STRATEGIC PLAN 2012-2015Grupo Banco Financiero y de AhorrosNovember 2012
2 of 50November 2012DisclaimerThis material has been prepared by Group Banco Financiero y de Ahorros (Group BFA) for infor...
3 of 50November 2012Recent eventsJUNE 21st Top-down analysis of Spanish financial institutions (Oliver Wyman – Roland Berg...
4 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic ...
5 of 50November 2012Starting point: results of OW stress test – capital needsGroup recapitalisation – stress testEXPECTED ...
6 of 50November 2012Reduction of Real Estate risk after transfer to SAREBGroup recapitalisation – impact of SAREBTotal Gro...
7 of 50November 2012Capital impact of the exchange of hybrid instrumentsBurden-sharing required by MoUExchange of hybrid i...
8 of 50November 2012BFA Group capital needs – Oliver Wyman adverse scenario 24.7Impact on capital needs due to transfer of...
9 of 50November 2012Group recapitalisation – timelineNext stepsCapital injection in BFA Group (Dec 2012)Approval of Recapi...
10 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic...
11 of 50November 2012Provisions planned for 2012Real Estate exposureRest of credit portfolio (SMEs and retail)InvesteesTOT...
12 of 50November 20122012 provisions for Real Estate exposureA Real Estate exposure 11.4Stock ofprovisions2011Required byR...
13 of 50November 20122012 provisions, rest of credit portfolioB Rest of credit portfolio (SMEs and retail)Stock ofprovisio...
14 of 50November 20122012 provisions for investeesC InvesteesInvestee risk 2011 Provisions 2012 Investee risk 2012e4.35.4 ...
15 of 50November 2012Provisioning scheduleAsset quality: provisioning scheduleTotalprovisions201224.812.6Real Estate(capit...
16 of 50November 2012Compliance with solvency ratios – BFA GroupBFA GROUP 2011EBA Core Tier 1 (€ bn)7.2ADJUSTMENTSBFA GROU...
17 of 50November 2012Compliance with solvency ratio – BankiaBankia GROUP 2011EBA Core Tier 1 (€ bn)12.6ADJUSTMENTSBankia G...
18 of 50November 2012Recapitalisation plan impact on BFA Group liquidityBFA Group liquidity positionLiquid assets cover 89...
19 of 50November 2012BFA Group capital increase impactGroup recapitalisation - SummaryAsset qualityLiquiditySolvencyAfter ...
20 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic...
21 of 50November 2012Starting pointHIGH FRANCHISE VALUE1Broad customer base> 7.5 million customers, with a closerelationsh...
22 of 50November 2012Starting point2A BALANCE SHEETASSET QUALITYCAPITALLIQUIDITYB PROFIT & LOSS ACCOUNTPROFITABILITYEFFICI...
23 of 50November 2012Starting pointSTRATEGIC PLAN2012 -2015RESTRUCTURINGPLAN2012-2017ECONOMICOUTLOOKSTRATEGIC PLAN 2012-20...
24 of 50November 2012Restructuring Plan 2012 - 2017Improvements from ourStarting PointCAPITALISATIONASSETCOVERAGELIQUIDITY...
25 of 50November 2012Economic outlookEuribor 12M, 2011 - today0,5000,7000,9001,1001,3001,5001,7001,9002,1002,300ene‐11feb‐...
26 of 50November 2012Strategic Plan 2012-2015Strategic Plan objectivesIMPROVINGOURPROFITABILITY IMPROVING BANK’S OVERALL E...
27 of 50November 2012Profitability: Strengthening our COMPETITIVE POSITIONING 1OUR KEY STRENGTH: LARGE CUSTOMER BASEOUR OB...
28 of 50November 2012Profitability: ASSET MIX Rebalancing 1NON-STRATEGIC ASSETS DISPOSAL1VOLUMEOFNON-STRATEGICASSETS€90 bn...
29 of 50November 2012Profitability: ASSET MIX Rebalancing 1TRANSFORMATION OF THE CREDIT PORTFOLIOBBreakdown of credit port...
30 of 50November 2012Profitability: Improving our EFFICIENCY 144%46%54%1%70%5%3%277%65%-10%High Value Customer20% ofbest b...
31 of 50November 2012Profitability: Improving our EFFICIENCY 1This is done by countryBranches 2012 – 2015 Workforce 2012 –...
32 of 50November 2012Our way to profitability 1The restructuring exercise and revenue-generating initiatives will lead the...
33 of 50November 2012Profitability: Minimizing our COST OF RISK 1Cost of risk2013-2015≈ 50 - 55 bpsGOOD STARTING SITUATION...
34 of 50November 2012Strategic Plan 2012-2015Strategic Plan objectivesIMPROVINGOURPROFITABILITY IMPROVING BANK’S OVERALL E...
35 of 50November 2012Liquidity: action linesLIQUIDITY GENERATION CAPACITYA2BFA Group data, € billionsLIQUIDITY generated d...
36 of 50November 2012Solvency: action linesSUSTAINABLE CAPITAL MODELB22015eEBA Core Tier 1 capital ratio (%) > 14.5%(2)Tot...
37 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic...
38 of 50November 2012Return to be a solid andsustainable financial institution,among the best in Spanishcommercial banking...
39 of 50November 2012ConclusionsSOLVENCYGroup will make a qualitative leap in terms of resilience, profitability and effic...
40 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic...
41 of 50November 2012APPENDIX – BFA GROUP
42 of 50November 2012Key financials, BFA GroupsAppendix I: BFA Group - FinancialsGross MarginTotal expensesPre Provision P...
43 of 50November 2012Banco Financiero y de Ahorros, S.A. – Holding structureAssets LiabilitiesFixed Income PortfolioGovern...
44 of 50November 2012APPENDIX – BANKIA GROUP
45 of 50November 2012Asset transfer to SAREB – Bankia Group levelAppendix I: Bankia Group – impact of SAREBBankia Group da...
46 of 50November 2012Provisions ScheduleBankia Group data, € bnAppendix II: Bankia group – Provisions ScheduleTotalprovisi...
47 of 50November 2012Recapitalisation plan impact on Bankia Group liquidityAppendix III: Bankia Group liquidity positionLi...
48 of 50November 2012Appendix IV: Bankia Group – Credit portfolio risk and coverageOnce the asset transfer to SAREB is com...
49 of 50November 2012Breakdown of on-balance-sheet Real Estate exposureA BFA Group Real Estate exposure after SAREBAppendi...
50 of 50November 2012Key financials, Bankia GroupAppendix VI: Bankia Group - FinancialsFigures in € bn and %Gross MarginTo...
51 of 50November 2012Investor Relationsir@bankia.com
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STRATEGIC PLAN 2012-2015

  1. 1. STRATEGIC PLAN 2012-2015Grupo Banco Financiero y de AhorrosNovember 2012
  2. 2. 2 of 50November 2012DisclaimerThis material has been prepared by Group Banco Financiero y de Ahorros (Group BFA) for information purposes only. It doesnot constitute a prospectus, offering, or recommendation of investment.This document shall not constitute an underwriting commitment, an offer of financing, an offer to sell, or the solicitation of anoffer to buy any securities of BFA, Bankia or any subsidiary of Group BFA, which shall be subject to internal Group BFAapprovals.Group BFA does not guarantee the accuracy or completeness of information which is contained in this document and which isstated to have been obtained from or is based upon trade and statistical services or other third party sources. Any data onpast performance, modelling or back‐testing contained herein is no indication as to future performance. No representation ismade as to the reasonableness of the assumptions made within or the accuracy or completeness of any modelling orback‐testing.All opinions and estimates are given as of the date hereof and are subject to change. The value of any investment mayfluctuate as a result of market changes. The information in this document is not intended to perform predictions and noassurances are given with respect thereto.Any forward‐looking statements speak only as of the date on which they are made and are based on the information availableon the date on which they are made; such information may change at any time. Group BFA does not undertake any obligationto update or revise any forward‐looking statement, whether as a result of new information, future events or otherwise.The distribution of this presentation in certain jurisdictions may be restricted by law. Recipients of this presentation shouldinform themselves about and observe such restrictions.This document does not disclose all the risks and other significant issues related to an investment in thesecurities/transactions of Bankia, BFA or any subsidiary of Group BFA. Prior to transacting, potential investors should ensurethat they fully understand the terms of the securities/transaction and any applicable risks. This document is not a prospectusfor any securities described herein.
  3. 3. 3 of 50November 2012Recent eventsJUNE 21st Top-down analysis of Spanish financial institutions (Oliver Wyman – Roland Berger)JULY AND AUGUSTSEPTEMBER 28thNOVEMBER 16thPublication of Memorandum of Understanding (“MOU”) and Royal Decree 24/2012• Requirements for incorporation of the asset management company (SAREB)• Imposition for liability management exercisesPublication of Oliver Wyman’s stress test results. Identification of BFA Group capital needs:• €13.2 bn in baseline scenario• €24.7 bn in adverse scenarioNOVEMBER 28thDefinition of Royal Decree regulating SAREB. Definition of the perimeter and transferprices of the assets to be transferredFinal approval of the restructuring plan by the European authorities
  4. 4. 4 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic Plan for 2012‐20154. ConclusionsAppendixContents
  5. 5. 5 of 50November 2012Starting point: results of OW stress test – capital needsGroup recapitalisation – stress testEXPECTED LOSSESBaseline (9%)29.6Adverse (6%)42.7CAPITAL NEEDS FOR 9%/6% CT1 (EBA) €13.2 €24.7EXISTING PROVISIONS (2011) (19.8) (19.8)PROVISION SHORTFALL 9.8 22.9OTHER (1) 3.4 1.8BFA Group data, € billions(1) Capital buffer + Pre Provision Profit generation 2012 – 2014 + Tax effect
  6. 6. 6 of 50November 2012Reduction of Real Estate risk after transfer to SAREBGroup recapitalisation – impact of SAREBTotal GrossReal EstateRisk(Data as ofJune 30th)Net RealEstate riskafter discounton transfer toSAREBNet RealEstate risk onthe balancesheet aftertransfer toSAREBReal EstateDeveloper41.3Real EstateAssets15.9Discount dueto transferprice toSAREB27.957.229.3Assetstransferredto SAREB24.64.7BFA Group data, € billions
  7. 7. 7 of 50November 2012Capital impact of the exchange of hybrid instrumentsBurden-sharing required by MoUExchange of hybrid instruments (preference shares and subordinated debt) for Bankia shares,under the terms and conditions imposed by the authoritiesEstimated exchange price (average):Preference shares 61%Perpetual subordinated debt 54%Dated subordinated debt 86%*Based on the exchange price assumptions and assuming 100% takeup,the exchange could generate capital of up to €6.5 bn at BFA Group levelOf which €4.7 bn generated as equityAnd €1.8 bn via trading incomeGroup recapitalisation – impact of hybrid instruments* Dated subordinated debt may be exchanged either for shares, with an appropriate discount (estimated average exchange price: 86%), or for no‐interest bonds, witha face value discount of 1.5% per month until maturity.
  8. 8. 8 of 50November 2012BFA Group capital needs – Oliver Wyman adverse scenario 24.7Impact on capital needs due to transfer of assets to SAREB-/+ -0.2Group recapitalisation – determination of final capital needsBFA Group capital needs after SAREB 24.5Of which: Bankia Group 15.5Capital needs after SAREB 24.5 15.5BFA Group Bankia GroupHybrid instruments Up to 6.5Capital to be contributed by shareholdersOf which, injected in September 201218.04.5Burden sharingUp to 4.810.7BFA Group data, € billions
  9. 9. 9 of 50November 2012Group recapitalisation – timelineNext stepsCapital injection in BFA Group (Dec 2012)Approval of Recapitalisation Plan (Nov 28th)Asset transfer to SAREB (Dec 2012)123
  10. 10. 10 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic Plan for 2012‐20154. ConclusionsAppendixContents
  11. 11. 11 of 50November 2012Provisions planned for 2012Real Estate exposureRest of credit portfolio (SMEs and retail)InvesteesTOTAL ESTIMATED PROVISIONS11.44.324.88.1Asset qualityOther 1.0ABCBFA Group data, € billions
  12. 12. 12 of 50November 20122012 provisions for Real Estate exposureA Real Estate exposure 11.4Stock ofprovisions2011Required byRoyalDecreesAssettransfer toSAREB2012 stockbeforeSAREB17.0*5.63.027.92.8Capitalbuffer RD2/2012-25.12.8Provisionstransferredto SAREB2012 stockafter SAREB* Including generic provision** Transferred to defaulted, foreclosed, etc.BFA Group data, € billionsOtherimpacts **-0.5Asset quality: Real Estate exposure
  13. 13. 13 of 50November 20122012 provisions, rest of credit portfolioB Rest of credit portfolio (SMEs and retail)Stock ofprovisions2011Provisions1.65.3 6.6SMEs8.1RetailStock ofprovisions2012Coverage for SMEs BFA Group** 13.9%OW expected loss BFA Group, baseline 11.1%OW expected loss BFA Group, adverse 18.6%3.5%Coverage for retail BFA GroupOW expected loss BFA Group, baselineOW expected loss BFA Group, adverse2.7%5.5%5.32.8Otherimpacts*Stock ofprovisions2011Provisions0.82.83.1Stock ofprovisions2012Otherimpacts*-0.5-0.3Asset quality: rest of credit portfolio* Transferred to defaulted, foreclosed, etc.** Corporates and SMEs coverageBFA Group data, € billions
  14. 14. 14 of 50November 20122012 provisions for investeesC InvesteesInvestee risk 2011 Provisions 2012 Investee risk 2012e4.35.4 2.3 3.1Listed2.7 2.0 0.7UnlistedAsset quality: investees8.1 4.3 3.8TotalBFA Group data, € billions
  15. 15. 15 of 50November 2012Provisioning scheduleAsset quality: provisioning scheduleTotalprovisions201224.812.6Real Estate(capital buffer + SAREB)12.2Investees and othersOther portfoliosRecorded as ofSeptember2012Pendingprovisions4.32.55.8BFA Group data, € billions
  16. 16. 16 of 50November 2012Compliance with solvency ratios – BFA GroupBFA GROUP 2011EBA Core Tier 1 (€ bn)7.2ADJUSTMENTSBFA GROUP AFTERRECAPITALISATIONProvisions andotherCapitalcontributionEBA Core Tier 1 (€ bn)10.7RWAs (€ bn)166RWAs reduction due to SAREB and deleveraging RWAs (€ bn)112EBA Core Tier 1 ratio4.3%EBA Core Tier 1 ratio> 9.5%Pre ProvisionProfitBFA solvency
  17. 17. 17 of 50November 2012Compliance with solvency ratio – BankiaBankia GROUP 2011EBA Core Tier 1 (€ bn)12.6ADJUSTMENTSBankia GROUP AFTERRECAPITALISATIONProvisions andotherCapitalcontributionEBA Core Tier 1 (€ bn)10.7RWAs (€ bn)157RWAs reduction due to SAREB and deleveraging RWAs (€ bn)107EBA Core Tier 1 ratio8.0%EBA Core Tier 1 ratio> 9.5%Pre-provisionprofitBankia solvency
  18. 18. 18 of 50November 2012Recapitalisation plan impact on BFA Group liquidityBFA Group liquidity positionLiquid assets cover 89% of the Group’s totalwholesale maturities, and 1.2x the wholesalematurities outstanding until 2017, inclusive.Liquid assets (October)Liquid assets – Dec 2012e (€ bn)Total liquid assetsTotal BFA Group maturitiesSAREB bondsCapital injection, BFA Group (net)*12.240.345.324.613.5Loan to deposits ratio (%)164%143%Jun 2012 Dec 2012eWholesale maturitiesImpact on transfer to SAREBon covered bonds(10.0)Covered bonds (roll-over capacity)Rest of maturities30.514.8Down 21 pps* Net of the €4.5 bn already injectedOf which, maturing until end 2017 32.8BFA Group data, € billions
  19. 19. 19 of 50November 2012BFA Group capital increase impactGroup recapitalisation - SummaryAsset qualityLiquiditySolvencyAfter SAREB, Real Estate loans represent barely 2.5% of creditportfolioSMEs coverage at 13.9%Retail coverage at 3.5%Investees marked to marketAll wholesale maturities nearly coveredLTD ratio down from 164% to 143%BFA Group solvency > 9.5% EBABankia Group solvency > 9.5% EBA
  20. 20. 20 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic Plan for 2012-20154. ConclusionsAppendixContents
  21. 21. 21 of 50November 2012Starting pointHIGH FRANCHISE VALUE1Broad customer base> 7.5 million customers, with a closerelationship> 260,000 SMEs and > 290,000 self-employedHigh market share10% share of Spanish market4th largest bank in SpainStrong presence in originalhome territoriesLeader financial institution in itshome regions, with a more than 15%market shareOrganisational strengthsProved integration capacityAdvanced IT systemsSources: BdE, Bankia, FRS Inmark. Data as of September 2012. Market shares as of June and August 2012
  22. 22. 22 of 50November 2012Starting point2A BALANCE SHEETASSET QUALITYCAPITALLIQUIDITYB PROFIT & LOSS ACCOUNTPROFITABILITYEFFICIENCYC ORGANISATIONAL AND INTEGRATIONNONETHELESS, MAJOR CHALLENGES
  23. 23. 23 of 50November 2012Starting pointSTRATEGIC PLAN2012 -2015RESTRUCTURINGPLAN2012-2017ECONOMICOUTLOOKSTRATEGIC PLAN 2012-2015 IS SHAPED BY:
  24. 24. 24 of 50November 2012Restructuring Plan 2012 - 2017Improvements from ourStarting PointCAPITALISATIONASSETCOVERAGELIQUIDITYBut, subject to limitationsInstalled capacity adjustments: profitablebranch closure and selective exit from non coreterritories1Limits on dividend payments until 201442Burden sharing among shareholders and retailholders of hybrid instruments3 New credit restrictions
  25. 25. 25 of 50November 2012Economic outlookEuribor 12M, 2011 - today0,5000,7000,9001,1001,3001,5001,7001,9002,1002,300ene‐11feb‐11mar‐11abr‐11may‐11jun‐11jul‐11ago‐11sep‐11oct‐11nov‐11dic‐11ene‐12feb‐12mar‐12abr‐12may‐12jun‐12jul‐12ago‐12sep‐12oct‐12Euribor 1 Año. Evolución 2011‐2012BUSINESS PERFORMANCE1HIGH FUNDING COSTSINTEREST RATES EVOLUTION23NII sensitivity to lower interest rates-50bps-€400million≈
  26. 26. 26 of 50November 2012Strategic Plan 2012-2015Strategic Plan objectivesIMPROVINGOURPROFITABILITY IMPROVING BANK’S OVERALL EFFICIENCYSTRENGTHENING OUR COMPETITIVE POSITIONING1MINIMIZING COST OF RISKASSET MIX REBALANCINGCONTINUE TO IMPROVEOURFUNDAMENTALSSOLVENCY2LIQUIDITYIn order to achieve by 2015 COMPETITIVE ROEs AROUND 10%
  27. 27. 27 of 50November 2012Profitability: Strengthening our COMPETITIVE POSITIONING 1OUR KEY STRENGTH: LARGE CUSTOMER BASEOUR OBJECTIVE: RELATIONSHIP WITH OUR CUSTOMERSRETAIL1 SMEsPension fundsMarket shareMutual fundsConsumerfinanceCredit cards4.9%4.6%4.6%5.6%11%10%7%16%1 Sources: Banco de España, Bankia. Data as of September 2012. Market shares at June and September 2012.Compared to a market share of 10%Commercial effectsLeasing, Factoring,Reverse factoringForeign tradeactivitiesServices: PayrollShareCompared to an average customer investment shareof ≈ 26%
  28. 28. 28 of 50November 2012Profitability: ASSET MIX Rebalancing 1NON-STRATEGIC ASSETS DISPOSAL1VOLUMEOFNON-STRATEGICASSETS€90 bnSAREB€25 bnCREDIT PORTFOLIO€17 bnSECURITIESPORTFOLIO€8 bn20152012VOLUMEOF NON-STRATEGICASSETS€40 bnBFA Group data, € billions
  29. 29. 29 of 50November 2012Profitability: ASSET MIX Rebalancing 1TRANSFORMATION OF THE CREDIT PORTFOLIOBBreakdown of credit portfolioNew lending2012 -2015 (cumulative data)BFA Group data, € billions
  30. 30. 30 of 50November 2012Profitability: Improving our EFFICIENCY 144%46%54%1%70%5%3%277%65%-10%High Value Customer20% ofbest branchesVolume of depositsLoan to deposits ratioNPLsPre Provision Profit20% ofworst branchesORGANISATIONAL STRUCTURESAHQ & CORPORATE CENTERINTERMEDIATE NETWORK STRUCTURESBIMODAL BRANCH NETWORKB
  31. 31. 31 of 50November 2012Profitability: Improving our EFFICIENCY 1This is done by countryBranches 2012 – 2015 Workforce 2012 – 2015BFA Group data, € billions* Includes depreciation and amortisationOperating costs 2012 – 2015
  32. 32. 32 of 50November 2012Our way to profitability 1The restructuring exercise and revenue-generating initiatives will lead the Grouptowards an efficiency ratio of 40% - 45% by 20154.12.41.72012e4.11.82.32015eIn billions of eurosGross MarginOperating costs*Pre Provision ProfitATAs Gross Margin / ATAs* Includes depreciation and amortisationBFA Group data, € billions
  33. 33. 33 of 50November 2012Profitability: Minimizing our COST OF RISK 1Cost of risk2013-2015≈ 50 - 55 bpsGOOD STARTING SITUATION: WELL PROVISIONED PORTFOLIOAPORTFOLIO BREAKDOWNRECOVERY PERSPECTIVEBUSINESS VISIONBRISK POLICIESC
  34. 34. 34 of 50November 2012Strategic Plan 2012-2015Strategic Plan objectivesIMPROVINGOURPROFITABILITY IMPROVING BANK’S OVERALL EFFICIENCYSTRENGTHENING OUR COMPETITIVE POSITIONING1MINIMIZING COST OF RISKASSET MIX REBALANCINGCONTINUE TO IMPROVEOURFUNDAMENTALSSOLVENCY2LIQUIDITYIn order to achieve by 2015 COMPETITIVE ROEs AROUND 10%
  35. 35. 35 of 50November 2012Liquidity: action linesLIQUIDITY GENERATION CAPACITYA2BFA Group data, € billionsLIQUIDITY generated during the period widely coversGroup’s wholesale maturities for the next 3 years(€ 23.5 bn)Liquidity generationReduction of commercial gapInvestees portfolioChange in other assets and liabilitiesCumulative2013-201528.811.610.23.9Organic generation in period (PPP) 3.1
  36. 36. 36 of 50November 2012Solvency: action linesSUSTAINABLE CAPITAL MODELB22015eEBA Core Tier 1 capital ratio (%) > 14.5%(2)Total capital-generating capacity in the period (2)5.4 bn(3)During this period, the Group generates an excess of capitalequivalent to 50% post-capital increase in 20122012e112 932015eCapital release via RWAs EBA Core Tier 1 Ratio2012e> 9.5%> 14.5%2015eCumulative Earnings2013e0.83.12015e3.12.3(1) 5.41 Combination of excess of capital in 2012e (€ 0.6 bn) and capital liberation via reduction in RWAs (€ 1.7 bn)2 It does not envisage dividend payments, although it is expected that the Bank will resume its shareholder’s policy remuneration in 20143 Excess over 9% EBABFA Group data, € billions
  37. 37. 37 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic Plan for 2012‐20154. ConclusionsAppendixContents
  38. 38. 38 of 50November 2012Return to be a solid andsustainable financial institution,among the best in Spanishcommercial bankingOur goalFocus on our customers:individuals, SMEs andbusinesses in original hometerritoriesSolid and sustainable franchiseSolvent EfficientProfitableOur strategyConclusions
  39. 39. 39 of 50November 2012ConclusionsSOLVENCYGroup will make a qualitative leap in terms of resilience, profitability and efficiencyBankia objectivefor 2015> € 5.4 bn1 It does not envisage dividend payments, although it is expected that the Bank will resume its shareholder’s policy remuneration in 2014EFFICIENCYPROFITABILITYORGANICCAPITALGENERATION(1)ASSETQUALITYCost of risk50 -55 bps> 10%≈ € 1.2 bnROENET PROFITEFFICIENCYRATIO40% - 45%
  40. 40. 40 of 50November 20121. BFA Group recapitalisation2. BFA Group asset quality, liquidity and solvency3. BFA Group Strategic Plan for 2012‐20154. ConclusionsAppendixContents
  41. 41. 41 of 50November 2012APPENDIX – BFA GROUP
  42. 42. 42 of 50November 2012Key financials, BFA GroupsAppendix I: BFA Group - FinancialsGross MarginTotal expensesPre Provision ProfitTotal assetsNet loans4.1-2.41.7305.8133.82012e14.1-1.82.3252.2115.62015eLoan to Deposits 143% 133%Core capital > 9.5% >14.5%2ROE - >10.5%1 Data after transfer to assets to SAREB and after capital increase2 It does not envisage dividend payments, although it is expected that the Bank will resume its shareholder’s policy remuneration in 2014BFA Group data, € billions
  43. 43. 43 of 50November 2012Banco Financiero y de Ahorros, S.A. – Holding structureAssets LiabilitiesFixed Income PortfolioGovernment debtBonds from capital increaseBonds from SAREBGuaranteed Government DebtAppendix II: Individual BFA – Financial StructureLiquid assetsCashInterbank depositsInvesteesWholesale fundingEquitySolid and solvent Holding, assets marked to market and non financial cost (coupon payments)on the liability side
  44. 44. 44 of 50November 2012APPENDIX – BANKIA GROUP
  45. 45. 45 of 50November 2012Asset transfer to SAREB – Bankia Group levelAppendix I: Bankia Group – impact of SAREBBankia Group data, € bnTotal GrossReal EstateRisk(Data as of 30thJune)Net realestate riskafter discounton transfer toSAREBNet real estaterisk on thebalance sheetafter transferto SAREBReal EstateDeveloper35.8Real EstateAssets 10.7Discount dueto transferprice toSAREB20.246.526.3Assettransferredto SAREB21.64.7
  46. 46. 46 of 50November 2012Provisions ScheduleBankia Group data, € bnAppendix II: Bankia group – Provisions ScheduleTotalprovisions201221.510.1Real Estate (Capital Buffer + SAREB)11.4Investees and othersOther credit portfoliosProvisions upto September2012Pendingprovisions20122.42.55.2
  47. 47. 47 of 50November 2012Recapitalisation plan impact on Bankia Group liquidityAppendix III: Bankia Group liquidity positionLiquid assets cover 85% of the Group´s totalwholesale maturities, and 1.3x the wholesalematurities outstanding until 2017, inclusive.Liquid assets (October)Liquid assets- Dec 2012e (€ bn)Total liquid assetsTotal Bankia Group maturitiesSAREB bondsCapital injection, Bankia Group (net)*9.231.637.021.610.8Loan to deposits ratio (%)163%142%Jun 2012 Dec 2012eWholesale maturitiesImpact on transfer to SAREBon covered bonds(10.0)Covered bonds (roll over capacity)Rest of maturities30.56.5Down 21 pp* Net of the €4,5 bn already injectedOf which, maturing until end 2017 24.5Bankia Group data, € bn
  48. 48. 48 of 50November 2012Appendix IV: Bankia Group – Credit portfolio risk and coverageOnce the asset transfer to SAREB is completed, real estate exposure on the credit portfolio will bebarely 2.5%.Bankia Group: Breakdown of credit portfolio after SAREB 2012e1 Coverage ratio calculated on total gross credit portfolioGross credit portfolio: 144,6bnNPL ratio 12%Credit portfolio coverage 8%1Developer portfolio coverage 49%
  49. 49. 49 of 50November 2012Breakdown of on-balance-sheet Real Estate exposureA BFA Group Real Estate exposure after SAREBAppendix V: Asset Quality: Real Estate exposureNet on‐balance‐sheet Real Estate risk after SAREBTOTAL Developer Foreclosed4.7 1.8 2.9BFA Group data, € billionsReal Estate Developers• They will represent a barely 2.5% of the total credit portfolio and will reach acoverage rate ≈ 49%• 40% are related to international operations, so they are not correlated with thenational economic business cycleReal Estate Assets• 43% provisioning with respect the original gross loans• 85% of finished homes
  50. 50. 50 of 50November 2012Key financials, Bankia GroupAppendix VI: Bankia Group - FinancialsFigures in € bn and %Gross MarginTotal expensesPre Provision ProfitTotal assetsNet loans3.9-2.31.6284.7133.62012e13.9-1.72.2249.7115.62015eLoan to Deposits 142% 133%Core capital >9.5% >14.3%2ROE - >10.5%31 Data after transfer to assets to SAREB and after capital increase2 Does not include any dividend payment, although it is expected that the Bank will resume its shareholder remuneration policy in 2014Bankia Group data, € bn
  51. 51. 51 of 50November 2012Investor Relationsir@bankia.com
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