Bankia S A : Consolidated statement of non-financial information of the Bankia Group for 2020

NON-FINANCIAL INFORMATION STATEMENT FOR 2020

This document is a translation of an original text in Spanish. In case of any discrepancy between the English and the Spanish version, the Spanish version will prevail.

This document presents the information required by the Spanish Non-financial and Diversity Information Act of 28 December 2018 and was prepared in accordance with the comprehensive option of the GRI Sustainability Reporting Standards. It has been assured by an independent expert in accordance with ISAE 3000.

Therefore, the Non-Financial Information Statement describes the key features of the Bankia Group's business model and risk management; its sustainability plans; environmental, social and employee matters; its policy on human rights; anti-corruption and bribery matters; and the bank's relationship with society. It describes the main policies pursued, actions taken and their outcome, the principal risks and how they are managed, and non-financial key performance indicators.

The non-financial information has been prepared considering the European Commission's communication on 5 July 2017 regarding guidelines on non-financial reporting (methodology for reporting non-financial information, 2017/C 215/01).

The information contained in the Non-Financial Information Statement encompasses the Bankia Group's operations (with the same scope as the consolidated financial statement) in 2020. It contains information that is presented in greater detail in other Bankia Group reports, such as the Annual Corporate Governance Report and the Remuneration Report. The information contained in the "People and talent management" section was prepared considering the Bankia, S.A. scope, except for the "2020 Training plan" which covers the Bankia Group scope.

CONTENTS

1.	FOREWORD .......................................................................................................................................... 3
a)	Letter from the Chairman ............................................................................................................... 3
2.	STRATEGY ............................................................................................................................................ 6
a)	Backdrop ......................................................................................................................................... 6
b)	2018-2020 Strategic Plan .............................................................................................................. 9
c)	Evolution of the 2019-2020 Responsible Management Plan ...................................................... 11
3.	ROBUSTNESS AND SECURITY ............................................................................................................ 21
a)	Solvency and liquidity ................................................................................................................... 21
b)	Internal control and compliance .................................................................................................. 23
c)	Tax commitment ........................................................................................................................... 30
d)	Information security and privacy .................................................................................................. 31
e)	Risk management ......................................................................................................................... 33
4.	RESPONSIBLE BANKING .................................................................................................................... 49
a)	Corporate governance ................................................................................................................... 49
b)	Ethics and integrity ....................................................................................................................... 62
c)	Sustainable financing ................................................................................................................... 64
d)	Human Rights ............................................................................................................................... 69
e)	People and talent management ................................................................................................... 71
f)	Responsible purchasing ................................................................................................................ 94
g)	Transparency of information ........................................................................................................ 96
5.	CUSTOMER FOCUS ............................................................................................................................. 98
a)	Responsible marketing ................................................................................................................. 98
b)	Business model ........................................................................................................................... 102
c)	Innovation and digitalisation ...................................................................................................... 133
d)	Accessibility and financial inclusion .......................................................................................... 142
e)	Effective management of non-performing loans ....................................................................... 144
6.	COMMITMENT TO THE ENVIRONMENT ............................................................................................ 146

a) Social contribution ...................................................................................................................... 146

b) Direct environmental impact ...................................................................................................... 155

APPENDIX I .............................................................................................................................................. 162

APPENDIX II .............................................................................................................................................. 168

1. FOREWORD a) Letter from the Chairman 2020 will go down in history as the year of the COVID-19 pandemic.

We just closed one of the most difficult years in recent history, in which as a society we have had to deal with a healthcare crisis that continues to have considerable ramifications in terms of the loss of human life and the socio-economic impact.

On the production front Spanish GDP shrank by 11% in 2020 and although we expected an intense recovery of the economy in 2021 and 2022, in principle will not return to pre-crisis levels until finally this year.

All of Spain's economic sectors have suffered the consequences, to a greater or lesser degree, of not only the strict lockdown and its implications on spending or investment decisions, but also the ongoing uncertainty caused by the disease. As a cyclical sector, the banking industry has not been immune to this situation or the fallout. The knock-on effects have been felt in our entity.

Since the start of lockdown in March we have made the utmost efforts to maintain a close relationship with our customers in their greatest hour of need.

Being an essential service, we kept practically all of our branches open in order to provide the best possible service to our customers. This, alongside the excellent operation and security of our digital channels, made it possible for our entity to provide the financial services required by our customers at all given times. This would not have been possible without the commitment of Bankia's professionals, who throughout the year have demonstrated an amazing ability to adapt to the new context caused by the pandemic and an absolute dedication to customer service.

Moreover, in view of the economic impact of the health crisis, we designed solutions and products to support families and businesses affected by the shutdown in activity. We granted payment holidays for mortgages and consumer loans to households which have lost a large portion of their income during the year. Alongside the Spanish Official Credit Institute (ICO), we helped thousands of businesses and self-employed workers preserve the viability of their business ventures with new lines of financing.

As such, not only our entity but the industry as a whole has become part of the solution to the problems caused by the crisis, helping to protect family income and production in Spain.

Thanks to the banking industry's efforts in recent years to bolster solvency and liquidity, and the support of monetary authorities, on this occasion banks have the capital and financial strength to continue financing businesses and families.

The economic effects of the crisis, together with these actions we have undertaken, have had a direct impact on profit for the year.

In 2020 we have recognised EUR 505 million of extraordinary provisions to cover the impacts that the COVID-19 crisis could have on our lending in the future. These provisions have directly affected profit after tax, which stands at EUR 230 million.

Nevertheless, our entity has continued to show great commercial dynamism, reflected in the fact that this year we have once again achieved record market shares in our priority high-value products. This includes reaching a 7.5% share in investment funds management and exceeding 8% in lending to businesses for the first time ever.

This huge commercial strength, supported by considerable cost containment, has enabled us to improve core profit by 3.8%.

Despite the challenging landscape, our ability to generate capital organically enabled us to raise our capital ratio to above 15% by the end of the year.

The entity has continuously improved these management KPIs for the last three years, which has helped us to achieve the lion's share of our objectives set in the 2018-2020 Strategic Plan, including the reduction of non-performing assets and the generation of capital.

Therefore, with these 2020 results, we close the final chapter of Bankia with pride having achieved major milestones despite the macroeconomic climate, particularly in terms of interest rates, being a far cry from that envisaged in our strategic plan.

The crisis caused by COVID-19 is having an enormous impact on the financial environment, particularly interest rates. At present, it seems clear that interest rates in Europe will be negative for a long period of time.

This requires us to make structural changes to our business and provide a strategic response.

With this outlook, having devoted numerous sessions in the past to analysing the consolidation of the sector in Spain and Bankia's potential role, the Board of Directors took the view that anticipation would be a key strategic factor.

In times of abrupt changes in the environment, anticipation not only affords us more options, it allows us to undertake integrations from a position of increased financial strength.

Accordingly, the Board of Directors considered that this anticipation should be realised through a search for a partner, in order to join forces and ensure three key aspects:

• x A critical size to obtain economies of scale and improve efficiency, while increasing the capacity for sustained investment in technology and innovation.

• x A more robust financial position, with a highly-provisioned and well-capitalised balance sheet, in order to take on the consequences of the economic crisis from a position of greater financial strength.

• x Sustainable profitability, thanks to a balanced business mix and a strong capacity for generating income from diversified sources.

I think the merger with CaixaBank, which was approved by the shareholders at their extraordinary general meeting on 1 December, meets all these objectives as we will form part of the largest financial group in Spain, with total assets in excess of EUR 660,000 million and over 20 million customers.

This project was launched on the back of a high-quality balance sheet and a unique distribution model which, together with a significant capacity for balanced income generation and synergies arising post-merger, will produce increased efficiencies and returns for all shareholders.

While all of the above is fundamental, of no lesser importance is the achievement of these objectives through shared values and culture, as this is the only way to mitigate the implementation risks related to the merger as a whole.

Bankia and CaixaBank share a management model that prioritises the ongoing improvement of customer satisfaction, which is essential to continue the sustainable generation of value for all stakeholders.

We do this with the conviction that we have to develop a model which harnesses the best of both entities. It is not just about uniting the banks, rather we must create a franchise that improves upon the current practices of each respective entity.

Given our origins, we have shared principles which we must apply and further strengthen, where possible, going forward.

These principles reflect the expectations of different stakeholders: customers, our team, our shareholders and, naturally, the local communities we form part of and serve, a project aimed at supporting and driving the expected growth in the Spanish economy, making it stronger by furthering digitalisation and developing a more sustainable economic environment.