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  1. Chairman´s Statement

Chairman´s Statement

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BANKIA HAS COMPLETED THE FIRST YEAR OF ITS 2018-2020 STRATEGIC PLAN WITH THE CUSTOMER AT THE CENTRE AND THE FIRM COMMITMENT OF THE WHOLE TEAM.

2018 was a particularly important year for Bankia.

Although from a macroeconomic and regulatory point of view the challenges of previous years persisted, affecting the sector’s profitability, from a strategic point of view 2018 marked a turning point in Bankia’s recent history.

At the macroeconomic level, the growth trend seen in recent years reached maturity and was threatened by various geopolitical events, including Brexit and the trade war, which triggered a sharp downturn in the financial markets, especially in the second part of the year.

The European banking sector’s stock market performance during 2018 was challenged, mainly due to the European Central Bank’s delay in raising interest rates.

The functional and technological integration of BMN was completed successfully in record time, reaffirming Bankia’s position as Spain’s fourth largest financial institution

This situation weighed more heavily on investors’ decisions than the steady improvement in the solvency of the Spanish banking system, marked by increases in asset quality and profitability.

Despite this complex environment, at Bankia we completed a very important year in our history.

The main challenge we faced at the start of the period was the need to integrate BMN, both functionally and technologically.

It was a complicated process but was carried out successfully in record time, strengthening Bankia’s position as Spain’s fourth largest financial institution and market leader in six of the country’s Autonomous Communities. Nearly eight million customers have placed their trust in us, which unquestionably is not only great news for the whole of the Bankia team but also a huge responsibility, which we accept in all modesty but also with pride.

2018 was also the first year without business restrictions, after the Restructuring Plan imposed by the European Commission was brought to a successful conclusion at the end of 2017. The lifting of restrictions meant we could engage in new businesses, such as real estate development finance, certain capital market and corporate banking transactions and the creation of joint ventures with companies that specialise in other lines of business, thus adding momentum to sales.

In the absence of restrictions and motivated by our firm commitment to providing finance for Spanish companies, in 2018 we granted 16,459 million euros in business loans, expanding our market share to 7.57%.

The new momentum was also reflected in sales of value-added products for retail customers, including consumer finance, where we increased our share to 5.56%, and mutual funds, where we also grew our market share, to reach 6.55%.

This improvement in sales was achieved despite the huge effort that went into integrating BMN.  Together with continued cost containment and the synergies resulting from the merger, it contributed to the achievement of an attributable profit for 2018 of 703 million euros, which also reflects the action taken to reduce non-performing assets.

This result helped generate sufficient capital to bring the ratio of highest quality capital to 13.8%, making us the most solvent of all the large Spanish banks, 524 points above the regulatory minimum.

Thanks to this level of profit and capital generation, the Board of Directors was able to propose to the General Meeting of Shareholders that a dividend of 357 million euros be paid out of profit for 2018, an increase of 5% compared to last year.

And so we have completed the first year of our 2018-2020 Strategic Plan, a plan that rests on three pillars: the customer at the heart of what we do, the digital transformation and the firm commitment of the whole of the Bankia team.

We are convinced that the satisfaction of our customers must be the main focus of our work and that customer satisfaction is only possible through excellent service. For that reason, we continued to improve our commercial positioning, first adopted in 2016, with the launch during 2018 of ‘Bankia Fácil’ as an expression of Bankia’s commitment to making life easier for our customers.

Meanwhile, the financial sector as a whole has not been immune to the digital transformation or the changes taking place in society in the way people relate to one another. The change in our customers’ habits has prompted us to make a great effort to adapt our distribution model. This is the biggest strategic challenge we are currently facing.

The satisfaction of Bankia’s customers has to be the main focus of our work

To meet this challenge, we have created a new Corporate Directorate of Strategy and Digital Transformation, whose main task is to ensure excellent service to our customers through all our digital channels.

In fact, as of the end of 2018 we can say that Bankia is the only bank in Spain that allows customers to make electronic payments through all the main platforms currently available: Apple, Google, Samsung, Paypal and Bizum.

Indeed, our customers’ digital activity continues to expand, to the point where, as of December 2018, 45.4% of our customers were digital and 25.8% of our sales were made through digital channels.

With this focus on customers’ needs, we are also very aware that the financial sector still falls seriously short in terms of social repute.

For that reason, I consider it essential that we concern ourselves with that reputation, because a sound financial system is vital to sustainable economic growth, which is the means to improve living standards and a precondition for reducing unemployment.

The best way to regain recognition is by listening to what society is asking of us; and when we listen to society, what we hear is that the economic crisis has had a very serious impact on the sector’s reputation. The sector has still not recovered the social recognition that every company needs. It can only do so through excellent corporate governance and adherence to a strict code of ethics.

That is one of our main challenges for the year just started.

For my part, on behalf of the whole of the Bankia team, I would like once again to sincerely thank our customers and shareholders for the trust they have shown in us day after day.

We are very aware of their support: it is the best incentive we have to continue to build the financial institution that society demands, so that we can continue to finance households and companies and thus contribute to our country’s social and economic improvement.


JOSÉ IGNACIO GOIRIGOLZARRI

CHAIRMAN OF BANKIA

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