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Sección de utilidades

Fin de la sección de utilidades

Key indicators and financial information

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AT YEAR-END 2017, BANKIA INCREASED ITS PROFIT AND MAINTAINED ITS DIVIDEND PER SHARE, AFTER THE MERGER WITH BMN.

DURING 2017 BANKIA STRENGTHENED ITS SOUND CAPITAL POSITION, CONTINUED TO IMPROVE ITS ASSET QUALITY AND ACHIEVED A GOOD PERFORMANCE OVERALL IN TERMS OF BANKING ACTIVITY AND MANAGED FUNDS, THANKS TO THE IMPETUS OF THE NEW COMMERCIAL MODEL.

At year-end, the bank posted a net attributable profit of 816 million euros, 1.4% more than the previous year. The commercial strategy, the focus on efficiency and the control of the cost of risk made this result possible, while at the same time maintaining the dividend payment of 11.024 euro cents per share, allowing further progress in the repayment of state aid.

Mortgage lending performed well over the year, supported by the Hipoteca SIN Comisiones no-fees mortgage. Mortgage loans totalling 1,908 million euros were granted, 133.5% more than in 2016. Some 40% of the new mortgages were for new customers.

Payment services also played an important role in 2017, with a total of 210,000 credit cards registered in just 12 months and turnover in retail outlets up 12.8%. The installed base of POS terminals grew 14.9% and POS terminal sales, 22.4%.

MORE DIGITAL, MORE SATISFIED CUSTOMERS

Customer satisfaction ratings improved significantly during the year, reaching their highest levels since the bank was created, while new products and services were developed to take advantage of the new technologies.

The result was significant growth in new customers, with a total of 158,000 net new customers in 2017, and an increase in digital sales, which reached 13.4% of total sales at year-end.

At 31 December, 40.5% of Bankia’s customers are multichannel (compared to 37.6% one year earlier) and 20.6% use mobile banking.

COMMERCIAL ACTIVITY

Another major milestone during the year was the expansion of the “Connect with your Expert” service, which grew 94.8% in users. More than 584,000 Bankia customers have their own online personal adviser, almost twice as many as in 2016.

The target for 2018 is for “Connect with your Expert” (which at year-end 2017 had a business volume of 20,800 million euros) to reach 750,000 users.

NUMBER OF CONNECT WITH YOUR EXPERT COSTUMERS APPROXIMATELY DOUBLED IN TWELVE MONTHS

INTEREST RATE PRESSURE CONTINUES

In a continuing negative interest rate environment, Bankia ended 2017 with net interest income of 1,943 million euros, down 9.6% compared to 2016.

In the last quarter of the year, however, the customer margin increased to 1.55% as a result of the rise in the average rate at which loans were granted and the fall in the cost of new deposits.

Meanwhile, net fee and commission income rose 3.2%, to 850 million euros, with particularly strong performance in income from payment services (+5.3%), origination (+9%) and asset management (+5.6%).

These good results  are attributable to factors such as increased customer activity and cross-selling, growth in assets under management, the new digital functionalities and the recovery of the economic cycle.

After the merger with BMN and the recognition of one-time adjustments arising from the merger (312 million euros), the bank’s profit is 505 million, 37.3% less than in 2016.

The “SIN comisiones” strategy launched two years ago has continued to bear fruit, bringing in 107,000 new customers with direct income deposits, which translated into higher business volumes and fee and commission income in value-added products.

Net trading income contributed 368 million euros, up 52.6%, as a result of the realisation of unrealised gains on sales of fixed-income securities in anticipation of the foreseeable rise in interest rates.

COST CONTROL AS A STRATEGIC MANAGEMENT TOOL

Bankia’s gross income was down 4.4% at year-end 2017, at 3,027 million euros, while operating expenses totalled 1,550 million euros, remaining stable compared to 2016. The efficiency ratio reached 51.2%.

The improvement in balance sheet quality also helped boost earnings in 2017, given that in reducing the stock of non-performing loans and foreclosed assets, it also reduced the amount of provisions to be recorded by 9.4%, to 448 million euros. The cost of risk decreased from 0.24% to 0.23%.

The balance of non-performing assets fell to 9,740 million, while the net carrying amount of foreclosed assets fell 326 million, to 1,925 million. The decrease in foreclosed assets came after the sale of 8,430 properties, representing 20.2% of the existing stock.

 
BANKIA GROUP INCOME STATEMENT
  Bankia Bankia + BMN(1)
(€/Mn) 2016 2017 Diff. % 2017 Diff. % vs 2016
Net interest income 2,148 1,943 -9.6% 1,968 -8.4%
Fee and commission income 824 850 +3.2% 864 +4.9%
Other revenue 194 234 +20.00 232 +19.2%
Gross income 3,166 3,027 -4.4% 3,064 -3.2%
Operating expenses (1,548) (1,550) +0.1% (1,581) +2.2%
Pre-provision profit 1,619 1,477 -8.8% 1,483 -8.4%
Provisioning for credit and foreclosed assets (494) (448) -9.4% (451) -8.7%
Taxes, minority interests and other items (320) (213) -33.3% (216) -32.6%
Recurring attributable profit 804 816 +1.4% 816 +1.5%
Integration costs (2) - - - (312) -
Reported attributable profit 804 816 +1.4% 505 -37.3%

(1) Reported income statement, which includes BMN's contribution to the results for month of December.
(2) Integration costs afther the merger with BMN.

SOLVENCY IMPROVES AND DIVIDEND GROWS

At the end of the year the Group succeeded in consolidating its solvency position. After the merger with BMN, the fully loaded Common Equity Tier 1 (CET1) ratio was 12.33%, above the 12% figure estimated when the merger was announced. Without BMN, the CET1 ratio was 14.83%, that is, 181 basis points more than one year earlier.

On a phase-in basis, the CET1 ratio stands at 14.15%. The capital surplus above the SREP regulatory requirements for 2018 is thus 559 basis points.

In view of these figures, the bank’s Board of Directors proposed to the General Meeting of Shareholders that the dividend payment be maintained at 11.024 euro cents per share, an amount equal to the previous year’s dividend after adjusting for the change in number of shares following the reverse split carried out in June.

Because of the increased number of shares, the amount to be paid, a total of 340 million euros, is 7.3% more than in 2016 and the payout ratio is 41.7%, compared to 39.5% the previous year.

The distribution of this dividend marks another step in the process of repayment of state aid, as the State, which at year-end owns 60.9% of Bankia, will receive 207 million euros in dividends. Once the dividend has been paid, the total amount of aid repaid will be 2,863 million.

SHARE PERFORMANCE

The financial markets were bullish during 2017, thanks to the robust economic growth achieved by the main economies and the successive upward revisions of their growth estimates.

In this environment the Ibex-35 rose 7.4% and the Euro Stoxx, 6.5%.

The financial sector also turned in an excellent performance, as reflected by the year-end level of the Euro Stoxx Banks index, which was up 10.9%.

BANKIA SHARE PRICE PERFORMANCE BANKIA SHARE,
IBEX-35 AND EURO STOXX BANKS DURING 2017, BASE 100

In Spain, the political tensions created by the situation in Catalonia led to an increase in volatility in the market and especially affected bank share prices in the last quarter of the year.

Against this background, the Bankia share climbed 2.7%. Average daily trading volume was 8.5 million securities, with an average value of 35 million euros per session.

*Data at 31 December 2017
Number of shares in circulation 2,879,332,136
Average daily trading volume (no. shares) 8,496,539
Average daily trading volume (euros) 35,112,266
High (euros) 4.624
Low (euros) 3.664
Closing price 29.12 17 (euros) 3.987
Market capitalisation at close 29.12 .17 (euros) 11,479,897,226

At year-end, a total of 33 analyst firms actively covered and provided a target price for the Bankia share (4.13 euros at that time). Of the recommendations, 33.3% were buy, 42.4% sell and 24.2% hold.

TREND IN RECOMMENDATIONS,
TARGET PRICE AND CLOSING PRICE

RATING

During 2017, Spain’s sovereign rating remained stable, thanks to the improvement in the country’s macro variables, with the result that S&P, Fitch and DBRS affirmed their ratings at ‘BBB+’, ‘BBB+’ and ‘A low’, respectively.

After the positive trends observed in 2016, the agencies saw 2017 as a year of consolidation, in which the banks improved thanks to the growth of the economy and the stabilisation of the property market, without losing sight of the political instability in Catalonia.

Bankia’s ratings, in particular, benefited from factors such as the conclusion of the 2012-2017 Restructuring Plan, the positive banking business performance, the reduction of non-performing assets and the increase in market capitalisation.

The rating agencies also considered that the merger with BMN will have a limited impact on Bankia’s credit profile and so maintained the ratings already assigned.

BANKIA RATINGS PERFORMANCE IN 2017
  S&P FITCH DBRS SCOPE
  DEC 16 DEC 17 DEC 16 DEC 17 DEC 16 DEC 17 DEC 16 DEC 17
ISSUER RATING
Long term BB+ BBB- BBB- BBB- BBB (high) BBB (high) --- BBB+
Outlook positive Positive Positive Stable Stable Stable Stable --- Estable
Viability rating bb- bbb- bbb- bbb- --- --- --- ---
Short term B A-3 F3 F3 R-1 (low) R-1 (low) --- S-2
MORTGAGE COVERED BOND RATINGS
Rating A+ A+ A A AAA AAA AAA AAA
Outlook Stable Positive Stable Stable --- --- Stable Stable

In 2013, Bankia decided to end its contractual relationship with Moody’s. The ratings this agency continues to publish for Bankia are therefore “Unsolicited” and “Non-participating”, which means that Bankia does not participate in the rating reviews and the agency bases its decisions strictly on publicly available information about the bank.

Although the agency has been asked repeatedly to stop publishing ratings of Bankia, it is Moody’s unilateral decision when to do so.

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