CoveredBonds Investor Presentation · review ofBankia’scovered bonds programme, Fitch affirmed...

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Covered Bonds Investor Presentation

September 2017

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

D isclaimer

This do cument has beenpreparedbyBankia, S .A. (“Bankia”) and is presented e xclus ive ly fo r in formation purposes. It is no ta prospectus and does no t constitu te an offero r re commendation to invest.

This do cument does not cons titu te a commitment to subs cribe, o r an offer to finance , or an o ffer to se ll, o r a so licitation o f offers to bu yse cu rities of Bankia, allo f whichare s ubject to internal approval by Bankia.

Bankia does no t gu arantee the accu racy or comple teness of the info rmation contained in th is document. The in formation contained here in has been obtained fromsources that Bankia cons ide rs re liab le , bu tBankia does no t represent o r warrant that the information is comple te or accu rate, in particu lar with respect to data pro videdby th ird parties . Th is document may contain ab ridged o r unaudited info rmation and re cip ients are invited to consu lt the pub licdo cuments and information submittedbyBankia to the financial marke t superviso ry au thorities . All o p in ions and es timates are g iven as o f the d ate stated in the document and so maybe sub ject to change.The value o f any investment may flu ctuate as a result o f changes in the marke t. The information in th is do cument is no t intended to pred ict fu tu re resu lts and nogu arantee is given in that respect.

D is tribu tion o f th is do cument in o ther ju risd ictions may be prohib ited, and there fore re cip ients o f th is do cumento r any persons who maye ventually ob tain a copy of itare 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 re veal all the ris ks o r o ther material facto rs relating to inves tments in the secu rities / transactions of Bankia. Befo re entering into anytrans action, po tential investo rs mus tensu re that they fu lly unders tand the terms o f the secu rities / transactions and the ris ks inhe rent in them. This do cument is no t aprospectus fo r the secu rities described in it. Po tential investo rs should only subscribe for se curities o f Bankia on the bas is of the info rmation pub lished in the appropriateBankia prospectus, noton the basis of the information contained in this document.

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3Q17 HIGHLIGHTS

NON-PERFORMING LOANS 10.2€

11.5

NPL COVERAGE RATIO 53.8% 55.1%

NPL RATIO 8.8% 9.8%

ATRIBUTABLE PROFIT 739 9M17€

FULLY LOADED CET1(1) 14.2% 13.2%

%

ASSET QUALITY SEP 2017 DEC 2106

PROFITABILITY & CAPITAL SEP 2017 SEP2016

COST OF RISK 249M17

24 9M16

bps

%

%

€bn

ROE

€mn

%

%

CURRENT ISSUER RATINGS

LONG TERM OUTLOOK SHORT TERM

STANDARD & POOR’S

FITCH RATINGS

BBB- Positive A-3

BBB- Stable F3

01. EXECUTIVE SUMMARY

Bankia Results

1 COMMERCIAL ACTIVITY

€1,333mn

New mortgages 9M17

65%

Average LTV new mortgages 9M17

2 EFFICIENCY & PROFITABLITY

48,0%

Cost toIncome

ratio Sep17

-1.8%

Administrative Expenses

9M17 vs 9M16

3 ASSET QUALITY

€1,282mn

NPL´s reduction vs Dec 16

€169mn

Reduction net foreclosed

assets

4 CAPITAL GENERATION

+114 bps

Capital generation in

2017 (CET1 FL)

DBRS BBB (high) Stable R-1 (low)

731 9M16

8.1% 9M17

8.2% 9M16

(1)Not including unrealised gains on sovereign holdings in the AFS portfolio

€1,250mn

Issuance of €750mn AT1

€500mn T2

4

ATTRIBUTABLE PROFIT

€ 804 mnNET INTEREST INCOME

€ 2,148 mn

PHASE IN CET1

14.70%FULLY LOADED CET1

13.02%


Bankia Results

€

CUSTOMER FUNDS(2)

+2.5%€

BRANCHES

1,855CUSTOMER FUNDS

€ 145,097 mn

ATMs

5,403POINT OF SALE TERMINALS

110,518

CUSTOMER LOANS

€ 110,470 mn€

€

2016 HIGHLIGHTS

UNIVERSAL BANKING MODEL, based on multi-channelmanagement, with a presence throughout Spain and highmarket shares in historical core regions.

BEST IN CLASS CORPORATE GOVERNANCE, optimalorganizational structure and highly respected managementteam.

SOLVENT, EFFICIENT AND PROFITABLE INSTITUTION, theGroup ended 2016 with an ROE of 7.3%.*

CLEAN BALANCE SHEET, with minimal real estatedeveloper exposureand high loan loss coverage.

SUSTAINABLE CAPITAL AND LIQUIDITY GENERATION.Comfortable solvency levels with a Phase In CET1 ratio of14.70% and Fully Loaded CET1 ratio of 13.02%**, as ofDecember 2016.

POSITIVE COMMERCIAL DYNAMICS, with positiveperformance of the outstanding balances of consumerfinance and businesses, showing a 0.8% increase year onyear.

(1) New lending to businesses and consumer finance. (2) Strict customer deposits plus off-balance-sheetcus tomer funds.

(*) ROE calculated excluding the net extraordinary provis ion made in connection with the potentialimpact of full retroactivity of mortgages’ floor clause nullity following the ECJ judgement on 21 Dec.20 16. If included, then ROE stands at 6.7%.(**) If unrealised gains on the available-for-sale sovere ign portfolio were included as of 31 December20 16 in the Fully Loaded ratio, the CET1 ratio would have s tand at 13,52%, and Total Solvency at14,85%.

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Covered Bonds Ratings

2013 2014 2015 2016 2017

BBB

A-

A

S&P Global Ratings DBRS

2014 2015 2016 2017

A-

A+

A+

AA

A+ AA +

A+Positive

AAA

DBRS

AStable

AAAStable

Fitch Ratings

A-

BBB+

A

RECENT RATING ACTIONS

FITCH. On 26 February 2016, on the back o f the upgrade o f Bankia’s long term ratingto BBB- with a stable outlook, Fitch raised Bankia’s covered bonds rating to “A”,outlook Stable. Lateron 5 August and 4 No vember, Fitch affirmed Bankia’s coveredbonds rating at “A”, outlook Stable. Mo re recently, on 8 O ctober 2017, following areview o f Bankia’s co vered bonds programme, Fitch affirmed Bankia’s covered bondsrating at “A”, outlook Stable.

S&P. Acco rd ing to the agency’s co vered bond rating methodology, S&P’s rating onBankia's mortgage covered bonds are capped at 'A+', three no tches abo ve S &P’slong-term rating on Spain . On 3 No vember 2016, fo llo wing a full review o f Bankia’sco vered bonds rating, S&P affirmed the “A+” rating with a Stable outlook. Mo rerecentlyon 7 April 2017, S&P revised the outlook on Bankia’s covered bonds ratingto Positive and affirmed the “A+” rating. The Positive outloo kon our co vered bondsrating, reflects the Positive outloo k from S &P’s long-term so vereign rating on Spain(BBB+/Positive/A-2).

DBRS. On 21 January, 14 March and 29 April 2016, DBRS affirmed Bankia’s co veredbonds rating at “AA” as a resu lto f two separate co vered bond issues and one tap issue,to taling €2.29 billion . On 23 June, following a review of the strength of the ReferenceEntity DBRS upgraded Bankia’s co vered bonds rating from “AA” to “AA (high)”. On 23September following the completion of a full review of Bankia’s covered bondsrating, DBRS affirmed the rating at “AA (high)”. Lastly, on 22 September 2017 DBRScompleted its annual review of Bankia’s covered bonds raising the rating to“AAA”.

Scope Ratings.On 8 July 2016, S cope Ratings assigned a rating o f “AAA” with a S tableo utlook to Bankia’s covered bonds.

BANKIA’S COVERED BONDS RATINGS HAVE IMPROVED ON THE

BACK OF A STRENGTHENED INTRINSIC ASSESMENT OF BANKIA.

AT THE SAME TIME THE MATURITY PROFILE OF THE COVERED BONDS

OUTSTANDING AND THE OC LEVEL ALSO IMPROVES. RECENT RATING

ACTIONS HAVE IMPROVED THE LCR ELIGIBILITY OF OUR COVERED

BONDS TO HQLA LEVEL 1.

A+ AAA

2014 2015 2016 2017

A

6

71,139

59,063

45,233

36,186

26,079

10,107

Total Collateral Elegible Legal Issuance Issued

02. MORTGAGE COVER POOL

Cover Pool Metrics

AMPLE ISSUANCE CAPACITY

HIGHOC

LEVEL

STRONG ELEGIBLE COVER POOL

COLLATERAL AND CB’s OUTSTANDING

89%Res idential

11%Commercial

76% o f the co verpo ol elig ible € 10,107

millio n IssuanceCapacity

X 80%

2014 2015 2016 2017

X 2,26 o ver-co llateralized

Co llateral CB’s Outstanding

ACTIVE OC MANAGEMENT

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

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

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Cover Pool Metrics

Q3 2017 Q4 2016

Collateral Eligible Collateral Eligible

Outstanding (million €) 59,063 45,233 61,073 46,648

Number of loans 671,656 574,876 678,318 577,796

Number of debtors 605,551 529,253 609,860 531,633

Average S easoning (months) 97 107 92 102

Life (months) 338 337 337 336

Time to maturity (months) 241 230 245 234

Average LTV 58% 48% 58% 48%

Q3 2017 Q4 2016


Residential 51,150 41,902 52,778 43,019

Co mmercial 6,835 2,821 7,104 3,050

Developers 931 510 1,032 579

Land 148 0 159 0

COLLATERAL LTV DISTRIBUTION

NPL RATIO

84% OF THE COVER POOL

HAS A LTV RATIO BELOW

80%

POSITIVE NPL’S PERFORMANCE WITH NPL RATIO

STANDING AT 5.35% AS OF 3Q17

0

5.000

10.000

15.000

20.000

25.000

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

Mill

on

es

5,92%

5,61%

5,48%5,41%

5,35%

Q3 Q4 Q1 Q2 Q3

2016 2017

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RESIDENTIAL PORTFOLIO


Residential Sub-Pool in figures

RESIDENCIAL PORTFOLIO ELIGIBILITY

STANDS AT 82%

AVERAGE LTV OF THE

ELIGIBLE PORTFOLIO IS

49%

Q3 2017 Q4 2016


O utstanding (million €) 51,150 41,902 52,778 43,019

Number of loans 634,618 548,401 639,098 550,847



Life (months) 360 347 359 346


Average LTV 56.2% 48.8% 56.5% 49.4%

MATURITY DISTRIBUTION

0

5.000

10.000

15.000

20.000

25.000

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

Mill

on

es

GEOGRAPHIC DISTRIBUTION Collateral (€mn) Q3 2017

Madrid 17.312

C. Valenciana 8.152

Catalunya 7.619

Andalucía 4.691

Castilla La Mancha 2.783

Canarias 2.692

Castilla y León 2.200

Rest 5.702

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%

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COMMERCIAL PORTFOLIO

RESTRICTIONS TO REAL ESTATE

LENDING IN RECENT YEARS

AVERAGE LTV OF THE ELIGIBLE COMMERCIAL

PORTFOLIO STANDS AT 37%

Q3 2017 Q4 2016


O utstanding 7,913 3,331 8,295 3,630

Number of loans 37,038 26,475 39,220 26,949



Life (mo nths) 196 217 198 216


Average LTV 70.2% 36.9% 67.5% 36.8%

SPLIT BY INDUSTRY CODE

MATURITY DISTRIBUTION

0

500

1.000

1.500

2.000

2.500

3.000

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

Mill

on

es


Commercial Sub-Pool in figures

Real Estate Building&

Materials

Business Services

Retail Food / Beverage/ Tobacco

Lodging/ Restaurants

ConsumerProducts

Healthcare Leisure / Entertainment

UtilitiesFarming/ Agricultural

Services

Others

18%

16%

11%9%

8%

4% 4% 4% 3% 3% 3% 3%

15%

Industrial

10

160

2.436 1.742

127

1.485

11.173

438

251

983 35

71

1.250

2017 2018 2019 2020 2021 >2021

03. WHOLESALE MATURITIES

Wholesale Maturities Amortizing Profile

598 2,687 3,725 127 1,520 12,494

Amount Outstanding (€mn) 20,403

Covered Bonds (1) 17,123

Senior Debt 1,779

Subordinated debt 2,250

(*) No t including re tained covered bonds

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04. ANNEXES

Macroeconomic Indicators

SPAIN SOVEREIGN DEBT RATING

LONG TERM OUTLOOK SHORT TERM

STANDARD & POOR’S

FITCH RATINGS

BBB+ Positive A-2

BBB+ Positive F2

MOODY’S

DBRS

Baa2 Stable P-2

A (low) Stable R-1 (low)

“GROWTH

CONSOLIDATION

”

“FAVOURABLE

EMPLOYMENT

TREND”

“HOUSEHOLD

SPENDING, MAIN

DRIVER OF THE

ECONOMY”

€

Sales (deflated and seasonally adjusted)

RETAIL TRADE INDEX (Annual Rate %)

UNEMPLOYMENT RATE IN SPAIN

QUARTERLY SERIES GDP. PREVIOUS QUARTER RATE (%)

2,9

2,52,8

2,2

0,1

0,6

1,3

2,1

2,7

2,3

1,2

1,7

2,1

SEP16 OCT16 NOV16 DEC16 JAN17 FEB17 MAR17 APR17 MAY17 JUN17 JUL17 AUG17 SEP17

0,9

0,8

0,70,7

0,80,80,8

0,9

0,8

2T 20171T 20174T 20163T 20162T 20161T 20164T 20153T 20152T 2015

0%

5%

10%

15%

20%

25%

30%

3T 20172T 20171T 20174T 20163T 20162T 20161T 20164T 20153T 20152T 20151T 20154T 20143T 2014

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04. ANNEX

Spanish Real Estate Market

MORTGAGES CONSTITUTED OVER DWELLINGS

EVOLUTION OF THE QUARTERLY RATE OF THE GENERAL HPI

“Mortgages

over dwellings

increase 6% vs

Q2-2016”

“New housing

prices increased

by 2,6%”

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

1,92,1

0,71

1,51,3

-0,3

2,6

3,7

-1,4

-0,5

3,7

2,600

1,300

Q2-2017Q1-2017Q4-2016Q3-2016Q2-2016Q1-2016Q4-2015

-2

0

2

4

6

8

10

12

2Q 2017. ANNUAL VARIATION RATE (%) OF THE HPI BY AUTON. COMMUNITY

New housing Second-hand housing

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017

22,3

0,40,8

1,81,5

-0,1

0,7

4,2

Q2-2017Q1-2017Q4-2016Q3-2016Q2-2016Q1-2016Q4-2015Q3-2015Q2-2015

CoveredBonds Investor Presentation · review ofBankia’scovered bonds programme, Fitch affirmed...

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