Financials Conference - Bankia...2016/09/29 · Financials Conference London 29th September 2016 2...
Transcript of Financials Conference - Bankia...2016/09/29 · Financials Conference London 29th September 2016 2...
BoAML Financials Conference
London 29th September 2016
2 / September 2016
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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.
Disclaimer
3 / September 2016
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Landscape has changed during the last years
“New normal”: profitability and valuations
2007 2016 June
Cost of risk 41 bps 70 bps
Cost to income 71% 65%
Euribor 12M 4.75% -0.05%
ROE 15.5 % 3.6%
Regulatory uncertainty
P / BV X 2.2 X 0.5
Internal factors
External factors
Low ROE
- 77%
&
Low valuations
+71%
26 banks Eurostoxx index
Capital ratios* 6.1% 12.2%
Capital ratios: 2007 Core capital ratio, 2016 June B3 CET1 FL. Source Bloomberg
4 / September 2016
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Low valuations driven by low returns and regulatory uncertainty
ROE improvement is not reflected in current valuations
ROE is low but recovering…
European banks ROE (%) evolution
…while valuations are at historical lows
-10
-5
0
5
10
15
20
ROE (%) European banks P/BV evolution (2013 – June 2016)
P/BV
Increase in ROEs since 2013 have not been matched by valuation improvements
26 banks Eurostoxx index
0,80 0,77
0,74
0,49
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1,0
(2013 – June 2016)
26 banks Eurostoxx index
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0
0,5
1
1,5
2
2,5
3
3,5
4Average P/BV
The market is not discriminating
We are in a low valuation and low discrimination environment
High valuation and high discrimination
* Source: 26 banks Eurostoxx index, Bloomberg
P/BV evolution for European banks*
Low valuation and low discrimination
P/BV
Avg. 1.8
Max 3.6
Avg. 0.68
Max 1.7
(2008 – June 2016) (2000 – 2007)
European banks P/BV evolution
P/BV
Min 0.5
Min 0.1
1.7x
0.1x
0.5x
3.6x
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Regulatory clearance and ROE recovery should lead to price discrimination
But Regulatory uncertainty is approaching to an end…
TLAC
MREL
AT1 Coupons
SREP & MDAs
Basel IV
We expect several of these items to be cleared in the coming months, bringing
certainty to the market with regards to…
Capital Management
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… and Spain is now registering solid macro improvements
GDP Growth
Unemployed population
SPAIN
EMU
Gro
wth
(%
)
Strong GDP growth above EMU and above expectations at ~3% for 2016 and 2.5% for 2017
Unemployment rate down -27% since peak (-1.34 million)
Increase in house prices for 9 consecutive quarters (+9,9% since bottom)
The number of tourists at record levels During Jan-Jul 2016 reaches 42.4 million (+11.1% vs
same period in 2015)
sources INE, Mº Empleo, Bank of Spain and Bankia Research
NPLs following the good evolution of the macro (-37% since December 2013)
4.85
DEC 2012
4.70
DEC 2013
4.45
DEC 2014
4.09
DEC 2015
3.70
AUG 2016
mn
Source: Ministry of Employment
Helping to strengthen banks’ balance sheet …
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Low interest rates
Mortgage floors
Fixed income portfolios
Equity stakes contribution
Trading income
Total Revenues
Operating Costs
Cost of Risk
61.0% recurrent C/I ratio
Low interest rates
Fixed income portfolios
82 bps Cost of Risk 2Q16
24 bps Cost of Risk 2Q16
*Weighted average figures for the biggest 6 banks in Spain excluding Bankia. Santander and BBVA include Banking and Real Estate activity in Spain.
1.52% NII+fees-opex / RWAs
50.5% recurrent C/I ratio
1.90% NII+fees-opex / RWAs
Challenges ahead … for the Spanish industry* …and for Bankia
… that increases the focus on the lower part of the P&L
Levers… for the Spanish industry* …and for Bankia
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Bankia´s focus: “Looking for Answers “
EFFICIENCY COMMERCIAL
STRATEGY
5
ASSET QUALITY
PROFITABILITY
3
1 2
SOLVENCY
4
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Loans outstanding without portfolio sales (€bn) Lending to target sectors continues to grow
Consumer performance Businesses performance (ex developer)
Consumer + Businesses (ex developer)
Outstanding gross loans performance (ex portfolio sales (1)) Consumer + Businesses (€bn)
Outstanding gross loans performance (ex portfolio sales (1)) Consumer + Businesses (€bn)
(1) Portfolio sales include non-performing and substandard loans
(1) Portfolio sales include non-performing and substandard loans
DIC 15
+2.5 %
JUN 15 JUN 16
38.1 37.8 37.1
+9.2% +14.7%
JUN 16 vs JUN15 JUN 16 vs JUN 15
Bankia Spanish market
-1.8%
+1.6%
JUN 16 vs JUN15 JUN 16(2) vs JUN 15
Bankia Spanish market
Commercial Strategy 1
(2) Latest data available. Source Bank of Spain
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%
Cost to Income Ratios
BANKIA
46.5%
*Weighted average cost to income ratio for the biggest 6 banks in Spain excluding Bankia. Santander and BBVA include Banking and Real Estate activity in Spain.
Cost to Income 2Q16 Recurrent Cost Income
2Q16
Spanish peers*
65.4%
%
Operating Expenses / RWAs
2Q16
2.01%
Bankia Spanish peers *
2Q16
2.96%
BANKIA
50.5% 61.0%
- 95 pbs - 1,890pbs - 1,055 pbs
Efficiency
Bankia’s leading position
2
Lower Opex/RWAs represents up to 5p.p. in ROE*
*Calculated assuming equity CET1 of 12.5% and Post 30% tax rate (95pbs/12.5% CET1 * 70%)
*Weighted average ratio or the biggest 6 banks in Spain excluding Bankia. Santander and BBVA include Banking and Real Estate activity in Spain.
Spanish peers* Euro Banks**
54.1%
** 26 banks Eurostoxx index. Source Bloomberg
12 / September 2016
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Effective NPA reduction strategy and sharp drop in Cost of Risk
Asset Quality 3
NPLs and foreclosed assets Jun16-Dec14 NPAs evolution Jun16-Dec14
2Q 16
60.8%
Spanish peers(1)
51.9%
+895pbs
2Q 16
0.9%
5.7%
6.6x
2014
60
2013
74
2015
pbs
2Q 16
24 43
Spanish peers (3)
82
€ bn % -4.8
-5.4
-5.0
-4.0
-0.9
-3.1
-0.5
+0.4
+0.7
-0.4
+2.3
-5.3
-5.0
-4.5
-3.2
-1.3
-0.8
Bankia
Spanish Peer 1
Spanish peers include: BBVA, Caixabank, Popular, Sabadell and Santander. Santander and BBVA include Banking and Real Estate activity in Spain
+0.4
Cost of Risk evolution RE exposure NPL Coverage
Spanish peers include: BBVA, Caixabank, Popular, Sabadell and Santander. Santander and BBVA include Banking and Real Estate activity in Spain
Euro Banks(4)
70
1 Sector weighted average 2Q16 of the biggest 6 banks in Spain excluding Bankia. Santander and BBVA include Banking and Real Estate activity in Spain. Source: semiannual accounts; 2 Same perimeter, Spanish businesses exposure to developers as a % of gross loan book. Source: semiannual accounts 3 Same perimeter, average figure 4 26 banks Eurostoxx index. Source Bloomberg
Spanish peers(2)
-2%
-4%
-10%
-18%
-19%
-26%
-30% -25% -20% -15% -10% -5% 0%
Spanish peer 5
Spanish peer 4
Spanish peer 3
Spanish peer 2
Spanish peer 1
Bankia
Spanish Peer 2
Spanish Peer 3
Spanish Peer 4
Spanish Peer 5
Bankia
Spanish Peer 1
Spanish Peer 2
Spanish Peer 3
Spanish Peer 4
Spanish Peer 5
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Managing the profitability levers in today’s environment…
Best in class
Cost to Income Ratio
Low Cost of Risk
Bankia has proven to be well positioned in the current environment with a higher return on equity than peer´s average
Pressure on
Gross Margin
Bankia
8.2%
Spanish peers*
3.6%
4.6 p.p.
*Aggregated ratio for the domestic peers: Sabadell, Caixabank and Popular.
ROE June 2016
b
b
…allows Bankia to be ahead of peers in profitability
Bankia ahead of its peers in profitability…
Profitability 4
Euro Banks **
3.8%
** 26 banks Eurostoxx index. Source Bloomberg
14 / September 2016
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CET 1 BIS III Fully Loaded
11.37%
Confortable position to fulfill new regulatory requirements
Robust solvency position, allowing the distribution of cash dividends
SOUND CAPITAL POSITION 5
BANKIA
12.89%
Spanish peers(1)
+158 bps y/y +23 bps y/y
(1) Aggregated ratio for the domestic peers: Sabadell, Caixabank and Popular. Popular 2016E CET1 FL of 10.8% as disclosed by the Company.
TBV PER SHARE PERFORMANCE (JUN 13 – JUN 16)
%
Spanish banks include: BBVA, Caixabank, Popular, Sabadell and Santander (Data as of June 2016)
12.17%
Euro Banks(2)
+76 bps y/y
(2) Banks Eurostoxx index ex Bankia. Source Bloomberg
-37%
-26%
-14%
-3%
-1%
-1%
19%
-40% -30% -20% -10% 0% 10% 20% 30%
Spanish bank 5
Spanish bank 4
Spanish bank 3
Spanish bank 2
Average Euro Banks*
Spanish bank 1
Bankia
* Banks Eurostoxx index ex Spanish banks. Source Bloomberg
15 / September 2016
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…where cost efficiency is 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 with a solid Capital position, allowing dividend payments in spite of
increasing regulatory requirements
Conclusions
A challenging environment requires a solid starting point…
…in order to continue generating value for our shareholders
Investor Relations