Bankia meets Strategic Plan targets ahead of time


Bankia meets Strategic Plan targets ahead of time


Bankia posts attributable profit of €855 million in the year to September, up 7.3%


  • Return on equity is 9.9%, compared to 8.4% in the same period 2014


  • Stable revenues and falling expenses improve the efficiency ratio to 41.5% year to date


  • Customer income maintains its rising trend


  • NPLs fall by €2,463 million year to date, lowering the NPL ratio to 11.41% and raising coverage to 61.7%


  • Fully loaded CET1 ratio is 11.73% after Bankia generates 113 bps of capital so far this year


  • Strong growth in new lending to businesses and consumer finance drives a 5.1% organic increase year-on-year in both segments


  • New payroll accounts up by 12%, POS sales by 47% and insurance sales by around 20%


  • Customer service quality improves again in the quarter increasing our lead over the sector average


  • BFA Group reports net profit of €1,890 million


Madrid, 2 November 2015. Bankia recorded net attributable profit of €855 million in the nine months to September 2015, a gain of 7.3% on the same period 2014.


Bankia Chairman, José Ignacio Goirigolzarri said 'we are satisfied to report that the ambitious targets we set ourselves three years ago in the Strategic Plan have been met ahead of time, making Bankia one of the most efficient banks in Spain, with risk under tight control and solvency growing from quarter to quarter. The aim of achieving 10% return on equity is now within our grasp. These achievements mean we can press forward with paying back the aid we received, a process to which we are firmly committed.'


'Looking to the coming quarters, being a highly efficient business with limited provisions is key if we are to succeed in an environment where revenues are under pressure from low interest rates', he added.


Bankia CEO, José Sevilla, emphasised that 'with every quarter that passes Bankia is improving its profitability. ROE is now among the highest in the sector, a signal achievement given the current environment, and we have done it while improving balance sheet quality, reducing NPLs, increasing coverage and reorienting assets toward higher-yielding segments.


Sevilla added that 'Bankia continues to show great dynamism in sales. Lending to SMEs and consumers is growing strongly and we are winning share among retailers. The service quality we are offering customers is also improving and this is helping us attract more payroll accounts than in 2014 and encouraging our customers to sign up for more insurance policies and more investment funds.'


Profits grow


Bankia's income statement shows revenues largely stable. This, coupled with a tight grip on expenses and falling cost of risk, has boosted profit and lifted return on equity to 9.9%.


Net interest income in the year to date was €2,075 million, down 4% as a result of historically low interest rates, the elimination of floor clauses from mortgages and the depreciation of the SAREB bonds. Without the SAREB effect net interest income would have grown by 4.3%.


The lower return on assets was offset by lower financing costs, which allowed customer margin to rise to 1.47% in the third quarter, compared to 1.26% in 3Q14.


Fee and commission income contributed €708 million in the year to September, broadly in line with the prior year period; the 1% increase was helped by a good performance on insurance and investment fund sales.


Net trading income was similar to the previous quarter, totalling €224 million so far this year, up 50.1% on 9M14. The fixed-income portfolio (ALCO) was stable, but turnover delivered some gains.


All of which meant that gross income was €3,030 million, close to the €3,079 reported a year ago (-1.6%).


Costs continue to fall


Bankia is continuing its efficiency drive. Operating expenses fell by 3.8% in year-to-date terms, to €1,257 million and are marking a downward trend from quarter to quarter. As a result, the efficiency ratio was 41.5% year-to-date, compared to 42.4% at 9M14.


Pre-provision profit in the year to September 2015 was €1,773 million, slightly up on the same period 2014.


Besides cost controls, another big factor lower down the income statement was the positive impact of Bankia's better quality balance sheet, which led to a 25.1% fall in provisions, to €612 million.


Bankia thus reduced its recurrent cost of risk (provisions as a percentage of loans) from 0.63% between January and September 2014 to 0.5% in the first nine months this year. In the third quarter, cost of risk stood at 0.44%.


Bankia earned profit before tax of €1,156 million in the first nine months of 2015. After taxes and minority interest, Bankia's attributable profit to September was €855 million, up by 7.3% year-on-year.


This gave a cumulative return on equity in the nine months to September of 9.9% compared to 8.4% in the same period 2014.


Stepped-up sales activity


During the first nine months, Bankia continued to show great commercial dynamism while simultaneously shifting its balance sheet mix toward more profitable segments, both in loans and deposits.


In lending, Bankia granted €10,784 million in new loans to the self-employed, SMEs and businesses in the nine month period, up by 55.4%. A further €874 million went to finance new household consumption, a 39.4% increase on 9M14. See http://darcuerda.bankia.com/es/.


The healthy growth in new lending to businesses and consumer finance expanded the back book in these segments, which deliver higher returns, by 5.1% year-on-year, to €46,700 million. Meanwhile, the weighting of mortgages and developer-linked assets in the balance sheet fell.


Customer funds grew by €923 million in the nine-month period, to €116,890 million with a trend away from term deposits toward sight accounts or investment funds.


The increase in off-balance sheet funds allowed Bankia to substantially increase its market share in investment funds, from 4.98% at end-2014 to 5.4% in September 2015.


Also, the branch network is maintaining the sales drive with a 12% increase in new payroll accounts and a 19.2% jump in insurance sales. POS contracting also rose 47.6%.


Improved sales performance was accompanied by a rise in service quality extending our lead over the sector average. In a study measuring service quality and commercial capacity of the different bank networks, Bankia scored

7.2 in the third quarter, stretching its lead over the average score of its peers to more than half a point.


Less NPLs better covered


Again in the third quarter, Bankia improved the quality of its balance sheet, reducing the amount of NPLs and improving the coverage of those that remain on its books.

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