Quarterly results presentation 1Q 2014

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The BFA-Bankia Group achieved a profit after tax of 250 million euros in the first quarter of the year, 17.4% more than in the same period of the previous year, when the figure was 213 million. The difference between the income statement of BFA and that of Bankia lies mainly in the dividends that BFA receives from its investees.
Bankia recorded a profit after tax of 186 million euros in the first quarter of 2014, an increase of 38.5% compared to the pro forma profit of the same period of 2013. First quarter earnings were up 157.1% on accounting earnings for the first quarter of 2013, which were affected by the subordinated loan granted by BFA to Bankia.
The chairman of the BFA-Bankia Group, José Ignacio Goirigolzarri, stated that "these results confirm that the bank is on the right track: core banking business revenue has improved, cost reduction efforts are continuing, and both the balance of non-performing loans and the non-performing loan ratio have been reduced".

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Quarterly results presentation 1Q 2014

  1. 1. Quarterly results presentation 1Q 2014 28 April 2014
  2. 2. 2 of 27 / April 2014 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. 3. 3 of 27 / April 2014 Contents 1. Highlights of the quarter 2. 1Q 2014 Results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions
  4. 4. 4 of 27 / April 2014 Highlights of the quarter COMMERCIAL ACTIVITY AND PLAN DEVELOPMENTS MARKET CONFIDENCE RESTORED COMMERCIAL ACTIVITY DYNAMIZATION 1 MAJOR PROGRESS IN DIVESTMENT PLAN FINANCIAL PERFORMANCE SIGNIFICANT LIQUIDITY AND CAPITAL GENERATION 2 CONTINUED IMPROVEMENT IN CORE BANKING BUSINESS EFFICIENCY RATIO IMPROVEMENT NPL RATIO REDUCTION AND INCREASED COVERAGE
  5. 5. 5 of 27 / April 2014 Highlights of the quarter COMMERCIAL ACTIVITY DYNAMIZATION New loans in 1Q 2014 totalled more than €2,800m, 26% more than in the same period of 2013 €Mn 1 NEW LOANS 1Q 2014LENDING MARKET SHARES INCREASED Market shares of new loans in main segments increase sharply Source: ICO Source: BdE Feb 13 Feb 14 CONSUMER 6.28% 9.61% +333 bps Businesses < €1m 3.45% 11.05% +760 bps Businesses > €1m 1.62% 11.35% +973 bps ICO financing 2.30% 11.99% +969 bps Mar 13 Mar 14 New lending 1.930,9 647,7 221,3 Businesses Retail Mortgages Consumer
  6. 6. 6 of 27 / April 2014 Highlights of the quarter COMMERCIAL ACTIVITY DYNAMIZATION1 Total customer funds grew by €1.7 bn compared to year-end 2013, in an environment in which the cost of term deposits fell 46 bps compared to 4Q 2013 TOTAL CUSTOMER FUNDS DEC 13 MAR 14 Var. 157.5 159.2 + 1.7 ON-BALANCE-SHEET CUSTOMER FUNDS 136.7 137.5 + 0.8 €Bn 20.8 21.7 + 0.9 OFF-BALANCE-SHEET CUSTOMER FUNDS Priv. sector deposits mkt. share % DEC 13 8.66% FEB 14 8.75%+9 bps Mutual Funds market share % DEC 13 4.82% MAR 14 4.92%+10 bps Source: BdE Source: BdE
  7. 7. 7 of 27 / April 2014 Highlights of the quarter MAJOR PROGRESS IN DIVESTMENT PLAN1 MAIN DIVESTMENTS More than 50 divestments in participated companies since the beginning of the year FEB 14 MAR 14 Sale of equity stake in NH Hoteles for €123 million Restructuring of the life and non-life bancassurance business with Mapfre (includes sale of 51% of Aseval) Sale of three portfolios of doubtful and bad loans totalling €713 million Sale of 70.2% of the capital of Bancofar, S.A. to Banco Caminos, S.A. LIQUIDITY GENERATED IN BANKIA GROUP TO DEC 2013 €1,272 million DEC 2013 - TO DATE €197 million PENDING REGULATORY APPROVAL * €791 million TOTAL €2,260 million More than €2,200 million of liquidity generated to date * Pending approval: CNB, Bancofar and Aseval
  8. 8. 8 of 27 / April 2014 Highlights of the quarter SALE OF 7.5% OF BANKIA BY BFA No. of shares sold Total amount Discount on prev. day’s price 863,799,641 €1,304 million 4.4% Selling price (€) €1.51 % of Bankia’s capital 7.50% Issued volume Maturity Spread Oversubscription €1,000 million 17/01/2019 MS + 235 bps 3.5x # Orders > 250 orders SENIOR DEBT ISSUANCE Oversubscription ≈ 2.0x Financial markets believe in Bankia’s project MARKET CONFIDENCE RESTORED1
  9. 9. 9 of 27 / April 2014 Highlights of the quarter Efficiency ratio ex net trading income is already around 49% PRE-PROVISION PROFIT EX NET TRADING INCOME EFFICIENCY RATIO EX TRADING INCOME (1) 62.1% 60.1% 54.2% 52.6% 49.3% 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 % INCREASE IN CORE BANKING INCOME AND IMPROVEMENT IN THE EFFICIENCY RATIO2 (1) Efficiency ratio excluding net trading income and exchange differences €Mn 1Q13 297 2Q13 338 3Q13 397 4Q13 419 1Q14 468 + 57.6% + 11.7% 89 53 (1) Figures adjusted for the financing cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013.
  10. 10. 10 of 27 / April 2014 Highlights of the quarter Cost of risk capped at 69 bps NPL €Bn DEC 13 20.0 MAR 14 19.2 - 0.8 bn NPL RATIO % DEC 13 14.7% MAR 14 14.3% - 34 bps NPL COVERAGE % DEC 13 56.5% MAR 14 57.4% + 92 bps NPL RATIO REDUCTION AND INCREASED COVERAGE2
  11. 11. 11 of 27 / April 2014 Highlights of the quarter LOANS TO DEPOSITS EBA CORE TIER 1 RATIO % DEC 13 115.4% MAR 14 111.9% -3.5 p.p. % DEC 13 11.71% MAR 14 11.96% +25 bps Liquidity ratios improve significantly Solid capital generation SIGNIFICANT LIQUIDITY AND CAPITAL GENERATION2 LTD ratio: (Net credit / (retail commercial paper + strict customer deposits + ICO/EIB deposits + single-certificate covered bonds)
  12. 12. 12 of 27 / April 2014 Contents 1. Highlights of the quarter 2. 1Q 2014 Results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions
  13. 13. 13 of 27 / April 2014 The pro forma income statement for 1Q 2013 excludes the cost of the subordinated loan by BFA to Bankia in the amount of €89m in Q1 2013, which was cancelled on 23 May 2013. 1Q 2014 Results Pro forma income statement – Bankia Group A B C Net interest income Gross income Operating expenses Pre-provision profit Provisions and others D 1Q 2013 601 957 (494) 463 (272) 1Q 2014 698 930 (441) 489 (221) Var. % 16.1% (2.8%) (10.7%) 5.6% (18.8%) Profit after tax 134 186 38.5% Var. € 97 (27) (53) 26 (51) 52 €Mn Fee and commission income 225 231 2.7%6 Gross income ex net trading income 791 909 14.9%118 E Taxes (57) (82) 43.9%(25) Pre-provision profit ex net trading income 297 468 57.6%171
  14. 14. 14 of 27 / April 2014 Quarterly performance of net interest income 1Q 2014 Results Loan yield vs. cost of deposits (1) €Mn (1) Figures adjusted for the financing cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. 1Q13 601 2Q13 633 3Q13 643 4Q13 690(1) (1) 89 53 1Q14 698 + 16.1% Net interest income up 16.1% in 1Q 2014 vs. 1Q 2013 Significant reduction in cost of deposits Gross customer spread reached 1.12%, up 30 bps on 4Q 2013 A Core banking business: Net interest income Consolidation of the positive trend in net interest income (1) The series exclude the effect of City National Bank, the sale of which is expected to be approved during 2Q 2014 1.89% 1.74% 1.70% 1.57% 1.33% 0.81% 0.81% 0.68% 0.82% 1.12% 2.70% 2.55% 2.38% 2.39% 2.44% 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 Cost of customer deposits Gross customer spread Loan yield
  15. 15. 15 of 27 / April 2014 Quarterly performance of fee and commission income 1Q 2014 Results Performance of core banking business €Mn 1Q13 225 2Q13 225 3Q13 237 4Q13 249 1Q14 231 + 2.7% Stable capacity to generate fee and commission income and steady improvement in core banking business: +12.5% compared to 1Q 2013 1Q13 825 1Q14 928 +12.5% Core banking business: Fees and commissions Higher fee and commission income compared to same period previous year €Mn Core banking business = net interest income + fee and commission income A
  16. 16. 16 of 27 / April 2014 Quarterly performance of gross income 1Q 2014 Results Gross income ex net trading income €Mn (1) Figures adjusted for the financing cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. 791 1Q13 957 826 2Q13 958 861 3Q13 945 878 4Q13 912(1) (1) 909 1Q14 930 + 1.9% Positive trend in gross income continues in first quarter of 2014 Gross income excluding net trading income improves 14.9% 166 132 84 34 21 Net trading income Gross income ex net trading income Gross income Gross income evolves positively 89 53 1Q13 791 1Q14 909 +14.9% €Mn B 89 + 3.5%
  17. 17. 17 of 27 / April 2014 Quarterly performance of operating expenses 1Q 2014 Results Efficiency ratio ex net trading income €Mn 1Q13 494 2Q13 488 3Q13 464 4Q13 459 1Q14 441 - 10.7% Proven capacity to continually reduce operating expenses - 3.9% Efficiency ratio ex net trading income already at 49.3% Operating expenses Sustained reduction of operating expenses 62.1% 60.1% 54.2% 52.6% 49.3% 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 % (1) Efficiency ratio excluding net trading income and exchange differences C - 12.8 p.p.
  18. 18. 18 of 27 / April 2014 1Q 2014 Results Pre-provision profit Strong performance in core banking business, combined with continued decline in costs, drives pre-provision profit growth: +58% 1Q13 vs 1Q14 1Q13 463 1Q14 489 + 5.6% Pre-provision profit Solid trend of pre-provision profit Pre-provision profit ex net trading income €Mn 1Q13 297 2Q13 338 3Q13 397 4Q13 419 1Q14 468 + 57.6% + 11.7% €Mn 89 53 (1) Figures adjusted for the financing cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. 89 D
  19. 19. 19 of 27 / April 2014 1Q 2014 Results Net profit rises to €186 million, up 38.5% compared with same period previous year RECURRING COST OF RISK 1Q 2014 69 bps Pre-provision profit Profit from sales and others Profit on discontinued operations Provisions 463 0 0 (272) 1Q 2013 (1) 489 62 21 (303) 1Q 2014 Profit after tax 134 186 Profit after tax Profit generation capacity in line with Plan estimates (1) Figures adjusted for the financing cost associated with the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013.. +38.5% €Mn E
  20. 20. 20 of 27 / April 2014 Contents 1. Highlights of the quarter 2. 1Q 2014 Results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions
  21. 21. 21 of 27 / April 2014 Trend of NPL, NPL ratio and NPL coverage NPL Total risk assets NPL ratio NPL coverage (1) €Bn DEC 2013 136.7 14.7% 56.5% (1) Loan loss provisions / NPL Asset quality and risk management Credit quality Decrease in NPL and reduction of NPL ratio MAR 2014 134.0 14.3% 57.4% Organic reduction / sale of portfolios Trend of NPL NPL - Dec 2013 + Gross additions - Recoveries 20.0 - Write-offs NPL - Mar 2014 + 0.9 - 1.4 - 0.1 19.2 Net additions - 0.5 NPL’s down €0.8 bn (€0.5 bn through organic reduction, €0.3 bn through portfolio sales); NPL ratio down 34 bps to 14.3%; and NPL coverage ratio up 92 bps reaching 57.4% 34 bps 92 bps - Sales - 0.3 €Bn 20.0 19.2€0.8 bn - 62 bps NPL formation +28 bps Denominator effect
  22. 22. 22 of 27 / April 2014 Bankia Group data. €Mn Balance of credit exposure and coverage ratios Asset quality and risk management Credit quality Prudent provisioning allows for steady increase in coverage ratios Increase in Businesses and RE developers coverage ratios, with Total portfolio (ex-RE developers) coverage ratio standing at 7.2% DEC 13 82.2 MAR 14 81.1 3.5% COVERAGE RATIOS Retail customers 3.5% DEC 13 37.8 MAR 14 36.8 16.2% Businesses 16.4% DEC 13 3.9 MAR 14 3.5 42.7% Real Estate developers 44.7% DEC 13 129.8 MAR 14 127.6 8.2% Total portfolio 8.2% GROSS EXPOSURE DEC 13 126.0 MAR 14 124.1 7.2% Total portfolio (ex-RE developers) 7.2% €Bn
  23. 23. 23 of 27 / April 2014 Contents 1. Highlights of the quarter 2. 1Q 2014 Results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions
  24. 24. 24 of 27 / April 2014 Bankia Group data. €Bnn LTD ratio (%) Commercial GAP LTD ratio reached 111.9%, while Commercial GAP descends to €21.6 Bn 111.9 1Q13 120.9 €Bnn% 2Q13 3Q13 4Q13 1Q14 118.2 116.7 115.4 21.632.8 29.6 27.6 25.1 1Q13 2Q13 3Q13 4Q13 1Q14 - 34.1%- 9 p.p Liquidity and solvency Liquidity indicators Main liquidity indicators show a positive trend - 3.5 p.p - 13.9% LTD ratio: (Net credit / (retail commercial paper + strict customer deposits + ICO/EIB deposits + single-certificate covered bonds)
  25. 25. 25 of 27 / April 2014 Liquidity and solvency Capital generated organically Strong capital generation in the quarter EBA CET1 ratio BIS III phase-in CET1 ratio EBA Core Tier 1 capital ratio c. 12% MAR 14DEC 2013 Organic capital generation 10.91%10.69% MAR 14DEC 2013 Organic capital generation 11.96%11.71% +25 bps +22 bps BIS III fully loaded ratio increases to 9.12%
  26. 26. 26 of 27 / April 2014 Contents 1. Highlights of the quarter 2. 1Q 2014 results 3. Asset quality and risk management 4. Liquidity and solvency 5. Conclusions
  27. 27. 27 of 27 / April 2014 Conclusions Positive performance in customers deposits, following completion of branch network restructuring Core banking revenues growing again, with continued reductions in operating expenses Back to normality for Bankia in the financial markets (fixed income and equity) Efficiency ratio already below 50% Capital ratio improves during one more quarter NPL ratio reduction with increased coverage We continue to make progress in the accomplishment of the goals of our Strategic Plan
  28. 28. Investor Relations ir@bankia.com

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