Covered Bonds Investor Presentation...4 2015 HIGHLIGHTS MARKET SHARE OF HOUSEHOLD MORTGAGES 12.02%...

1

Covered Bonds Investor Presentation

December 2015

2

Index

01 EXECUTIVE SUMMARY

Bankia Results……………………………………………………………………. 3

Covered Bonds Ratings…………………………………………………….. 5

02 MORTGAGE COVER POOL

Cover Pool Metrics…………………………………………………………….. 6

Residential Sub-Pool in figures………………………………………. 8

Commercial Sub-Pool in figures…………………………………….. 9

03 WHOLESALE MATURITIES

Wholesale Maturities profile………………………………………..… 10

04 ANNEXES

Macroeconomic Indicators……………………………………………. 11

Spanish Real Estate Markets…………………………………………. 12

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.

3

ATTRIBUTABLE PROFIT

€ 1,040 Mn

NET INTEREST INCOME

€ 2,740 Mn NEW LENDING(1)

+19.4%

CET1 PHASE IN

13.9% CET1 FULLY LOADED

12.3%

01. EXECUTIVE SUMMARY

Bankia Results

€

CUSTOMER FUNDS(2)

+3.4% €

BRANCHES

1,944 CUSTOMER FUNDS

€ 155,402 Mn

ATMs

5,598 POS TERMINALS

97,913

CUSTOMER LOANS

€ 115,973 Mn €

€

2015 HIGHLIGHTS

UNIVERSAL BANKING MODEL, based on multi-channel management, with a presence throughout Spain and high market shares in historical core regions.

BEST IN CLASS CORPORATE GOVERNANCE, optimal organizational structure and highly respected management team.

SOLVENT, EFFICIENT AND PROFITABLE INSTITUTION, the Group concludes 2015 with an ROE of 10.6%*, outperforming the 10% set as a priority target of the Strategic Plan 2012-2015.

CLEAN BALANCE SHEET, with reduced real estate developer exposure and high loan loss coverage.

SUSTAINABLE CAPITAL AND LIQUIDITY GENERATION. Comfortable solvency levels with a CET1 BIS III Phase In ratio of 13.9% and CET1 BIS III Fully Loaded ratio of 12.3%, as of December 2015.

POSITIVE COMMERCIAL DYNAMICS, with growth in new lending and an increase in retail customer funds. +19.4% growth in new lending to key segments (businesses & consumer) Dec 15 vs Dec 14.

(1) New lending to businesses and consumer. Does not include forberance. (2) Strict customer deposits plus off-balance-sheet customer funds.

(*) ROE post-IPO provision in 2015: 9%

4

2015 HIGHLIGHTS

MARKET SHARE OF HOUSEHOLD MORTGAGES 12.02% 12.25%

NEW LENDING(1) 15,532 13,211

COMMERCIAL ACTIVITY

NON-PERFORMING LOANS 13.0 €

16.5

NPL COVERAGE RATIO 60.0% 57.6%

NPL RATIO 10.8% 12.9%

ATRIBUTABLE PROFIT 1,040 €

747

CET1 BIS III FULLY LOADED 12.3% 10.6%

%

DEC 2015 DEC 2014

ASSET QUALITY DEC 2015 DEC 2014

PROFITABILITY & CAPITAL DEC 2015 DEC 2014

COST OF RISK 43 60 bps

%

%

€bn

€Mn

ROE (2) 10.6% 8.6%

€Mn

%

%

ISSUER RATINGS

LONG TERM OUTLOOK SHORT TERM

STANDARD & POOR’S

FITCH RATINGS(3)

BB Positive B

BBB- Stable F3


Bankia Results

(1) Does not include forberance. (2) ROE excluding the impact of the IPO contingency provision. (3) Feb-2016

1 COMMERCIAL ACTIVITY

+ €3.2 Bn Customer Funds vs. Dec14

+ 3,5% Loans to businesses and consumers, organic Dec15 vs. Dec14

2 EFFICIENCY & PROFITABLITY

43.6% Cost to Income ratio Dec15

10.6% ROE(3)

3 ASSET QUALITY

€ 3.5 bn NPL´s reduction vs Dec 14

60.0% Coverage ratio (+2,4 p.p. vs Dec 14)

4 CAPITAL GENERATION

+ 166 bps Capital generation in 2015 (CET1 BISIII FL)

MARKET SHARE OF BUSINESS LENDING

5.71% 5.74%

+ 39.2% Attributable Profit vs. Dec14

5


Covered Bonds Ratings

BANKIA’S RATINGS HAVE STRENGTHENED AS A RESULT OF THE IMPROVEMENT IN THE MATURITY PROFILE OF THE COVERED BONDS OUTSTANDING AND THE OVERCOLLATERALIZATION LEVEL, AND ULTIMATELY THE CHANGES IN METHODLOGY DUE TO THE BRRD FRAMEWORK.

Fitch Ratings raised Bankia’s covered bonds ratings by one notch from “BBB+” to “A-”, outlook Stable, on 6 April 2015. This action was a result of an improved OC level and the impact of Fitch’s revised methodology. Subsequently on 27 May, Fitch affirmed the rating at “A-”, outlook Stable, after considering the positive trend of Bankia’s OC level, resulting from the active management of its retained covered bonds, which provides sufficient margin to maintain the current rating level. On 16 September, Fitch affirmed Bankia’s covered bonds rating at “A-” and revised the outlook to Positive reflecting Bankia’s long-term rating outlook (BB+/Positive). Finally, on 26 February 2016, Fitch raised Bankia’s covered bonds rating to “A”, outlook Stable.

On 5 February 2015, having adapted its rating methodology, S&P affirmed Bankia’s covered bonds rating at “A”, outlook Negative. This rating was again affirmed in March after a new €1 billion covered bond issue. On 27 April, S&P revised the covered bonds outlook to Stable as a result of Bankia’s long-term rating being affirmed and its outlook being revised to Stable. On 13 October, following Spain’s sovereign upgrade on 2 October, S&P raised Bankia’s covered bonds rating from “A” to “A+”, maintaining the outlook Stable. Finally, on 15 January 2016, as part of its ongoing surveillance, S&P affirmed Bankia’s covered bonds rating at “A+”, outlook Stable.

On 26 March 2015, as a result of a new €1 billion covered bond issue, DBRS affirmed Bankia’s covered bonds rating at “A (high)”. On 26 May, DBRS placed Under Review with Developing Implications Bankia’s covered bonds programme after announcing a Request For Comments for its covered bonds methodology that proposes a new analysis for European covered bonds ratings that are subject to the Bank Recovery and Resolution Directive (BRRD). On 19 October, DBRS improved Bankia’s covered bonds rating by two notches from “A (high)” to “AA” after concluding it’s review of sovereign support and incorporating the revised covered bonds methodology, published on 8 September 2015. Finally on 21 January 2016, as a result of a new €1 billion covered bonds issue, DBRS affirmed Bankia’s covered bonds rating at “AA”.

A+ Stable

AA

2013 2014 2015 2016

BBB

A-

A

Fitch Ratings Standard & Poor’s

A-

BBB+

DBRS

2013 2014 2015 2016

A-

A+

2014 2015 2016

DBRS

A Stable

A+ AA A+ AA A

6

02. MORTGAGE COVER POOL

Cover Pool Metrics

AMPLE

ISSUANCE

CAPACITY

HIGH

OC

LEVEL

0

20.000

40.000

60.000

80.000

100.000

120.000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

STRONG

ELEGIBLE

COVER

POOL

COLLATERAL AND CB’s OUTSTANDING

81,543

66,879

49,501

39,601

32,460

7,141

Total Collateral Elegible Legal Issuance Issued

86% Residential

14% Commercial

74% of the cover pool eligible € 7,141

million Issuance Capacity

X 80%

2012 2013 2014 2015

X 2,06 over-collateralized

Collateral CB’s Outstanding

7


Cover Pool Metrics

Q4 2015 Q4 2014

Collateral Eligible Collateral Eligible

Outstanding (million €) 66,879 49,501 73,968 54,006

Number of loans 696,811 591,255 723,529 610,629

Number of debtors 624,852 542,585 643,643 556,182

Average Seasoning (months) 83 93 74 83

Life (months) 329 333 323 329

Time to maturity (months) 247 240 249 246

Average LTV 60% 50% 62% 51%

Q4 2015 Q4 2014


Residential 55,771 45,496 59,809 48,769

Commercial 7,809 1,991 10,368 2,783

SME 2,747 1,711 3,126 2,069

Developers 461 304 568 384

Land 92 0 96 0

0

5.000

10.000

15.000

20.000

25.000

0-40% 40%-60% 60%-80% 80%-100% >100%

Mill

ones

COLLATERAL LTV DISTRIBUTION

NPL RATIO

80% OF THE

COVER POOL

HAS A LTV

RATIO BELOW

80%

POSITIVE NPL’S

PERFORMANCE

WITH NPL RATIO

STANDING AT

6.26% AS OF 4Q15

7,67%

6,26%

Dic 14 Dic 15

Source: ECBC Label. In Spain a loan is doubtful when: Repayment is considered uncertain and some losses are expected; and also when the loan is in arrears: the obligor is past due more than 90 days on the mortgage credit obligation to the credit institution (that includes capital, interest payments..) or when the total amount due to the lender exceeds 25% of the mortgage debt (and it has not been considered as a default yet).

-141 bps

8

RESIDENTIAL PORTFOLIO


Residential Sub-Pool in figures

RESIDENCIAL

PORTFOLIO

ELIGIBILITY

STANDS AT 82%

AVERAGE LTV

OF THE

PORTFOLIO IS

51%

Q4 2015 Q4 2014


Outstanding (million €) 55,771 45,496 59,809 48,769

Number of loans 654,338 562,318 676,153 579,216



Life (months) 356 343 353 340


Average LTV 57,6% 50,7% 59% 52%

MATURITY DISTRIBUTION

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

20.000

1-5 5-10 10-20 20-30 >30

Mill

on

es

GEOGRAPHIC DISTRIBUTION Q4 2015

Madrid 18.913

C. Valenciana 8.766

Catalunya 8.195

Andalucía 5.181

Castilla La Mancha 3.059

Canarias 2.952

Castilla y León 2.466

Resto 6.240

91% LOANS FOR PRIMARY RESIDENCE

98% FIRST RANKED MORTGAGES

34%

15%

16%5%

4%

9%

5%

2%

1% 1%1%

1%1%

1%

1%

2%

9

COMMERCIAL PORTFOLIO

RESTRICTIONS

TO COMMERCIAL

MORTGAGE

LENDING IN

RECENT YEARS

AVERAGE LTV

OF THE

COMMERCIAL

PORTFOLIO

STANDS AT 38%

Q4 2015 Q4 2014


Outstanding 11,109 4,005 14,158 5,236

Number of loans 42,473 28,937 47,376 31,413



Life (months) 193 216 196 223


Average LTV 74,2% 37,2% 74% 40%

SPLIT BY INDUSTRY CODE

MATURITY DISTRIBUTION

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

1-5 5-10 10-20 20-30 >30

Mill

on

es


Commercial Sub-Pool in figures

Building & Materials

Real Estate

Business Services

Retail Energy Lodging/ Restaurants

Transport Industrial Food / Beverage / Tobacco

Leisure / Entertainment

Healthcare Consumer Products

Others

17%

14%

11% 9%

7% 7% 5%

3% 3% 3% 3% 3%

14%

10

03. WHOLESALE MATURITIES

Wholesale Maturities Amortizing Profile

5,709 1,154 2,281 2,655 127 512 10,929

Amount Outstanding (€Mn) 23,367

Covered Bonds (*) 19,721

Senior Debt 2,646

Subordinated debt 1,000

(*) Not including retained covered bonds

5.154

555

2.206 1.655

127 477

9.547

1.000

555

599

75 1.000

35

382

2016 2017 2018 2019 2020 2021 >2021

11

04. ANNEXES

Macroeconomic Indicators

0,8

1,00,9

0,7

0,50,5

0,30,3

0,1

-0,1

-0,3

3T 20152T 20151T 20154T 20143T 20142T 20141T 20144T 20133T 20132T 20131T 2013

SPAIN SOVEREIGN DEBT RATING

LONG TERM OUTLOOK SHORT TERM

STANDARD & POOR’S

FITCH RATINGS

BBB+ Stable A-2

BBB+ Stable F2

MOODY’S

DBRS

Baa2 Positive P-2

A- Positive R-1-

0%

5%

10%

15%

20%

25%

30%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1T15 2T15 3T15 4T15

“GROWTH

CONSOLIDATION

”

“FAVOURABLE

EMPLOYMENT

TREND”

“HOUSEHOLD

SPENDING, MAIN

DRIVER OF THE

ECONOMY”

€

Sales (deflated and seasonally adjusted)

6,1

3,9

2,73,3

3,9

3,22,4

4,1

3,1

4,6

6,0

3,3

2,2

DIC14 ENE15 FEB15 MAR15 ABR15 MAY15 JUN15 JUL15 AGO15 SEP15 OCT15 NOV15 DIC15

RETAIL TRADE INDEX (Annual Rate %)

UNEMPLOYMENT RATE IN SPAIN

QUARTERLY SERIES GDP. PREVIOUS QUARTER RATE (%)

12

04. ANNEX

Spanish Real Estate Market

MORTGAGES CONSTITUTED OVER DWELLINGS

EVOLUTION OF THE QUARTERLY RATE OF THE GENERAL HPI

“Mortgages

over dwellings

increase 14%

from Q3-2014”

“The price of

housing increases

0.7% as compared

with the previous

quarter”

“Second-hand

housing prices

increased by

0.7% ”

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015 Q2-2015 Q3-2015

0,7

4,2

-0,6

0,20,2

1,7

-0,3-1,3

0,7

-0,8

-6,6

Q3-2015Q2-2015Q1-2015Q4-2014Q3-2014Q2-2014Q1-2014Q4-2013Q3-2013Q2-2013Q1-2013

EVOLUTION OF THE QUARTERLY RATE OF THE HPI BY TYPE OF HOUSING

0,6

1,52,2

-0,1

1,20,60,1

-1,2

2,3

-2,4

-6,8

0,7

4,6

-1,0

0,30,0

1,9

-0,4

-1,3

0,1

-0,1

-6,5

Q3-2015Q2-2015Q1-2015Q4-2014Q3-2014Q2-2014Q1-2014Q4-2013Q3-2013Q2-2013Q1-2013

New housing Second-hand housing

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

3Q 2015. ANNUAL VARIATION RATE OF THE HPI BY AUTONOM. COMMUNITY

Covered Bonds Investor Presentation...4 2015 HIGHLIGHTS MARKET SHARE OF HOUSEHOLD MORTGAGES 12.02%...

Documents

Transcript of Covered Bonds Investor Presentation...4 2015 HIGHLIGHTS MARKET SHARE OF HOUSEHOLD MORTGAGES 12.02%...