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Key indicators and financial information

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IN 2018 BANKIA CENTRED ITS MANAGEMENT ON IMPROVING THE DYNAMIC BUSINESS, ACCELERATING THE REDUCTION OF NON-PERFORMING ASSETS AND INTEGRATING BMN IN RECORD TIME.

In 2018, Bankia recorded an attributable profit of 703 million euros, which represents an increase of 39.4% compared to 2017, thanks to the merger with BMN. On a recurring basis, excluding the impact of extraordinary results, the profit was 788 million.

The year was marked, one again, by an adverse environment of extraordinarily low interest rates, which tends to compress the bank’s margins. The bank therefore focused its management on three main objectives:

  • Improve the dynamic of the business so as to boost current revenue and lay the groundwork for further significant increases in the future.
  • Increase the pace of reduction of non-performing assets (both non-performing loans and foreclosed assets), following the recommendations of the supervisory authority.
  • Integrate BMN in record time, with the aim of bringing forward a large part of the cost savings envisaged in the Strategic Plan.

At the start of 2019, Bankia carried out a management reorganisation, creating four new deputy general directorates and increasing the number of members of its Management Committee to 12. This change will allow it to adopt a more agile and ambitious approach, both in the short term and in the medium and longer term, oriented entirely to customers’ needs.

703 million euros
ATTRIBUTABLE NET PROFIT


788 million euros
RECURRING PROFIT

MARGIN GROWTH

During 2018, Bankia increased its net interest income by 4.1%, to 2,049 million euros (-9.6%, if BMN were included in the income statement for 2017). Fee and commission income rose 23.3% (+3.4% on a like-for-like basis) and net trading income rose 11.8%, driving gross income up 9.9% (-6.3% including BMN) to 3,368 million.

Gross customer margin climbed to 1.58%. The growth was driven by a decrease in the cost of deposits and a slight increase in the yield on loans.

Another item that performed well was operating expenses: despite an 18.3% increase due to the BMN merger, on a constant perimeter basis they fell 4.3%, thanks to early success in capturing merger synergies, which have already reached 130 million euros, compared to a forecast of 66 million at this stage.

A MAJOR EFFORT TO REDUCE NON-EARNING ASSETS

During 2018 the bank made a great effort to improve balance sheet quality by reducing non-performing loans (NPLs) and foreclosed assets, as recommended by the European supervisory authorities. Non-performing assets (NPAs) ended the year at 10,900 million, compared to 16,900 million the previous year. This reduction of 6,000 million is more than double the original target of 2,900 million per year for each of the three years of the Strategic Plan.

A large part of the decrease in non-performing assets came from the reduction of non-performing loans, which dropped to 8,416 million, 3,702 million less than in 2017. As a result, the NPL ratio fell to 6.5%, a fall of 2.4 percentage points compared to one year earlier.

The remaining 2,300 million reduction in non-performing assets came from the decrease in foreclosed assets, which fell to 2,462 million. This decrease was achieved through a large asset disposal, in the amount of 3,070 million at the time of the deal, which was announced last December. Bankia also disposed of 13,300 units through organic sales for an aggregate selling amount of 646 million, 7.2% more than one year earlier.

MORE SOLVENCY, GREATER LIQUIDITY

In terms of solvency, Bankia ended 2018 with a fully phased-in CET1 ratio (that is, applying future legal requirements) of 12.51%, up 56 basis points compared to the previous year, having generated 775 million euros of capital during the year. This figure includes the effect of the sales of portfolios of non-performing assets and the reorganisation of the bancassurance business arising from the BMN merger. The total capital ratio came to 16.34%, up 161 basis points compared to the previous year.

On a transitional basis (i.e., not applying future requirements), which is the basis taken into account from a regulatory point of view, the CET1 ratio stands at 13.80%. This figure includes the unrealised gains on available-for-sale debt securities but does not include the sales of non-performing assets. The capital surplus over and above the regulatory requirements specified in the Supervisory Review and Evaluation Process (SREP) thus amounts to 524 basis points.

Bankia also improved its liquidity position, with a loan-to-deposit ratio of 91.2% at year-end, compared to 93.9% the previous year.

In 2018 Bankia succeeded in generating 775 million euros of capital

SALES MOMENTUM

Sales activity during the year was strongly influenced by the merger of Bankia and BMN, which took place in the first few months of the year. As a result, the bank’s sales momentum built steadily over the period. In the end, the bank equalled and exceeded the cruising speed achieved in previous years. The year ended with significant increases in mortgage lending (up 6.1%), consumer credit (+12.8%) and corporate finance (+12.6%). Value-added businesses such as payment services and asset management also posted notable gains.

The increased sales momentum also fed through to the customer base. Last year Bankia acquired 120,576 new customers and increased by 103,000 the number of customers with direct income deposit, i.e., the most loyal customers.

At the same time, the pace of adoption of digital channels by customers increased during the year. By year-end, 45.4% of customers (3.2 million, 530,000 more than in 2017) were digital and 25.8% of sales were made through digital channels, compared to 15.9% the year before. A total of 31.4% of consumer loans, 19.4% of new pension plans and 12.6% of mutual fund investments were arranged digitally.

LENDING


120,576
MORE CUSTOMERS


45.4%
OF CUSTOMERS ARE DIGITAL

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HIGHLIGHTS 2018

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