Financial Results 3Q 2017

24th October 2017

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Latest trends. Key Highlights Asset quality  NPAs (inc. portfolio transfer)(1) down € 813m in the quarter, -14% QoQ and -26% YoY.

 NPA ratio(1) stands at 19.7%. Target of c.18.0% by year end and

 Historical record sales of foreclosed assets coupled with opportunistic sales of investment properties allow Liberbank to reach its real estate assets reduction target of over €800m in the second half of 2017:

  • Direct gross sales of € 209m in the 3Q17 of which € 48m are investment properties.

  • Liberbank has signed an agreement in October to transfer a € 602m portfolio of gross real estate assets, of which € 86m are investment properties.

 NPLs down € 225m QoQ. NPL ratio drops to 10.5%, 75bp down QoQ.

 Coverage ratio of NPAs (inc. portfolio transfer)(1) stands at 49% as of Sep17.

 Texas ratio pro-forma(2) stands at 94%, below our 98% target for year end.

Solvency  CET1 ratio (FL) improves from 11.3% in Jun17 to 12.2% pro-forma(2) in Sep17.

 CET1 phased-in raises from 12.4% in Jun17 to 13.4% pro-forma(2) in Sep17 and total capital(2) increases to 15.3%.

 Migration to IRB models calendar well on track. Liberbank estimates, subject to the ECB approval, the RWAs on the mortgage portfolio could fall by more than Eur 3.0bn.

 As commented during the Extraordinary Shareholders Meeting held on the 9th of October the Board plans to launch the rights issue after the 3Q results release.

  1. Including the transfer of € 602m RE assets portfolio. Subject to closing, expected before year end. 3

  2. Including € 500m rights issue and transfer of RE assets portfolio (€ 602m).

Latest trend. Key Highlights Commercial activity

 Mortgages performing loan book keeps growing (+0.3% QoQ and +0.2% YoY).

 Consumer book and corporate book (exc RED&construction) maintain a strong growth (+10.5% and +5.5% YoY respectively).

 Mutual funds continue to grow (+19.7% YoY) and expect to accelerate further after reaching an agreement with JP Morgan in July.

Operating profit  Net interest income remains flattish QoQ while recurrent fees improve slightly YoY.

 Bank well-positioned for interest rate recovery. Ability to improve profitability in the Fixed Income portfolio.

 Costs remain under control. Cost cutting initiatives still ongoing, target to reduce operating costs below € 400m.

 Impairments are extraordinarily high this quarter in order to reinforce coverage.

CoR target below 25bps.

Liquidity

 Liberbank maintains a strong liquidity position, LCR ratio stands at c.346% and LtD at 92% as of Sep17.

 96.5% of the deposits are retail, granular, sticky and with low average balance.

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Liberbank SA published this content on 24 October 2017 and is solely responsible for the information contained herein.
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