Deutsche Bank Global Financial Services Conference 31 st May 2016
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 information or statements. Such information or statements represent the opinion and expectations of Bankia regarding the development of its business and revenue generation, but such development may be substantially affected in the future by certain risks, uncertainties and other material factors that may cause actual business development and revenue generation to differ substantially from our expectations. These factors include i) market conditions, macroeconomic factors, government and supervisory guidelines, ii) movements in national and international securities markets, exchange rates and interest rates and changes in market and operational risk, iii) the pressure of competition, iv) technological changes, v) legal and arbitration proceedings, and vi) changes in the financial situation or solvency of our customers, debtors and counterparties. Additional information about the risks that could affect Bankia s financial position, may be consulted in the Registration Document approved and registered in the Official Register of the CNMV. Distribution of this document in other jurisdictions may be prohibited, 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. 2 / May 2016
Successful Completion of Bankia s Strategic Plan 2012-2015 The achievement of the objectives of our Plan Efficiency ratio (%) 55.7% 43.6% PLAN TARGETS LtD ratio (%) 120.4% 101.9% -12.1 p.p. 40-45% < 110% -18.5 p.p. 2012 2015 Efficiency Liquidity 4Q 12 4Q 15 Cost of risk. Bps 74 bps 2013-31 bps 43 bps 2015 Cost of risk 10.6% * ROE 2015 Capital generation 50 bps 480 bps Capital generation. CET1 BIS III FL + 544 bps 4.8 bn DEC12 DEC15 DEC12 DEC15 Bankia Group data has allowed us to distribute in 2016 a cash dividend of 302mn against 2015 results, +50% vs 2014 * ROE without deducting in 2015 provisions arising from IPO contingency ( 184 million) 3 / May 2016
Going forward Challenges ahead Bankia s levers Low interest rates Impact on loan yields Lower contribution from bond portfolios Reduction of trading gains Mortgage floors removal Reduction in funding costs 1 EFFICIENCY 46,8% Cost to Income ratio 1Q16 vs 67% European banks average ratio 1Q16 #1 Low growth GDP growth in Spain Deleveraging in mortgage books Limited growth in the Business segment Consumer finance positive trend 2 ASSET QUALITY -37% in NPLs since December 2013 60,5% coverage and 33bps Cost of Risk 1Q16 #1 High regulation Undefined capital requirements Uncertainty regarding hybrid instrument Local discrepancies 3 CAPITAL GENERATION 12.5% CET 1 FL 1Q16 with a high density of RWAs #1 Cost Efficiency and Solid Asset Quality will be the main drivers of the profitability of the banks with current environment 4 / May 2016
1 EFFICIENCY Bankia s leading position Cost to Income Ratios Operating Expenses / RWAs % Cost to Income 1Q16 46.8% 53.6% Recurrent Cost Income 1Q16 50.9% 61.6% % Bankia Sector * 2.03% 2.90% - 680 pbs - 1,070 pbs - 87 pbs BANKIA SECTOR* BANKIA SECTOR* 1Q16 1Q16 *Aggregated cost to income ratio for the biggest 6 banks in Spain excluding Bankia. Santander and BBVA include Banking and Real Estate activity in Spain. *Aggregated ratio for the biggest 6 banks in Spain excluding Bankia. Santander and BBVA include Banking and Real Estate activity in Spain. Lower Opex/RWAs represents up to 5p.p. in ROE* *Post 30% tax rate and assuming Equity = CET1 of 12.5% 5 / May 2016
2 ASSET QUALITY Positive trend in NPL reduction initiating a sharp drop in Cost of Risk NPLs and Coverage (1) Cost of Risk evolution (2) bn/% 61.8% 56.5% NPL Coverage 57.6% 60.0% 60.5% pbs n.a. 74-3.9bn Organic -3.5bn Sales 60 43 33 19.8 20.0 16.5 13.0 12.6 DEC 12 DEC 13 DEC 14 DEC 15 1Q 16 2012 2013 2014 2015 1Q 16 1 NPLs in 2013 excluding refinancing criteria : 18.6Bn ; 2 Annual average cost of risk with the exception of 1Q16 6 / May 2016
3 CAPITAL GENERATION Robust solvency position allowing us to distribute cash dividends Bankia CET 1 BIS III Fully Loaded Distance to MDA (Phase In) 6.82% 8.60% 10.60% 12.26% 12.52% % 3.75% 2.70% + 105 pbs DEC 12 DEC 13 DEC 14 DEC 15 1Q 16 BANKIA 1Q16 SECTOR 1Q16* *Sector average for Santander, BBVA, Caixabank, Popular, Bankinter and Sabadell Confortable position to face new regulatory requirements 7 / May 2016
Conclusions A challenging environment requires a solid starting point where cost efficiency will be a necessary condition to offset negative headwinds impacting total revenues where a reduced cost of risk is going to be a key lever for higher than average return on equity and where a solid starting capital position will be needed to face the increasing regulatory requirements in order to continue generating value for our shareholders 8 / May 2016
Investor Relations ir@bankia.com