Goirigolzarri: “The transformation of Bankia, based on solid responsible management principles, has been impressive”

• Bankia chairman José Ignacio Goirigolzarri has told the shareholders that the merger with CaixaBank is 'an enormously exciting project, because we are going to create the number one financial group in Spain' and 'spearhead the profound transformation to be carried out in our sector'
• 'We approach this new project with the clear purpose of creating a stronger bank that can support our country's families and businesses'
• The shareholders were told that 'this is the best way to be able to reward you on the basis of profit levels that will be much higher for the combined entity than for our bank on its own'
• 'The conclusion of the 2018-2020 Strategic Plan marks a fitting finale to the cycle of transformation in Bankia's history', explained Goirigolzarri, who noted that the bank has transformed its financial fundamentals to make it the most solvent of Spain's banking majors
• In his review of 2020, the board chairman recalled that 'we have had to face a health crisis that is still affecting us intensely, in the loss of human life and in economic and social setbacks. This has been, beyond doubt, one of the most important challenges that we as a society have had to confront in recent years'
• Goirigolzarri argued that faced with this situation, Bankia mustered an 'extraordinary reaction', both in managing the pandemic and in designing and implementing measures to mitigate its effects on customers
• CEO José Sevilla pointed out that we have 'completed what may well have been the most complicated year in our history, in which Bankia worked to support society at large while at the same time ensuring satisfactory business and income statement performance'

Bankia chairman José Ignacio Goirigolzarri has underscored the 'impressive' transformation carried out by the bank over the last eight years, based on solid responsible management principles, and explained that the merger with CaixaBank now marks the start of a 'new stage' with 'an enormously exciting project, because we are going to create the number one financial group in Spain'.

In his talk to the Annual General Meeting of Shareholders, the last to be held by Bankia as an independent entity, he stressed that 'beyond size, this is a project that will lead us to spearhead the profound transformation to be carried out in our sector'.

Goirigolzarri voiced his confidence that the authorisations for the merger will be received soon, at which time the real union of the two banks will begin, culminating in their technological integration, which is initially slated to be completed in late 2021.

'We approach this project with a very clear purpose, namely, to create a stronger bank that can better support our country's families and businesses', the Bankia chairman stated, while expressing his conviction that 'only through this new bank will we have the strength needed to become lead players in our country's recovery'.

In addition, according to Goirigolzarri, 'only with an adequately sized bank will we be able to invest in and develop tools and products that satisfy the requirements of our customers', and 'only through a growing bank will we be able to offer our employees career development opportunities in the coming years'.

Sustainable profits and dividends

He also argued that 'it is only through the creation of that new bank that you the shareholders will be able to reap the value of the synergies the merger is poised to generate'. 'This is the best way to be able to reward you on the basis of profit levels that will be much higher for the combined entity than for our bank on its own', he added.

In this regard he repeated that 'after the merger the new Caixabank will have the financial might to generate sustainable returns. And that is the necessary condition for being able to maximise cash dividends, which is the goal we all share'.

As for the distribution of earnings, Bankia, pursuant to the recommendations of the European Central Bank (ECB) for heightened prudence in the present economic context, and in accordance with the terms of the projected merger, decided to allocate profits for the year to voluntary reserves and to not pay out dividends. It will thus be up to the new Caixabank Board of Directors to propose a dividend distribution, to which all Bankia shareholders at the distribution date will be entitled, on the same terms as the Caixabank shareholders.

The bank's chairman underscored that at the close of last week the share was up 69% over its trading price the day before the merger was announced. This is 20 percentage points better than the growth in the Eurostoxx Banks index and 48 percentage points stronger than the Ibex.

Assessment of 2020, a year of 'great complexity'

Goirigolzarri reviewed 2020, a year he described as of 'great complexity' and gave the General Meeting an evaluation of the bank's last Strategic Plan for the period 2018-2020.

In his summary of 2020, he recalled that 'we have had to face a health crisis that is still affecting us intensely, in the loss of human life and in economic and social setbacks'. 'This has been, beyond doubt, one of the most important challenges that we as a society have had to confront in recent years', he highlighted.

The Bankia chairman has argued that faced with this situation, the bank mustered an 'extraordinary reaction', both in managing the pandemic and in designing and implementing measures to mitigate its effects on customers.

Bankia kept practically all of its branches open for business during the months of strict lockdown, kept its digital channels in excellent operation and expanded its use of telework. 'This was only made possible by the commitment of Bankia's employees, who over the course of the year demonstrated their great capacity to adapt to the new context brought on by the pandemic, their strong sense of responsibility and an overarching dedication to customer service', Goirigolzarri assured.

Also, the bank advanced in the design of solutions and products to support households, the self-employed and businesses hit by the shutdown of activity. Toward that end, the Bankia chairman stated, 'we have granted moratoria for mortgage and consumer loans for families who went without a good part of their income during the year and we teamed up with ICO to finance thousands of enterprises and independent contractors, extending new lines of credit to keep making their business projects viable'.

Support for households and businesses

In this regard, Bankia chief executive officer José Sevilla noted that the bank granted 54,000 ICO-backed loans, with a drawn balance of over 8,200 million euros, and 113,000 loan moratoria for a total of 5,625 million euros.

'We now look back at a year of enormous complexity, in which economic activity suffered an unprecedented setback and interest rates continued to fall', the bank's CEO underscored.

He also emphasised that 'in our banking business, we have grown more than our competitors in key segments' and that 'our balance sheet has been strengthened, with a reduction in non-performing assets and a very significant increase in solvency'.

Sevilla explained that core earnings, which reflect the most recurring part of the income statement, rose 3.8% in 2020, to 1,336 million euros, and that Bankia's net profit reached 230 million euros, after setting aside extraordinary provisions of 505 million 'to mitigate any future effects of the pandemic'.

For the CEO, 'we completed what may well have been the most complicated year in our history, in which Bankia worked to support society at large while at the same time ensuring satisfactory business and income statement performance'.

The Bankia chairman, in turn, noted that the situation generated by Covid-19 has also affected the financial environment, given that 'the financial sector has not been immune to the pandemic and to its fallout'.

On the one hand, low interest rates will persist in Europe for a long time to come -'the market is discounting that rates will not return to positive ground in the euro zone until February of 2025'- and, on the other, great advances have been made in digitisation by society and by the bank's customers, noted Goirigolzarri.

These circumstances made it necessary to be among the first movers in the consolidation of Spain's financial sector and to look for a partner who could ensure sufficient critical mass, financial robustness and sustainable margins, three 'key points' that are met by the merger with CaixaBank.

Results of the 2018-2020 Strategic Plan

The head of Bankia took a positive view of the results of the 2018-2020 Strategic Plan, which he said, 'met all of the objectives that depended on our management performance', such as the increase in market shares, cost containment and reduction of non-performing assets.

However, he told shareholders that 'we have not met our net interest income objective, due to the strong impact on this variable of interest rates, which behaved radically worse than the market expected'.

The bank nonetheless topped the plan's goal of generating 2,500 million euros of capital in three years, with the final figure coming in at 2,932 million euros, boosting the CET1 capital ratio to 15.48%. The executive lamented that the new capital could not be distributed to shareholders, 'due to the supervisory and regulatory environment brought on by the pandemic', but he argued that Bankia's 'capacity to generate capital has been key to the merger with Caixabank'.

'The conclusion of the Strategic Plan marks a fitting finale to a cycle of transformation in Bankia's history', Goirigolzarri explained. He specifically noted that the bank has transformed its financial fundamentals to become the most solvent of Spain's banking majors.

In his opinion, 'behind all this transformation there stand certain solid principles of responsible management. Responsible management has been part of our DNA during all these years'. Responsible management based on four pillars: deeply rooted principles and values, excellent corporate governance, commitment to sustainability and the environment, and resolute striving for a fairer and more inclusive society.

On these foundations, 'the Bankia team has achieved what perhaps many doubted was even possible: we have made Bankia a sustainable and solvent bank, with high customer satisfaction ratings thanks to the service we provide. Bankia has gone from being the main problem for the financial sector and for our country's stability in 2012, to being a reference in the sector and making a decisive contribution to socioeconomic progress in Spain in 2020', Goirigolzarri declared.

At this point the Bankia chairman made special reference to two executive directors in the bank, José Sevilla and Antonio Ortega, whom he thanked for their 'contribution, which for me has been absolutely decisive over these years'; and to the members of the Board of Directors as a whole, explaining that 'they have given a permanent example of dedication, professionalism and a profound sense of independence', and then to all of the bank's employees.

'I am grateful to the Bankia team for many reason but, above all, for their example, the example they have given me during all these years. An example of obsession with customer service, of professionalism, commitment and a spirit of adaptation and sacrifice. I have said this many times but today want to repeat that I take enormous pride in being part of this team', he noted emphatically.

He also had words of gratitude to the bank's customers, 'who have trusted and stood with us', and to the shareholders 'for the confidence you have shown during this entire period'. I am sure that all of us who have lived this experience will remember it with tremendous pride, with great affection and with enormous gratitude', he added.

Objective: to be the standard-bearer for responsible banking

The Bankia chairman pointed out that the new CaixaBank will work 'with an intense focus on a way of running the bank that brings us closer to our customers and to society as a whole, because we want to be the standard-bearer for responsible banking'.

And this commitment is not starting from scratch, because both Bankia and CaixaBank have been taking that approach for years now. Bankia has pursued this along three main lines. First, by fostering diversity in the bank and, in particular, the presence of women in executive positions. In 2020 women held 43% of management positions and earned 52% of promotions. These policies have allowed Bankia to enter the Bloomberg's 2020 Gender Equality Index (GEI) that recognises the bank as a gender-equality standard-bearer among banks the world over.

This was accompanied by a commitment to education through the Fundación Bankia por la Formación Dual, 'which is so necessary in our country and will be even more so in the future', and the bank's social action programmes, which in the last eight years contributed 147 million euros to social projects throughout all of Spain, benefiting 3.6 million persons and some 6,000 foundations and associations.