Download - Results presentation 3Q 2013
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Legal Disclaimer
This document was prepared by Bankia, S.A. ("Bankia") and is presented exclusively for informational 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.
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Contents
1. 3Q 2013 highlights
2. 3Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
Annex: BFA Group data
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3Q 2013 highlights
High degree of progress in branch closures and workforce adjustment RESTRUCTURING
PLAN Over €1,900 million in cash generated by sale of non-strategic assets
Increased productivity in the branch network
BUSINESS ACTIVITY
New business model
Good performance of the business in the restructured network
2
1
Continued growth in net interest income and pre-provision profit
FINANCIAL
PERFORMANCE Stabilised cost of risk
Efficiency ratio improvement
3
Significant strengthening of liquidity and solvency
Net profit in line with estimates
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3Q 2013 highlights
As of today 29.7% of the branches existing at the end of 2012 have been closed.
Restructured network at 30 September 2013 accounts for 88% of deposits and 87% of gross income generated in the branch network.
Workforce has been reduced by 19.6% year to date (4,019 employees)
BRANCH CLOSURES
ESTIMATED CLOSURES (PLAN) 1,143
CLOSURES COMPLETED TO DATE 929
% OF TARGET 81%
Restructuring plan 1
BRANCH NETWORK RESTRUCTURING AND CAPACITY ADJUSTMENT
Network restructuring to be completed in Q1 2014, ahead of Strategic Plan schedule
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3Q 2013 highlights
Business activity 2
PRODUCTIVITY AND EFFICIENCY
More productive and efficient organisational structure: 81% of the branches remaining after the restructuring are more than 15 years old
OPERATING EXPENSES/ATAs EFFICIENCY RATIO
STRICT DEPOSITS BY BRANCH (€m)
Dec 2012
30.5
Sep 2013
40.0
Dec 2012
46.6
Sep 2013
58.9
4Q 2012
0.78%
3Q 2013
0.70% - 8 bps
4Q 2012
63.3%
3Q 2013
54.2% - 9.1%
pts.
(1) Cost-to-income ratio excluding trading income and exchange differences
(1)
GROSS LENDING BY BRANCH (€m)
31.1% 26.4%
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3Q 2013 highlights
Business activity 2
NEW MODELS OF SUPPORT OFFICES FOR THE BRANCH NETWORK
Segmentation of the network and opening of a new branch model.
A total of 28 Recovery and Liquidation Centres (CLRs) will be in place in the areas with lower presence (non-natural territories).
Recovery and Liquidation Centres (CLRs)
Intense activity in monitoring and recovery of NPLs
Referral of high-value customers to the appropriate branches
Settlement activities
Transactional Centres “Oficinas Ágiles”
High frequency transactions
Sale of basic products (credit cards, term deposits, etc.)
Extended opening hours
… ALLOWING GREATER BUSINESS FOCUS IN THE BRANCHES
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3Q 2013 highlights
Financial performance 3
Profit before tax in the 3Q amount €229 million. Total pro forma accumulated to September 2013: €633 million.
Net interest income increases for the second consecutive quarter, to €643 million, and at the same time expenses reduce by 5%.
Results
Asset quality
Liquidity and solvency
Reduction of NPLs for the third consecutive quarter in a cumulative amount of around €800 million in the first nine months of the year.
Coverage ratios are maintained on loan portfolios at 8.5% of the total portfolio and 62.6% of NPLs.
Reduction of the commercial gap continues and the LTD ratio improves to 116.7% .
Bankia again increases its capital ratio, by 74 bp in the quarter, reaching EBA Core Tier I of 11.06% .
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3Q 2013 highlights
CASH GENERATED FROM COMPLETED SALES OF INVESTEES
1,133
Amounts in € million
Financial performance 3
DIVESTMENT PLAN
More than €1,900 million of cash generated from sale of investees
CASH GENERATED FROM SALES OF INVESTEES PENDING APPROVAL
779 ESTIMATED LIQUIDITY
To 30 June To 30 Sept
715
More than 70 sales and liquidations completed by the end of 3Q 2013
Others
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Contents
1. 3Q 2013 highlights
2. 3Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
Annex: BFA Group data
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Bankia Pro Forma Income Statement 1Q / 2Q / 3Q 2013 – Key figures
A
B
C
D
2Q 2013
The following pro forma income statement excludes the cost of the subordinated loan by BFA to Bankia, in the amount of €89m in 1Q and €53m in 2Q, which was cancelled on 23 May. In 2Q and 3Q 2013, profit from discontinued operations in amounts of €113 mill. and €21 mill., respectively, is included in profit from sale of investees and other profit.
3Q 2013 results
Bankia Group data. €m
Net interest income
Gross Income
Operating Expenses
Pre-provision profit
633
958
(488)
470
Addition to provisions
Profit before tax
(585)
213
Profit from sale of investees and other profit
328 E
1Q 2013
601
957
(494)
463
(272)
191
0
3Q 2013
643
945
(464)
481
(294)
229
42
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3Q 2013 results
Net interest and fee income – Bankia
Bankia Group data. €m
Growth in Net Interest Income
(1) Actual numbers, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May.
A
Positive fee performance
Change in net interest income trend initiated in 1Q 2013 is confirmed.
Reduction in customer deposits cost
Fees improvement vs. two prior quarters.
4Q12
91
731(1)
1Q13
601(1)
89
2Q13
633(1)
53
3Q13
643
4Q12 1Q13 2TQ3 3Q13
225 225 237
242
3Q12
762 (1)
18
3Q12
226
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Bankia Group data. €m
3Q 2013 results
The stability of gross income is maintained by the improvement in the primary banking business
Gross income – Bankia
Composition and trend of Gross Income
B
(1) Actual figures, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled after the Bankia capital increase (2) Trading income + Exch. Diff. + Dividends + Equity method + Other operating income
3Q 13
945
1Q 13
957
601
(1)
633
958 (1)
2Q 13
643 Net interest
income
Fees 225
225 237
Other (2) 131 100 65
Gross Income
93% of Gross
Income is
generated by the
primary business
+2.6% +3.9%
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Operating expenses – Bankia
Quarterly trend in operating expenses
C
Reduction of expenses by 5% from the previous quarter
3Q 2013 results
Bankia Group data. €m
Operating expenses/ Gross income (ex tr. income)
(1) Cost-to-income ratio excluding trading income and exchange differences
1Q 2013
494
4Q 2012
553
2Q 2013
488
3Q 2013
464
-17.1%
1Q 2013 4Q 2012 3Q 2012
60.1%
63.3% 62.1%
54.2%
2Q 2013 3Q 2012
560 -4,9%
62.1%
3Q 2012
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3Q 2013 results
Pre-provision profit – Bankia D
Bankia Group data. €m
Fourth consecutive quarter of increased pre-provision profit (1) Actual figures, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled after the Bankia capital increase
PRE-PROVISION PROFIT / RWAs RATIO
3Q 13
481
4Q 12
351 (1)
91
260
1Q 13
463
89
374
(1)
417
53
470 (1)
2Q 13
0.34% 0.46% 0.48% 0.52%
+48.5%
481 18
306
3Q 12
0.23%
324 (1)
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3Q 2013 results
Profit before tax - Bankia
Pre-provision profit 1,414 (1)
Profit from sales and other profit 317
E
Cumulative pre-tax profit is €633 million
Bankia Group data. €m
Recurring profit from discontinued operations
53 (2)
3Q 2013
Provisions (1,151)
Profit before tax 633
(1) Includes €89 million in 1Q and €53 million in 2Q of net interest income due to impact of subordinated loan
Recurring cost of credit risk accumulated at September
≈ 74 bps
(2) Includes recurring profit of Aseval
Accum
481
(294)
21
21 (2)
229
470
296
32 (2)
1Q 2013
(585)
213
2Q 2013
463
(272)
0
0
191
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Contents
1. 3Q 2013 highlights
2. 3Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
Annex: BFA Group data
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Asset quality and risk management
Portfolios
Retail
Corporates and SMEs
87.6
43.0
Gross amount
Developers 4.8
Credit quality
Bankia Group data. €bn
Total loan portfolio 145.8
Provisions as % gross loans
3.3%
14.8%
44.8%
8.0%
Constant improvement of provision coverage ratios
Dec 2012
Gross loans and provision coverage ratios
Gross amount
Sept 2013
Provisions as % gross loans
Total excluding developers 141.0 6.7%
83.5
39.1
4.5
133.2
3.4%
15.7%
52.5%
8.5%
128.7 7.0%
The refinanced loans maintain a coverage rate of 24%
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Asset quality and risk management
Credit quality
Bankia Group data. €bn
Reduction of NPLs continues, with a cumulative decrease during the year of €786 million
Evolution of NPLs and NPL coverage
1Q 2013
19.6
4Q 2012
19.8
2Q 2013
19.3
3Q 2013
19.0
NPLs (€bn)
Total assets 152.5 149.6 144.5 140.3
NPL rate 13.0% 13.1% 13.4% 13.6%
NPL coverage
61.8% 61.9% 63.0% 62.6%
Reduction in NPLs (€bn)
NPLs Dec 2012
+ Gross additions
- Recoveries
19.8
- Written off
NPLs Sept 2013
+ 3.0
- 3.4
-0.4
19.0
Net additions - 0.4
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Contents
1. 3Q 2013 highlights
2. 3Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
Annex: BFA Group data
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Main liquidity indicators - Bankia
Commercial gap
The reduction of commercial gap and LTD (%) continues
Liquidity and solvency
Commercial gap: Net loans – mediation loans – retail commercial paper – strict customer deposits LTD ratio: (Net credit / (retail commercial paper + strict customer deposits + ICO/EIB deposits + single-certificate covered bonds)
Bankia Group data. €bn
4Q 2012
33.3
3Q 2013
27.6
LTD ratio
4Q 2012
120.4%
3Q 2013
116.7%
- 17.1% - 3.7%
2Q 2013
29.6
2Q 2013
118.2%
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Liquidity and solvency
Capital generated organically
Bankia Group – CORE TIER I EBA
+ 37 bp 10.32%
11.06%
JUN 2013 SEPT 2013
↑Prof. (1) ↓RWAs
Bankia increases its Core Tier I EBA by 74 bp to more than 11%. Year to date Bankia has generated 144 bp of core capital
Gener. organically: + 74 bp
+ 20 bp + 17 bp
SMEs
Note (1): Profit includes income attributable to the Group (161.5 million) during the quarter, plus other adjustments of Core Capital in an amount of 22 million.
9.62%
Dec 2012 PF
Gener. organically: + 70 bp
BIS II RATIO
9.84% 10.52% 11.27%
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Contents
1. 3Q 2013 highlights
2. 3Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
Annex: BFA Group data
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Conclusions
We are making progress towards the objectives in the Strategic Plan…
• Accelerated restructuring plan. Lower than expected impact on the business. The restructured network is returning to growth in terms of loans and deposits
• “Normalisation” of income statement. Financial income and fees are driving income generation. Reduction of costs. New progress in recurrent efficiency. Active management of NPLs
• Divestment plan for non-strategic assets. Capital gains used to strengthen provisions. Generation of liquidity
• “Self-sustained” model of capital generation. Bankia’s Core Capital already exceeds 11%
…in order to achieve ROE OF AROUND 10% in 2015
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Contents
1. 3Q 2013 highlights
2. 3Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
Annex: BFA Group data
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Actual cumulative Income Statement at 3Q 2013 – BFA Group and Bankia Group
BFA Group/ Bankia Group data. €m
BFA Group data
Net interest income 1,734 1,832
Dividends 7 147
Other revenue 977 967
Gross Income 2,718 2,946
Operating expenses (1,446) (1,452)
Profit before tax 357 634
(1,151) Provisions and other expenses (1,404)
Profit from sale of investees and other profit 235 544
1,272 1,494 Pre-provision profit
Profit after tax 353 648
Tax (104) (86)
Net profit associated with hybrids exchange* 969
Profit from discontinued operations 100 100
* In the published income statement the net profit associated with the hybrids exchange is included in "Other revenue" as trading income.
Reported profit after tax 1,617
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BFA Group data
CASH GENERATED FROM COMPLETED SALES OF INVESTEES
2,462
Amounts in € million
DIVESTMENT PLAN
More than €3,200 million of cash generated from sale of investees
CASH GENERATED FROM SALES OF INVESTEES PENDING APPROVAL
779 ESTIMATED LIQUIDITY
To 30 June To 30 Sept
729
More than 70 sales and liquidations completed by the end of 3Q 2013
Others