Quarterly results presentation 2Q14

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The BFA-Bankia Group achieved profit after tax of 827 million euros in the first half of the year, 93% more than the ordinary profit for the same period of 2013 (428 million euros) . At the BFA level, the earnings for the period were influenced by the gains on sales of investees. In Bankia, the profit after tax for the first six months of the year was 431 million euros, 48% more than in the first half of 2013.

Text of Quarterly results presentation 2Q14

  • 1. 1 of 28 / July 2014 Quarterly Results Presentation 2Q14 28th July 2014 Trabajamos desde los principios para poner la mejor banca a tu servicio

2. 2 of 28 / July 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 of 28 / July 2014 Contents 1. Highlights of 1H14 2. 2Q14 results 3. Asset Quality and Risk Management 4. Liquidity and solvency 5. Conclusions 4. 4 of 28 / July 2014 Highlights of 1H14 +3.8Bn Customer Funds +26.8% New Credit 1 3 IMPROVED PROFITABILITY COMMERCIAL ACTIVITY DYNAMIZATION Net Profit Bankia: 431Mn Net Profit BFA: 827Mn 2 4 BALANCE SHEET STRENGTH NPL: -1.4Bn CET 1: +113pbs Issuances: 3.3Bn MARKETS CONFIDENCE 5. 5 of 28 / July 2014 COMMERCIAL ACTIVITY DYNAMIZATION1 DEC 13 MAR 14 bn JUN 14 90.0 90.7 QUARTERLY PERFORMANCE OF STRICT CUSTOMER FUNDS 20.8 21.7 +0.7 92.3 22.3 +1.6 +0.6+0.9 110.8 112.4 114.6 Strict customer deposits Off-balance-sheet customer funds +2.2+1.6 Total strict dep. + off-balance (0.4) +1.1 +0.7 SEP 13 90.4 19.7 110.1 Total strict customer funds up 3.9% year on year + 3.9% JUN 13 91.7 18.6 110.3 (1.3) +1.1 (0.2) Highlights of 1H14 6. 6 of 28 / July 2014 New credit grows 26.8% quarter on quarter. In businesses, new credit rises 46.9% Mn NEW CREDIT Significant increase in market shares 2,800 1,931 1Q 14 2Q 14 3,551 869 2,837 714 + 26.8 % Businesses Individuals CREDIT MARKET SHARES NEW CREDIT 9.33% 11.69%+236 bps % Source: ICO ICO Financing DEC 13 JUN 14 8.50% 10.90%+240 bps % Source: BdE Businesses >1MM DEC 13 9.52% MAY 14 10.39%+87 bps % Source: BdE Businesses 250 orders SENIOR DEBT Oversubscription 2.0x Amount Maturity Spread Oversubs. 1,000 Mn 22/05/2024 MS + 316.6 bps 3.5x # Orders > 270 orders SUBORDINATED DEBT More than 3.3bn raised in wholesale markets during 1H14: senior debt issuance (1Bn), sale of 7.5% of Bankia (1.3Bn) and subordinated debt issuance (1Bn) Highlights of 1H14 12. 12 of 28 / July 2014 Contents 1. Highlights of 1H14 2. 2Q14 Results 3. Asset Quality and Risk Management 4. Liquidity and Solvency 5. Conclusions 13. 13 of 28 / July 2014 2Q14 Results Pro forma income statement Bankia Group A B C Net interest income Gross income Operating expenses Pre-provision profit Provisioning & others D 2Q13 633 958 (488) 470 (257) 2Q14 730 1,002 (435) 567 (241) Diff % 15.3% 4.6% (10.9%) 20.7% (6.2%) Profit after tax 157 245 56.1% Mn Fee and commission income 225 237 5.5% Gross income ex NTI 826 949 14.9% E Taxes (56) (81) 44.6% Pre-provision profit ex NTI 338 514 52.1% 1H13 1,234 1,915 (982) 933 (529) 1H14 1,427 1,932 (876) 1,056 (462) 291 431 449 468 1,617 1,858 (113) (163) 635 982 The pro forma income statement for 1H 2013 excludes the cost of the subordinated loan by BFA to Bankia in the amount of 89 million in 1Q 2013 and 53 million in 2Q 2013, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. Diff % 15.7% 0.9% (10.8%) 13.2% (12.7%) 48.0% 4.1% 14.9% 44.2% 54.6% 14. 14 of 28 / July 2014 Quarterly performance of net interest income Mn 2Q13 633 3Q13 643 4Q13 690 1Q14 698(1) 53 2Q14 730 + 15.3% Net interest income upward trend started in 2Q13 continues: +4.6% in the quarter Net interest income up 15.7% compared with 1H13 A Core banking business: net interest income Interest margin positive trend consolidates + 4.6% Half-year performance net interest income 1H13 1,234 1H14 1,427 +15.7% Mn 142 (1) 2Q14 Results (1) Figures adjusted excluding the finance cost (89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. (1) Figures adjusted excluding the finance cost (89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. 15. 15 of 28 / July 2014 Cost of stock term deposits vs. new additions The cost of new deposits in 2Q14 is 1.10% A Core banking business: net interest income Growth in net interest income driven by an improvement in spreads Stock and new additions - quarterly average. Excludes City National Bank. Loan yield vs. cost of deposits (1) Gross customer spread up another 10 bps in the quarter (1) Excludes City National Bank from the series 2Q14 Results %% 1.17% 1.17% 1.07% 0.99% 1.00% 16. 16 of 28 / July 2014 Quarterly performance fee and commission income Core banking business performance Mn 2Q13 225 3Q13 237 4Q13 249 1Q14 231 2Q14 237 + 5.5% Fee and commission income up 5.5% quarter on quarter, due to an increase in the sale of off-balance-sheet products 2Q13 857 2Q14 967 +12.8% Core banking business: fee and commission income Fee and commission income generation performs better than previous year Mn Core banking business = net interest income + fee and commission income A Core banking business up 12.8% compared with 1H13 53 (1) 2Q14 Results (1) Figures adjusted excluding the finance cost (89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. 17. 17 of 28 / July 2014 Quarterly performance of gross income Gross income ex NTI Mn 826 2Q13 958 861 3Q13 945 878 4Q13 912 909 1Q14 930(1) 949 2Q14 1,002 + 7.7% Recurring gross income excluding net trading income up 14.9% quarter on quarter and half on half Gross income ex net trading income up 4.4% compared to previous quarter 132 84 34 21 53NTI GI ex NTI Gross income Solid growth of gross income 53 2Q13 826 2Q14 949 +14.9% Mn B 53 + 4.4% (1) GI 2Q14 Results (1) Figures adjusted excluding the finance cost (89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. (1) Figures adjusted excluding the finance cost (89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. 18. 18 of 28 / July 2014 Quarterly performance of operating expenses Efficiency ratio ex net trading income m 2Q13 488 3Q13 464 4Q13 459 1Q14 441 2Q14 435 - 10.9% Continued quarter on quarter reduction in operating expenses - 1.5% Efficiency ratio ex NTI falls 3.2 p.p. in quarter, reaching 46.1% Operating expenses Continued cost reduction % (1) Efficiency ratio excluding net trading income and exchange differences C - 14.0 p.p. 2Q14 Results 60.1% 54.2% 52.6% 49.3% 46.1% 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 19. 19 of 28 / July 2014 Pre-provision profit Recurring pre-provision profit ex net trading income up 10% quarter on quarter and 52.1% compared with 2Q13 2Q13 470 2Q14 567 + 20.7% Pre-provision profit Very positive performance of pre-provision profit Pre-provision profit ex net trading income Mn 2Q13 338 3Q13 397 4Q13 419 1Q14 468 2Q14 514 + 52.1% + 10.0% Mn 53 D (1) 53 2Q14 Results (1) (1) Figures adjusted excluding the finance cost (89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. (1) Figures adjusted excluding the finance cost (89Mn in 1Q13 and 53Mn in 2Q13) of the subordinated loan from BFA to Bankia, which was cancelled on 23 May 2013. Thus the reported profits for these periods were lower. 20. 20 of 28 / July 2014 Net profit reaches 431 million in the first half of the year, up 48% from 1H 2013 RECURRING COST OF RISK 2Q14 (CREDIT) 63 bps Pre-provision profit Profit from sales and others Profit from discont. op.(2) Provisions 567 3 17 (262) 2Q14 Profit after tax 245 Profit after tax Significant increase in net profit compared to same quarter of previous year (1) Figures adjusted excluding the finance cost (89Mn in 1Q13 and 53Mn in 2Q13) of the subor