Bankia : The company submits press release about the results of the third quarter of 2016.

Q3 results improve on previous two quarters and once again exceed market consensus

• The CET1 fully loaded ratio continues its upward trend, reaching 13.24%, compared to 12.26% at the end of 2015

• The stock of non-performing loans and foreclosed assets is down almost 2,000 million euros in the year to date, while the NPL ratio is down to 9.5%

• Lending to businesses and consumer finance is up 1.9% year-on-year

• Customer funds are up 1,724 million in the nine months to September, with growth in deposits and off-balance-sheet funds

• Multichannel customers already account for 36.3% of the total and digital-only customers, for 15.3%

• The deconsolidation of CNB, the depreciation of the Sareb bonds and the fall of the Euribor have affected accumulated profit

• Expenses remain under control and are down 2.3% on a constant perimeter basis, keeping the efficiency ratio ex NTI at 51.8%

• Return on equity is unchanged at 8.2%, the highest of the six largest banks

On a quarterly basis, however, attributable profit moved upward, from 237 million euros in the first quarter to 245 million euros in the second and 250 million euros in the third, which represents growth of 2.2% quarter-on-quarter.

Bankia's CEO José Sevilla said that "Bankia continues to demonstrate its ability to improve the quality of its balance sheet. Each quarter, we have succeeded in reducing the balance of non-earning assets, maintained our coverage levels and increased our solvency." Seville emphasised that "strong capital levels and high efficiency are key factors for facing the current difficult interest rate environment".

The CEO of Bankia added that "the effort we have made to keep costs under control and reduce the level of provisions, through improvements in balance sheet quality, have allowed us to maintain high levels of profitability".

As regards business trends, Sevilla said that "the strategy of waiving fees, which was launched at the start of the year, has continued to yield good results, both in terms of attracting new customers and in cross-selling to existing customers".

The Bankia CEO also stressed that this quarter "Bankia was included in the Dow Jones Sustainability Index. This is a very important milestone, one that we are very proud of, because it implies the approval not just of the Bank's management results but of how the Bank is being managed." The aspects of Bankia that were assessed include corporate governance, transparency and the management of stakeholder expectations and needs.

In the first nine months of the year, net interest income reached 1,631 million euros, down 21.4%, or 16.9% if we discount the effect of the deconsolidation of CNB. The deconsolidation of CNB deducted 112 million euros from interest income, while the repricing of the SAREB bonds subtracted 119 million euros and the effect of the fall in the Euribor on the loan portfolio removed 161 million euros. The Bank's decision to eliminate floor clauses from mortgage agreements deducted a further 28 million euros.

The figure for net fee and commission income reflects the effect of the elimination, in January, of all fees for customers who have direct-deposit arrangements in their account at Bankia for their income. In the first nine

months of the year, net fee and commission income totalled 611 million euros, down 13.8%.

Net trading income came to 184 million euros, down 18%, due to reduced portfolio sales compared to 2015.

As a result, gross income for the first nine months of the year totalled 2,460 million euros, down 18.8%. Without the effect of the deconsolidation of CNB, the decline would have been 15.5% compared to the same period of 2015.

In this difficult environment of negative interest rates, managing costs and controlling NPLs in order to reduce provisions, are key management levers.

Operating expenses continue the downward trend seen in previous quarters. In the first nine months of the year they totalled 1,172 million euros, a fall of 2.3%, excluding the effect of the deconsolidation of CNB. Including the expenses of CNB in 2015, the decline would have been 6.5%.

Cost control has allowed Bankia to maintain an efficiency ratio excluding net trading income of 51.8%, outperforming the industry average by more than nine percentage points. Net operating income before provisions was 1,288 million euros, down 27.4%.

Continued improvement in the quality of the Bank's balance sheet, with falls both in NPLs and in foreclosed assets, brought a decrease in provisioning expense, which totals 321 million euros in the year to date, down 47.5%.

As a result of all this, net attributable profit for the first nine months of the year was 731 million euros, down 14.5%. Stripping out the contribution of CNB in 2015, the decrease would be 9.9%. In quarterly terms, profit for the period from July to September was 250 million euros, 2.2% higher than the previous quarter.

These results maintain return on equity (ROE) at 8.2%, the highest of Spain's six largest banks.

The new positioning with customers put into effect at the start of the year continues to bring clear improvement in customer satisfaction rates, encouraging them to intensify their relationship with the bank.

The mystery shopper exercises that assess the quality of the attention customers receive once again returned improved scores for Bankia in the third quarter, rising to 7.62 points out of 10, further widening its advantage over the sector average, which declined to 7.06. The customer satisfaction index continued rising to reach 86.8%, a gain of 4.4 percentage points over the 2015 reading.

Having customers with a higher degree of satisfaction increases the options for the bank to interact with them and this is clearly reflected in the figures. In the first nine months of the year, the number of credit cards in use grew by 246,349, three times the increase recorded in the same period in 2015. The number of customers with direct deposit of their income continued rising (109,212 more) and billings through the bank's POS terminals were up nearly 20%.

On the lending side, activity was brisk in consumer loans and in financing of the self-employed and SMEs. Consumer loans outstanding rose in the last year by 14.9%, while loans to business were up almost 1%. In the last year, the balance in both segments grew 700 million euros, to 38,200 million euros, a gain of 1.9%.

Customers funds, meanwhile, increased 1,724 million in nine-month period. Deposits were up 1,020 million euros, to reach 98,010 million euros. Off- balance-sheet funds (mutual funds and pension plans) grew 704 million euros, reaching 19,720 million euros.

Bankia's determined move towards a multichannel customer relationship model continues to provide good results. 36.3% of customers perform transactions with the bank using physical and virtual means, up nearly five points since year- end 2015 (31.5%). 15.3% of customers are digital-only, compared with 13.8% in December of last year.

The new programmes that have been developed include the 'Connect with your expert' service, targeted at customers who prefer to be attended via channels