• "For this Board, paying back the aid to the taxpayers is one of most important objectives"
  • "It is a matter of great satisfaction and pride to be able to announce the payment of the bank's first dividend"
  • Bankia chairman highlights increase in market share in lending to self-employed and SMEs, consumer finance and investment funds
  • "Bankia fully complies with the 48 recommendations of the Code of Good Corporate Governance. Excellence in corporate governance is crucial to the medium and longer-term sustainability of any enterprise"

The chairman of Bankia, José Ignacio Goirigolzarri, announced at today's Annual General Meeting that the bank expects to achieve a "substantial increase in profit" in 2015, after posting attributable profit of 747 million in 2014.

In his address to the bank's shareholders, the Bankia chairman explained that the bank's goal this year is to "meet the goals we set for ourselves in our Strategic Plan", which concludes at the end of this year. One of the plan's main targets is to reach a return on equity (ROE) of 10%, compared to 6.6% last year.

Achieving an ROE of 10% "would make us one of the most profitable banks in Spain" and would mean that "Bankia has a higher value and is worth more, which will allow us to pay back the aid we received from the taxpayers. I can assure you we will work very hard to make those goals happen."

"There will be difficulties in our path," he acknowledged, "I am very aware of them. But I am convinced we will be able to overcome them. That conviction is based on my faith in the bank's team of employees - a team that has demonstrated its worth and commitment on a daily basis."

Repayment of aid

Last year, Goirigolzarri explained, BFA sold 7.5% of Bankia to private investors. This was "a successful transaction and one that was very important to us because it was representative of the bank's gradual return to normal operations, because it signified a vote of confidence on the part of the market and investors, and because it meant we could start to pay back the aid we received from the taxpayers, which for this Board is one of the most important objectives".

"2014 was also the year in which the ECB and the EBA carried out the balance sheet review (AQR) and stress tests on the main European banks. The results showed that the Spanish banking sector is in good health. And in the particular case of our bank, they were deeply satisfying because they showed that the BFA-Bankia Group has an excellent level of capital adequacy and soundness The Group took first place among Spanish banks in terms of capital adequacy in the adverse scenario and obtained the best results of all the listed Spanish banks," Goirigolzarri said.

The Bankia chairman gave the shareholders a review of the income statement for 2014, when the bank obtained an attributable profit of 747 million euros. If the General Meeting gives its approval, 202 million of that profit will be paid out in the form of dividends (1.75 euro cents per share).

This result includes the effect of the provision set aside for possible civil suits arising out of the 2011 IPO. Without this provision, the bank would have had earnings of 966 million euros, with an ROE of 8.6% (270 basis points more than in 2013), proving that it is "on track to achieve the objective of our Strategic Plan, which is to reach a return on equity of 10% by the end of this year - 2015."

In 2014, Bankia also succeeded in reducing its stock of non-performing loans by 3,500 million euros, increasing its loan loss coverage, improving its liquidity position and generating 200 basis points of capital, bringing the Basel III CET 1 ratio on a fully loaded basis to 10.6%.

"We are now a self-sustainable institution. A healthy balance sheet, increasing earnings and a growth model that generates capital organically: that is the basis on which we are able to recommend the payment of a cash dividend of 202 million euros, which is great news - news that fills us with satisfaction and pride," the Bankia chairman said. "This is undoubtedly great news because it is the first dividend our company has paid and is further proof of the bank's return to normal operations.

Business growth

Goirigolzarri explained how Bankia has made progress in key aspects of its business, both in 2014 and in the first few months of 2015. In investment funds, for example, Bankia gained 24 basis points of market share last year, bringing the share to 4.98%. And in the first quarter of 2015 the figure has already risen above 5%.

There have also been achievements in lending. The market share of new consumer loans to households went from 4.7% in 2013 to 7.1% in 2014. And in the first quarter of 2015 "we increased our revenue from consumer lending by 11%".

The number of loans to the self-employed and SMEs increased by almost 40% in 2014 and the bank set itself the goal of increasing its market share of working capital loans in this segment. "And that's what we did. Our share of receivables discounting went from 6.8% to 7.4%, and in foreign trade we had growth of more than 130 basis points, to 5.6%."

"We made a very strong start to 2015 in this segment, where we are seeing growth rates of new lending in the region of 70%," Goirigolzarri said.

For all these reasons, "we are confident of achieving growth in net new loans (difference between loans falling due and new loans) of more than 10% for 2015 as a whole in the consumer finance and the self-employed and SMEs segments."

One of the keys to these achievements has been "the improvement in the commercial productivity of our branch network. In the last two years we have gone from selling 18 products per employee per month to 31 products. We have increased our commercial productivity 70% in the period."

Corporate governance

Goirigolzarri reviewed the developments in the bank's corporate governance, in line with the new recommendations. He told the shareholders that "excellence in corporate governance is crucial to the medium and longer-term sustainability of any enterprise."

After giving details of the changes in corporate governance during 2014, including the appointment of José Sevilla as CEO and the changes to the Board committees, he highlighted the fact that Bankia "fully complies with the 48 recommendations" of the 2006 Code of Good Corporate Governance that are applicable to it.

With reference to the recently approved new code, he explained that "we are examining and analysing" its instructions "with a view to monitoring compliance and incorporating them in Bankia's corporate texts, although, at the same time, we have also implemented some of them in practice immediately". One notable example, he said, was the requirement to report to the General Meeting in person on the most important aspects of corporate governance.

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