% compared with 1H13 16 of 28 / July 2014

17 2Q14 Results B Gross income Solid growth of gross income Quarterly performance of gross income Gross income ex NTI Mn % 1, NTI 53 GI Mn % % GI ex NTI Q13 3Q13 4Q13 1Q14 2Q14 2Q13 2Q14 Figures adjusted excluding the finance cost ( 89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profits for these periods were lower. Figures adjusted excluding the finance cost ( 89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profits for these periods were lower. Gross income ex net trading income up 4.4% compared to previous quarter Recurring gross income excluding net trading income up 14.9% quarter on quarter and half on half 17 of 28 / July 2014

18 2Q14 Results C Operating expenses Continued cost reduction Quarterly performance of operating expenses Efficiency ratio ex net trading income m % % % 60.1% p.p. 54.2% 52.6% 49.3% 46.1% 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 2Q13 3Q13 4Q13 1Q14 2Q14 Efficiency ratio excluding net trading income and exchange differences Continued quarter on quarter reduction in operating expenses Efficiency ratio ex NTI falls 3.2 p.p. in quarter, reaching 46.1% 18 of 28 / July 2014

19 2Q14 Results D Pre-provision profit Very positive performance of pre-provision profit Pre-provision profit ex net trading income Pre-provision profit Mn % Mn % % Q13 3Q13 4Q13 1Q14 2Q14 2Q13 2Q14 Figures adjusted excluding the finance cost ( 89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profits for these periods were lower. Figures adjusted excluding the finance cost ( 89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profits for these periods were lower. Recurring pre-provision profit ex net trading income up 10% quarter on quarter and 52.1% compared with 2Q13 19 of 28 / July 2014

20 2Q14 Results E Profit after tax Significant increase in net profit compared to same quarter of previous year Mn 2Q13 3Q13 4Q13 1Q14 2Q14 Pre-provision profit Provisions (585) (294) (353) (303) (262) Profit from sales and others Profit from discont. op. (2) Profit after tax Figures adjusted excluding the finance cost ( 89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May Thus the reported profits for these periods were lower. (2) Includes recurring profit of Aseval +56.1% RECURRING COST OF RISK 2Q14 (CREDIT) 63 bps Net profit reaches 431 million in the first half of the year, up 48% from 1H of 28 / July 2014

21 Contents 1. Highlights of 1H Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions 21 of 28 / July 2014

22 Asset Quality and Risk Management Credit quality Decrease in NPL and reduction of NPL ratio Performance of NPL, NPL ratio and NPL coverage NPL performance Bn DEC 2013 MAR 2014 Organic reduction JUN 2014 Bn NPL March NPLs Total risk assets bn Gross additions - Recoveries NPL ratio 14.7% 14.3% 28 bps 14.0% Net additions bps + 17 bps - Write-offs NPL Formation Denominator effect - Sales - NPL coverage Loan loss provisions / NPLs 56.5% 57.4% 151 bps 58.9% NPL June NPL ratio reduces to 14%, while NPL fall by 1.4 Bn in 1H14 NPL coverage up 2.4 p.p. in 1H14 22 of 28 / July 2014

23 Asset Quality and Risk Management Credit quality Coverage increased in almost all segments Balance of credit exposure and coverage ratios COVERAGE RATIOS 3.5% 3.5% 16.4% 16.9% 44.7% 45.3% 8.2% 8.3% 7.2% 7.3% GROSS EXPOSURE bn MAR 14 JUN 14 MAR 14 JUN 14 MAR 14 JUN 14 MAR 14 JUN 14 MAR 14 JUN 14 Individuals Businesses Real estate developers Total portfolio Total portfolio (ex RE developers) Coverage ratios increase in RE developers and businesses segments Coverage ex RE developers reaches 7.3% 23 of 28 / July 2014

24 Contents 1. Highlights of 1H Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions 24 of 28 / July 2014

25 Liquidity and Solvency Liquidity indicators Good liquidity management leads to improved ratios LTD ratio (%) Commercial gap % p.p. Bn % p.p % 2Q13 3Q13 4Q13 1Q14 2Q14 LTD ratio: (Net credit / (retail commercial paper + strict customer deposits + ICO/EIB deposits + single-certificate covered bonds) 2Q13 3Q13 4Q13 1Q14 2Q14 LTD falls to 109.7%, while commercial gap is down 37% year on year 25 of 28 / July 2014

26 Liquidity and Solvency Significant organic capital generation Continued high level of capital generation CET 1 BIS III phase-in ratio CET 1 BIS III fully loaded ratio 10.69% 11.82% 8.60% 9.95% + 68 bps + 45 bps + 57 bps + 78 bps Generated organically: bps RWAs Profit Generated organically: bps RWAs Profit DEC 13 JUN 14 DEC 13 JUN % TOTAL SOLVENCY 13.29% 8.98% TOTAL SOLVENCY 11.43% CET 1 BIS III phase-in ratio close to 12% CET 1 BIS III fully loaded ratio almost 10% 26 of 28 / July 2014

27 Contents 1. Highlights of 1H Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions 27 of 28 / July 2014

28 Conclusions 1H14: First half of our Strategic Plan concluded Important commercial capabilities acceleration Strong push to recurrent results generation (pre-provision profit: %) Efficiency ratio already stands at 46% NPL ratio reduction and coverage increases Additional progress in the capital ratio Normalization of Bankia in the financial markets with ROE close to reaching 8% 28 of 28 / July 2014

29 Trabajamos desde los principios para poner la mejor banca a tu servicio Investor Relations ir@bankia.com 29 of 28 / July 2014