results presentation 2q 2013
DESCRIPTION
In the first half of the year the BFA-Bankia Group obtained profit after tax of 428 million euros, putting it on track to achieve the target established in the 2012-2015 Strategic Plan of posting full-year profit of 800 million euros. This result does not include the effect of the exchange of hybrid instruments for capital, which, as forecasted, generated 1,795 million euros. Out of this amount, Banco Financiero y de Ahorros (BFA) allocated 525 million euros in the second quarter to cover contingencies in the arbitration process. BFA estimates that it has sufficient funds to assume any additional cost that might arise from arbitration, without having to raise more capital. Arbitration has no effect on the capital of Bankia, the listed entity.TRANSCRIPT
Results Presentation
2Q 2013
25 July 2013 1Q 2013
April 2013
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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.
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Contents
1. 2Q 2013 highlights
2. 2Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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2Q 2013 highlights
Improved net interest income
FINANCIAL
PERFORMANCE Divestment plan proceeds used to reinforce provisions
RESTRUCTURING
PLAN
PROGRESS
Improvement of recurring efficiency ratio
Cost reduction continues
Net profit in line with Plan
Accelerated restructuring plan on going
Capitalisation process completed
Divestment plan driving ahead
Capital generated organically
1
2
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2Q 2013 highlights
Q2 net profit reaches €215 million in BFA Group, excluding positive effect of hybrids exchange. Cumulative total as of June 2013: €428 million.
Profit from sale of investees allows additional €284 million of non-recurring provisions.
Results
Asset quality
Liquidity and solvency
NPLs reduced by €514 million in first half.
Provision coverage ratios increased to 8.5% of total loan portfolio and 63.6% of NPLs.
LTD ratio improves to 118.7%.
BFA Group maintains core capital ratio at 10.0%, after setting aside €525 million to cover contingencies arising from the arbitration process. Bankia increases its capital ratio once again this quarter.
BFA Group financial performance 1
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Restructuring Plan Progress
2Q 2013 highlights
CAPITALISATION PROCESS – FINAL FIGURES
CAPITAL GENERATED (€bn) 24.6
• Capitalisation process completed
• Share stabilised following listing of new shares
• BFA’s Bankia share purchase programme cancelled without having been used
15.6
BANKIA SHAREHOLDER STRUCTURE
BFA 68%
Free Float 32%
Member of the following indices
2
TOTAL No. SHARES (mill.) 11,517
Share price 23 July €0.643 MSCI
Eurostoxx 600
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2Q 2013 highlights
INVESTEES SOLD IN 1H 2013
CASH GENERATED 729
Divestment plan making headway
Amounts in € billion
Restructuring Plan Progress 2
SALES NOT YET COMPLETED
ESTIMATED CASH PROCEEDS 995
DIVESTMENT PLAN
More than €1,700 million of cash generated from sale of investees
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2Q 2013 highlights
CUMULATIVE CLOSURE SCHEDULE
1Q13 Current 1Q14e
212
666
1,143
Accelerated branch closures above Strategic Plan shedule. Forecast confirmed: restructuring will be completed in 1Q 2014.
Restructured network accounts, as of 30 June 2013, for 86% of deposits and 80% of gross income generated by the network.
Leading financial institution in traditional home territories, with market shares around 15%.
BRANCH CLOSURES
ESTIMATED CLOSURES AS OF PLAN 1,143
CLOSURES COMPLETED TO DATE 666
% OF TARGET 58%
Restructuring Plan Progress 2
BRANCH NETWORK RESTRUCTURING
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Income Statement 1H 2013 – BFA Group and Bankia Group
BFA Group/ Bankia Group data. €m
2Q 2013 highlights
Net interest income
Dividends
Other revenue
Gross income
Operating expenses
Profit before tax
Provisions and other expenses
Profit from sale of investees and other profit
Pre-provision profit
Profit after tax
Tax
Net profit associated with hybrids exchange*
Profit from discontinued operations
* In the published income statement the net profit associated with the hybrids exchange is included in “Other revenue” as trading income.
Profit after tax published
1,092 1,204
6 105
675 699
1,773 2,008
(982) (990)
149 381
(856) (854)
214 217
791 1,018
192 428
(43) (39)
1,269
86 86
1,697
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Contents
1. 1H 2013 highlights
2. 2Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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Bankia Pro Forma Income Statement 1Q 2013 / 2Q 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 2013, profit from discontinued operations, in the amount of €113 million before taxes, is included in Profit from sale of investees and other profit.
2Q 2013 results
Bankia Group data. €m
Net interest income
Gross income
Operating expenses
Pre-provision profit
633
958
(488)
470
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
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3.13% 2.99%
2.72% 2.65%
1.95% 1.95% 1.86% 1.70%
3Q 2012 4Q 2012 1Q 2013 2Q 2013
Loan yield Cost of deposits
Net interest margin – Bankia
Bankia Group data. €m
Net interest income up 5%
(1) Actual numbers, adjusted for the finance cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May.
A
Loan yield and customer deposits
Net interest income improved in 2Q 2013 due to higher net interest margin
Asset repricing policies continue
Cost of customer deposits down 25 b.p. since 4Q 2012
3Q12
18
762 (1)
4Q12
91
731 (1)
1Q13
601
89
(1)
2Q13
633
53
(1)
+5%
1.18% 1.04% 0.86% 0.95%
Customers gross margin
2Q 2013 results
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Strong gross income generation, with income from the traditional banking business (net interest income plus fees and commissions) up 3.7% in the quarter (+€32 million).
Gross income – Bankia
Composition and trend of Gross Income
B
Bankia Group data. €m
2Q 2013 results
(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
GROSS INCOME 1Q 2013
957 (1)
884 (1)
GROSS INCOME 3Q 2012
904 (1)
GROSS INCOME 4Q 2012
633 (1)
Net interest income
225
146
3 (49)
Net fee income
Trading income and exch. diffs
Dividends and eq. method
Other
(DGF)
GROSS INCOME 2Q 2013
958 (1)
53
GROSS INCOME 2Q 2013
958 (1)
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Operating expenses – Bankia
Quarterly trend in operating expenses
C
Cost reduction effort continues: recurring efficiency ratio (%) (1) continues improving.
1Q 2013
494
2Q 2013 results
4Q 2012
553
3Q 2012
560
Operating expenses/ Gross income (ex tr. income)
2Q2013
488
- 1.3%
Bankia Group data. €m
(1) Cost-to-income ratio excluding trading income and exchange differences
1Q 2013 4Q 2012 3Q 2012
62.1% 63.3%
62.1%
60.1%
2Q 2013
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2Q 2013 results
Pre-provision profit – Bankia D
Bankia Group data. €m
Pre-provision profit rises for fourth quarter in a row
(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
3Q12
324 (1)
18
306
4Q12
351 (1)
91
260
1Q13
463
89
374
(1)
417
53
470 (1)
2Q13
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Profit before tax - Bankia
Pre-provision profit 470 (1)
Profit from sales and other profit 296
2Q 2013 results
(1) Includes €51m of net interest income due to impact of subordinated loan
E
More than €200 million of profit before tax in 2Q
Bankia Group data. €m
Recurring profit from discontinued operations 32 (2)
2Q 2013
Provisions (585)
Profit before tax 213
Recurring provisions (301)
Non-recurring provisions (284)
… used to ensure prudent coverage of
our portfolio
Extraordinary income…
(1) Includes €89m on 1Q and €53m on 2Q of net interest income due to impact of subordinated loan
Recurring cost of credit risk in 1H ≈73
b.p.
(2) Includes recurring profit of Aseval
463 (1)
1Q 2013
(272)
191
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Contents
1. 2Q 2013 highlights
2. 2Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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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%
Provision coverage ratios continue to improve after additions to provisions
Dec 2012
Gross loans and provision coverage ratios
85.7
41.0
Gross amount
4.7
137.7
Jun 2013
Provisions as % gross loans
3.5%
14.9%
51.6%
8.4%
Total excluding developers 141.0 6.7% 133.0 6.9%
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Asset quality and risk management
Credit quality
Bankia Group data. €bn
NPL coverage ratio improves to 63%, while NPLs fall €0.5 bn
NPLs and NPL coverage Reduction in NPLs (€bn)
Dec 2012
Total gross assets (€bn) 152.5
NPLs (€bn) 19.8
NPL ratio
NPL coverage
13.0%
61.8%
Jun 2013
144.5
19.3
13.4%
63.0%
NPLs Dec 2012
+ Gross additions
- Recoveries
19.8
- Written off
NPLs Jun 2013
+ 1.8
- 2.1
-0.2
19.3
Net additions - 0.3
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Asset quality and risk management
Credit quality
Structure of refinanced loans – Jun 2013
Only 8% of total refinanced loans are developer loans.
Approximately 87% of refinanced performing loans are loans to individuals.
Category
Non-performing
Total amount refinanced
9.8
22.1
Gross amount
Total gross loans 137.7
16.3%
44.2%
3.6 Substandard
% of refinanced amount
8.7 Performing 39.5%
4.5
5.4
Prov.
23.4%
46.4%
0.9
% Cov.
24.4%
Bankia Group data. €bn
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Contents
1. 2Q 2013 highlights
2. 2Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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Main liquidity indicators - Bankia
Commercial gap
Main liquidity indicators show positive trend
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
1Q2013
32.8
4Q2012
33.3
2Q2013
29.6
LTD ratio
1Q2013 4Q2012
120.4%
2Q2013
120.9% 118.2%
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Liquidity and solvency
Capital generated organically
Bankia increases Core Capital by 26 b.p. to 10.32%.
Bankia Group – CORE CAPITAL
+ 37 bp
10.06%
+ 12 bp
+ 0.26%
10.06% 10.32%
MAR 2013 Pf JUN 2013
↑Prof. ↓RWAs
- 23 bp
Aseval Integration
BFA Group maintains solvency ratio at 10.0%, after the provision for arbitration.
Gener. organically: + 49 bp
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Contents
1. 2Q 2013 highlights
2. 2Q 2013 results
3. Asset quality and risk management
4. Liquidity and solvency
5. Conclusions
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Conclusions
We are on track to meet the goals of the Strategic Plan
Active commercial strategy has stabilised net interest income earlier than planned
Strong momentum in accelerated restructuring plan and pursuit of cost improvement targets
Reinforced NPL management in an environment of weakening domestic demand. Prudent provisioning policy
Active management of divestment plan: more than €1,700 million of cash generated
Organic capital generation model: we continue to increase the solvency ratio
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Appendix
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Actual and Pro Forma Income Statement Bankia 2Q
Subordinated loan
Bankia 2Q 2013
Bankia Group data. €m
Net interest income
Gross income
Profit after tax
+53
+53
Profit before tax +53
Actual
580
905
120
47
Pro forma
633
958
213 +113
PDO (1)
+37 (2) 157
(1) Profit from discontinued operations – Aseval (€86 million net as profit from discontinued operations and €113 million gross as profit from sale of investees and other) (2) Adjustment to subordinated loan for tax effect
Corporate income tax (16) (13) (56)
Profit from discontinued operations 86
(27)
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Actual and Pro Forma Income Statement Bankia 1H
Subordinated loan
Bankia 1H 2013
Bankia Group data. €m
Net interest income
Gross income
Profit after tax
+142
+142
Profit before tax +142
Actual
1.092
1.773
192
149
Pro forma
1,235
1,916
404 +113
ROI (1)
+100 (2) 292
Corporate income tax (42) (43) (112)
Profit from discontinued operations 86
(27)
(1) Profit from discontinued operations – Aseval (€86 million net as profit from discontinued operation and €113 million gross as profit from sale of investees and other) (2) Adjustment to subordinated loan for tax effect
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Actual and Pro Forma Income Statement BFA 2Q
BFA 2Q 2013
BFA Group data. €m
Net interest income
Gross income
Profit after tax
Profit before tax
Actual
617
2,280
1,484
1,417
(1) Adjusted for tax effect
Pro forma
617
981
118
215
Trading Income
(1,299)
(1,299)
(1,269) (1)
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Actual and Pro Forma Income Statement BFA 1H
BFA 1H 2013
BFA Group data. €m
Net interest income
Gross income
Profit after tax
Profit before tax
Actual
1,204
3,307
1,698
1,680
(1) Adjusted for tax effect
Pro forma
1,204
2,008
381
428
Trading Income
(1,299)
(1,299)
(1,269) (1)
Results Presentation
2Q 2013
25 July 2013 1Q 2013
April 2013