Financial Summary December 2017 4Q 2017
Index 2 3 4 6 7 1. Economic and financial environment 2. Financial highlights 3. Results 4. Condensed balance sheet 5. Customer funds and lending 8 8 9 10 11 6. Quality of assets 7. Change in NPLs 8. Consolidated statements of income 9. Quarterly statements of income 10. Fees and commissions 12 13 14 14 15 11. Cumulative yields and costs 12. Quarterly yields and costs 13. Contribution by business area 16 17 18 16. Shareholder value 17. People 18. Quarterly events 14. Shareholders equity and ratings 15. Change in net worth
2 1. Economic and financial environment The cycle of growth remained strong during the last quarter of 2017, on the back of increased economic activity and job creation in developed countries. The Eurozone s performance was particularly significant, with its accelerating growth rate. Its gross domestic product grew by 2.8% at the end of the third quarter of 2017, with more dynamism than that of the United States, with 2.3% growth. The vigorous internal demand, the increasingly higher levels of corporate investment and the gradual decline of the unemployment rate (8.7% in November, down from 8.9% in September) were key factors. Despite the certainly complicated political situation in Europe, the power of its main economies could not be curbed. Thus, growth has gained traction, as evidenced by the GDP expansion in Spain at the end of the third quarter (+3.1%), Germany (+2.8), Italy (+1.7%) and France (+2.3). This performance affirms that the impact of certain geostrategic variables and political uncertainty is diminishing. In United States, Donald Trump was able to get a tax reform passed, and macroeconomic indicators showed signs of robust consumption, the industrial sector recovered after the hurricanes in August and September, and job creation improved, with the unemployment rate at 4.1% in December. In Japan, Abe was re-elected, renewing his mandate with an absolute majority and a sound economy, with a 2.1% GDP growth at the end of the third quarter of 2017. Emerging economies saw some recovery on the back of raw material prices and a weaker dollar. In China, the growth rate reached 6.8% in the third quarter of 2017, according to published figures. India enacted widespread structural and tax reform, recording a bountiful growth rate of 6.3% in the third quarter. Meanwhile, in Brazil, growth indicators were positive with a 1.4% increase in GDP, despite difficulties to rein in the tax deficit and the national debt. On the microeconomic front, corporate earnings were favourable, and the average earnings per share on the S&P 500 index climbed to 6.90%, even with downward adjustment with respect to insurance companies due to the hurricanes. This improvement is expected to continue in the medium term, according to fourth-quarter estimates that indicate an 11% increase in corporate earnings. This marco and micro environment is set within a scenario of low inflation (1.4% in the Eurozone and 2.1% in the US) and low interest rates. The markets understand the roadmap being taken by the central banks to normalise monetary policies, without curbing growth. The Federal Reserve raised interest rates in December, for the third time in the year (up 25 basis points to 1.25%-1.50%) and kept its guidance on increasing the federal funds rate gradually to around 2% under the leadership of Jerome Powell. The ECB announced that it would halve its asset purchase programme to 30 billion euros in monthly bond purchases (versus 60 billion euros previously) in early 2018; and temporarily extend quantitative easing in December 2017 for six to nine months. In the foreign exchange market, the euro strengthened with respect to the dollar, rising from 1.18 in September to 1.20 at the end of the year. Although a stronger common currency has not hindered growth in the Eurozone, it still poses risk in the coming months in terms of weakened competitiveness and price recovery. The British pound albeit with less fluctuation than in previous quarter, going from 0.88 in September to 0.89 in December against the euro) remains impaired by the little progress made in the Brexit negotiations and the declining economic activity in the United Kingdom. Overall, the fourth quarter of 2017 has provided a spectacular ending to a year in which stock values are up (cumulative revaluations in 2017: S&P500 +25.1%; EuroStoxx50 +6.5%; Ibex35 +7.5%; Hang Seng +26%; Sensex +27.9%; Bovespa +26.9%; Nikkei +19,1% and MSCI World +20,1%) and bonds withstand low internal rates of return (0.43% IRR for the German bund at the end of December). This is for three main reasons: the economic cycle is clearly expansive; the process to normalise the extremely lax monetary policies of the central banks (as stated earlier) has been and will continue to be very long; and the immense amount of liquidity in the market and the economy puts constant pressure on the prices of the most secure (or least insecure) assets in view of the lack of investment alternatives.
3 2. Financial highlights thousands of euros Variation BALANCE SHEET 31/12/2017 31/12/2016 Amount % Total assets 71,332,651 67,182,467 4,150,184 6.18 Loans and advances to customers 53,300,184 51,333,772 1,966,412 3.83 Total customer funds 79,376,226 75,411,758 3,964,468 5.26 On balance sheet 52,788,690 51,869,456 919,235 1.77 Retail customer funds ex repos 46,431,396 44,127,812 2,303,584 5.22 Marketable debt securities 5,750,215 6,923,396-1,173,181-16.95 Off-balance-sheet managed funds 26,587,536 23,542,302 3,045,234 12.94 Shareholders equity 4,357,140 4,097,376 259,764 6.34 EARNINGS Net interest income 1,061,995 979,017 82,978 8.48 Gross operating income 1,851,316 1,717,389 133,927 7.80 Pre-provision profit 906,846 815,142 91,704 11.25 Profit before taxes 677,123 676,711 412 0.06 Net attributable income 495,207 490,109 5,098 1.04 RATIOS (%) Non-performing loans/total risk exposure 3.45 4.01-0.56-13.97 NPL coverage 44.53 49.23-4.70-9.55 Cost-to-income 51.02 52.54-1.52-2.89 RoE 12.64 13.48-0.84-6.23 RoA 0.71 0.78-0.07-8.97 CET 1 capital 11.83 11.77 0.06 0.50 BANKINTER SHARES Number of shares 898,866,154 898,866,154 0 0.00 Closing price ( ) 7.90 7.36 0.54 7.39 EPS ( ) 0.55 0.55 0.01 1.03 DPS ( ) 0.25 0.21 0.04 18.50 BRANCHES AND BUSINESS UNITS Number of branches 445 447-2 -0.45 Other business units Corporate bkg 22 22 0 0.00 SMEs 72 73-1 -1.37 Private bkg 48 49-1 -2.04 Corporate partnerships 279 315-36 -11.43 Number of financial agents 444 482-38 -7.88 Telephone and on-line banking 3 3 0 0.00 EMPLOYEES Banking group 5,578 5,486 92 1.68 Insurance business (LDA) 2,194 2,049 145 7.08
4 3. Results Bankinter Group has brought 2017 to a brilliant close, with record earnings underpinned by its core customer business that build on its 2016 earnings, despite the extraordinary results from that year. The bank s profitability is above that of its peers, reaffirming its traditional competitive advantage in terms of quality of assets. The Group closed out 2017 with 495.2 million euros in net profit, a 1% increase with respect to 2016; and with 677.1 million euros in pre-tax profit, similarly to last year and offsetting extraordinary results from its acquisition of Barclay s Portugal in 2016, with its core customer business. In a like-for-like comparison without those extraordinary results, with the figures from Bankinter Spain alone, the Group s net profits saw a 20.2% increase, with 19.1% increase in profit before tax. For another consecutive year, Bankinter continues to lead the banking system in profitability, with a return on equity of 12.6%, the highest RoE among listed banks in Spain. In terms of solvency, Bankinter ended December 2017 with a CET1 fully-loaded capital ratio of 11.46% and a CET1 phased-in ratio of 11.83%, a 6 basis-point improvement from 2016 and well above the 7.125% required of Bankinter by the ECB in 2018 (the lowest minimum capital requirement among banks in Spain). As regards its financing structure, Bankinter s liquidity gap fell by 200 million euros during the year to 5.2 billion euros at year end. In parallel, the bank s deposit-to-loan ratio reached 90.6%, 20 basis points higher than a year ago. Lastly, the bank continues to outperform other listed banks due to its quality of assets. Its NPL ratio dropped from 4.01% to 3.45%. Based on figures from Bankinter Spain alone, this ratio comes to 3.06%. These figures are less than half the sectoral average of 8.08% as of November 2017. A sustainable business based on five strategic lines Our customer business was the main contributor to earnings. It is based on five profitable business lines that are complementary to each other and help diversify the Group s strategy. Corporate and SME Banking continues to add the most to Bankinter s gross operating income at 30%. As in recent years, Bankinter has again increased the balance of its corporate loan book, which is up 5.2% with respect to 2016, reaching 22.9 billion euros. In Spain alone, Bankinter s loan book grew by 4.5%, while overall lending to companies across the Spanish banking system had fallen by 3.4% as of late November 2017. Furthermore, the bank attracted 18,600 companies as new customers during the year, 6% more than in 2016. Also in Corporate Banking, yearly revenues from the international trade finance business fared significantly well, with an 18.4% increase in gross income with respect to the same period in 2016. As relates to Commercial Banking, our private and personal banking segments, which cover affluent and high net-worth customers, had some impressive results. In Private Banking, total managed wealth at the end of December amounted to 35 billion euros, up 12% from a year ago and with an increasingly larger managed asset portfolio, which offers higher returns for both the bank and our customers. On the other hand, assets managed for Personal Banking customers reached 21.2 billion euros during the year, with 2.3 billion euros in net new money. One of our core retail banking products is still the 5% payroll account, a major source of new customers. Total payroll accounts amount to 6.808 million euros, up 21.8% with respect to the end of 2016. Moreover, Línea Directa maintains the trend of previous years, with 2.79 million euros in total policies taken out and increases of 7.3% in motor insurance policies and 13.5% in home insurance policies. Insurance premiums amount to 797 million euros, an 8% increase with respect to last year. Total premium growth in motor and home insurance policies stood well above the industry average. Línea Directa is showing a high degree of profitability, with a RoE of 35% and a combined ratio of 86.9%. Bankinter Consumer Finance is already a major player in the consumer lending scene in Spain, in addition to being one of bank s fastest growing business lines. At the end of the year, it had a total of 1.1 million customers, up 28% from the end of 2016, with 1.5 billion euros in consumer loans, a 42% increase in the last 12 months.
5 With regard to Bankinter Portugal, overall growth is in line with its defined business plan. In its first full year, it accounted for 7% of the Group s revenues. Its loan book at the end of 2017 reached 4.8 billion euros, up 6% from a year ago, with particularly significant growth in company lending (up 21%). Its retail funds remained at a level similar to 2016 figures, totalling 3.6 billion euros, while its offbalance-sheet funds (investment funds and unit-linked funds) grew by 25%. Altogether, Bankinter Portugal s gross operating income at 31 December had reached 133 million euros, with 31.4 million euros in pretax profit, thus reaffirming the favourable contribution of this franchise to the Group s earnings. Digitalisation An entire chapter could be written about Bankinter s activities regarding digitalisation and innovation, two areas in which the bank has traditionally had a leading role. Bankinter s substantial digital offering has its customers regularly using virtual channels en masse to interact with the bank. 91% of Bankinter customers use the bank s digital channels; 31% of customers can be defined as purely digital ; 60% are mixed customers who use digital and other channels interchangeably; and only 9% of customers are considered traditional, engaging the bank through their branch offices or via telephone banking. The digital projects promoted this year by the bank include the launch of its new transactional website, the creation of Popcoin, an investment management service for all types of investors that marks the start of the cyborg-advisor era; and the COINC mortgage, the first 100% online mortgage in the market that can be directly taken out via mobile phone, computer or tablet and approved online, without the need to take out additional products or change banks. Margins and earnings Bankinter Group s profit and loss margins have shown strong growth with respect to 2016, in line with its results from previous quarters. It ended 2017 with 1,062 million euros in net interest income, an 8.5% increase from a year ago. Its gross operating income grew by 7.8% with respect to 2016, to 1,851.3 million euros. This is mostly due to fee income, netting 11.7% more than last year, especially in terms of asset management fees, which were up by 22.8%. The Group s pre-provision profit ended the year with a total 906.8 million euros, an 11.3% increase compared to last year s figure. Although total operating costs increased by 4.7% (or 3%, minus Bankinter Portugal), the swell in income has improved the group s banking cost-to-income ratio with depreciation and amortisation. This ratio now stands at 46.8%, down from 48.6% a year ago. As a result, as of 31 December 2017, Bankinter had earned a net profit of 495.2 million euros, an improvement of 1% with respect to 2016; in addition to a pre-tax profit of 677.1 million, up 0.1%. In comparable terms, if we factored out business figures from Bankinter Portugal and the extraordinary results from its acquisition, the Group s net profit growth would be a rate of 20.2%, with a 19.1% increase in pre-tax profit. Balance sheet figures On Bankinter s balance sheet, total group assets for the year amounted to 71,332.7 million euros, 6.2% more than on 31 December 2016. Loans to customers totalled 53,300.2 million euros at year end, up 3.8% from a year ago, despite the 1.7% decrease in lending seen across the Spanish banking system as of November 2017. Total controlled funds climbed 5.3% to 79,376.2 million euros. In particular, off-balance-sheet managed funds (ie, investment funds, pension funds and wealth management) also grew by 13.4% during the year. As regards quality of assets, Bankinter s non-performing loan ratio fell from 4.01 in 2016 to 3.45% (or 3.06%, not including Bankinter Portugal), with a coverage ratio of 44.5%. Furthermore, its foreclosed property asset portfolio shrunk considerably during the year, with a total gross value of 411.6 million euros (111.9 million less than a year ago), 44% of which relates to homes. Its foreclosure coverage ratio was 45.2%. Lastly, Bankinter s share price closed out the year at 7.90 euros, a revaluation of 7.39%.
6 4. Condensed balance sheet thousands of euros Var. 12/17-12/16 31/12/2017 31/12/2016 Thousands % ASSETS Cash, balances with central banks and other demand deposits 5,594,779 3,556,750 2,038,029 57.30 Financial assets held for trading 2,734,699 2,676,719 57,980 2.17 Available-for-sale financial assets 4,575,214 4,140,057 435,157 10.51 Loans and receivables 53,863,211 52,816,104 1,047,107 1.98 Debt instruments 357,056 499,004-141,948-28.45 Loans and advances 53,506,155 52,317,100 1,189,056 2.27 To credit institutions 355,001 1,132,327-777,326-68.65 To customers 53,151,154 51,184,773 1,966,381 3.84 Held-to-maturity investments 2,591,774 2,019,546 572,228 28.33 Derivatives/hedge accounting 237,511 215,965 21,547 9.98 Investments in joint ventures and associates 114,586 112,708 1,878 1.67 Assets under insurance and reinsurance contracts 6,361 3,124 3,237 103.61 Tangible assets 495,776 503,716-7,940-1.58 Intangible assets 255,878 245,063 10,815 4.41 Tax assets and other assets 637,437 589,694 47,743 8.10 Non-current assets held for sale 225,425 303,021-77,595-25.61 TOTAL ASSETS 71,332,651 67,182,467 4,150,184 6.18 LIABILITIES Financial liabilities held for trading 1,993,191 2,195,816-202,626-9.23 Financial liabilities at amortised cost 63,274,666 59,338,635 3,936,031 6.63 Deposits 53,135,951 48,788,809 4,347,142 8.91 From central banks 6,500,608 4,750,000 1,750,608 36.85 From credit institutions 2,120,624 1,472,286 648,338 44.04 From customers 44,514,719 42,566,523 1,948,196 4.58 Issued debt instruments 8,187,472 8,915,470-727,998-8.17 Other financial liabilities 1,951,243 1,634,355 316,889 19.39 Derivatives/hedge accounting 36,250 109,154-72,904-66.79 Liabilities under insurance contracts 737,571 683,659 53,911 7.89 Provisions 205,771 153,707 52,064 33.87 Tax liabilities and other liabilities 728,063 604,121 123,942 20.52 TOTAL LIABILITIES 66,975,511 63,085,091 3,890,420 6.17 Shareholders equity 4,249,619 3,987,518 262,101 6.57 Total comprehensive income 107,521 109,858-2,337-2.13 TOTAL SHAREHOLDERS EQUITY 4,357,140 4,097,376 259,764 6.34 TOTAL LIABILITIES AND EQUITY 71,332,651 67,182,467 4,150,185 6.18
7 5. Customer funds and lending thousands of euros Variation 31/12/2017 31/12/2016 Amount % Retail funds 46,431,395 44,127,812 2,303,583 5.22 Public sector deposits 914,153 904,166 9,988 1.10 Private sector deposits 43,518,185 41,349,852 2,168,334 5.24 Current accounts 35,611,388 31,242,882 4,368,506 13.98 Term deposits 7,897,092 10,087,466-2,190,373-21.71 Valuation adjustments 9,705 19,504-9,799-50.24 Other demand accounts 478,352 300,119 178,234 59.39 Retail marketable securities 1,520,705 1,573,676-52,971-3.37 Repurchase agreements 607,080 818,248-211,168-25.81 Wholesale marketable securities 5,750,215 6,923,396-1,173,181-16.95 Securitisations 873,892 1,076,633-202,741-18.83 Covered bonds 4,262,123 5,153,683-891,560-17.30 Senior debt 497,709 497,548 161 0.03 Valuation adjustments 116,491 195,532-79,041-40.42 TOTAL ON-BALANCE-SHEET FUNDS 52,788,690 51,869,456 919,236 1.77 Off-balance-sheet funds 26,587,536 23,542,302 3,045,234 12.94 Own mutual funds 8,521,404 7,619,966 901,438 11.83 External mutual funds marketed 11,441,789 8,803,782 2,638,007 29.96 Pension funds 2,457,317 2,261,755 195,562 8.65 Wealth management and SICAVs 4,167,027 4,856,800-689,773-14.20 Loans and advances to customers Loans to public sector 1,434,981 1,513,810-78,829-5.21 Loans to private sector 51,716,174 49,670,963 2,045,211 4.12 Commercial credit 2,370,750 1,963,758 406,993 20.73 Secured loans 30,222,928 30,124,036 98,892 0.33 Other credit facilities 15,354,858 13,865,228 1,489,630 10.74 Personal loans 7,968,963 7,480,439 488,524 6.53 Credit lines 7,348,911 6,370,436 978,475 15.36 Other lending 36,983 14,353 22,630 157.67 Finance leases 1,102,534 1,181,996-79,462-6.72 Non-performing loans 1,976,703 2,227,808-251,105-11.27 Loan-loss allowances -895,469-1,105,291 209,823-18.98 Other term lending 1,583,869 1,413,429 170,440 12.06 Loans and advances to customers 53,151,154 51,184,773 1,966,381 3.84 Fixed-income securities to customers 149,030 148,999 30 - TOTAL LOANS TO CUSTOMERS 53,300,184 51,333,772 1,966,412 3.83 Off-balance-sheet risks 16,098,959 14,471,212 1,627,747 11.25 Contingent risks 4,009,695 3,934,041 75,654 1.92 Drawable by third parties 12,089,264 10,537,171 1,552,093 14.73
8 6. Quality of assets thousands of euros Variation 31/12/2017 31/12/2016 Amount % Total risk exposure 58,824,461 57,308,266 1,516,195 2.65 Total non-performing loans 2,029,908 2,296,743-266,835-11.62 Credit risk provisions 903,865 1,130,626-226,761-20.06 NPL ratio (%) 3.45 4.01-0.56-13.97 NPL coverage ratio (%) 44.53 49.23-4.70-9.55 Foreclosed assets 411,556 523,453-111,898-21.38 Provision for foreclosed assets 186,130 220,433-34,302-15.56 Foreclosed asset coverage(%) 45.23 42.11 3.11 7.41 7. Changes in NPLs thousands of euros Variation 31/12/2017 31/12/2016 Importe % Initial balance 2,296,743 2,039,239 257,504 12.63 Net additions -68,234 461,909-530,143-114.77 Write-offs -198,601-204,405 5,804-2.84 Final balance 2,029,908 2,296,743-266,835-11.62 NPL ratios: Bankinter vs Sector (%) 8.08% 3.06% 86 88 90 92 94 96 98 00 02 04 06 08 10 12 13 14 15 16 2017 l Bankinter l Sector Sector source: Bank of Spain, november, 17
9 8. Consolidated statements of income thousands of euros 31/12/2017 31/12/2016 Variation Bankinter Group Amount Amount Amount % Interest and similar income 1,288,805 1,271,458 17,347 1.36 Interest expense and similar -226,810-292,441 65,631-22.44 Net interest income 1,061,995 979,017 82,978 8.48 Dividend income 6,993 10,253-3,260-31.80 Share of results of entities accounted for under equity method 25,186 22,093 3,093 14.00 Net fees and commissions 423,491 379,110 44,381 11.71 Gains on financial transactions and exchange differences 61,580 71,449-9,869-13.81 Other operating income/expenses 272,072 255,468 16,605 6.50 Gross operating income 1,851,316 1,717,389 133,927 7.80 Staff costs -498,494-462,693-35,801 7.74 General & admin. expenses and amortisation charge -445,977-439,555-6,423 1.46 Pre-provision profit 906,846 815,142 91,704 11.25 Provisions -53,215-38,611-14,605 37.83 Impairment charges -149,226-169,190 19,964-11.80 Operating profit net of provisions 704,404 607,342 97,063 15.98 Gains/(losses) on disposal of assets -27,281-75,770 48,489-63.99 Negative goodwill recognised 0 145,140-145,140-100.00 Profit before taxes 677,123 676,711 412 0.06 Income tax -181,916-186,603 4,687-2.51 Consolidated net income 495,207 490,109 5,098 1.04
10 9. Quarterly statements of incomethousands of euros Variation in % 4Q17 3Q17 2Q17 1Q17 4Q16 4Q17/4Q16 4Q17/3Q17 Interest and similar income 326,406 306,490 334,676 321,234 330,896-1.36 6.50 Interest and similar charges -54,071-46,535-62,682-63,523-64,707-16.44 16.20 Net interest income 272,335 259,955 271,994 257,711 266,189 2.31 4.76 Dividend income 1,136 1,777 1,651 2,429 2,057-44.79-36.09 Share of results of entities accounted for 6,597 7,193 5,862 5,534 6,097 8.21-8.27 under equity method Net fees and commissions 110,475 103,521 109,343 100,151 105,093 5.12 6.72 Gains/(losses) on financial transactions and 11,791 15,622 10,242 23,924 15,390-23.38-24.52 exchange differences Other operating income/expenses 55,223 83,411 55,778 77,661 52,616 4.95-33.79 Gross operating income 457,557 471,479 454,870 467,410 447,441 2.26-2.95 Staff costs -124,923-124,437-126,039-123,094-128,523-2.80 0.39 General & admin. expenses and -116,192-108,263-111,958-109,564-118,911-2.29 7.32 amortisation charge Pre-provision profit 216,442 238,779 216,873 234,752 200,007 8.22-9.35 Provisions -36,937-4,520-4,043-7,715-10,277 259.41 717.11 Impairment charges -12,453-42,373-49,261-45,139-34,526-63.93-70.61 Operating profit net of provisions 167,052 191,885 163,569 181,898 155,204 7.63-12.94 Gains/(losses) on disposal of assets -7,536-6,002-3,442-10,301-30,745-75.49 25.57 Negative goodwill recognised 0 0 0 0 4,460-100.00 - Profit before taxes 159,516 185,883 160,127 171,596 128,919 23.73-14.19 Income tax -40,354-50,865-43,491-47,206-38,849 3.88-20.66 Consolidated net income 119,161 135,018 116,637 124,390 90,070 32.30-11.74 Gross operating income (millions of euros) and quarterly cost-to-income ratio (%) Pre-provision profit (millions of euros) 55.3 467 49.8 471 52.7 52.3 49.4 458 200 455 235 239 217 216 447 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 l Cost-to-income ratio l Gross operating income
11 10. Fees and commissions thousands of euros Variation 31/12/2017 31/12/2016 Amount % FEE AND COMMISSION EXPENSE 105,278 91,740 13,538 14.76 FEE AND COMMISSION INCOME On guarantees and documentary credits 32,952 31,158 1,795 5.76 On foreign exchange and foreign banknotes 62,633 60,145 2,488 4.14 On contingent liabilities 12,310 12,641-332 -2.62 On collection and payment services 91,235 81,512 9,722 11.93 On securities services 95,355 83,085 12,271 14.77 Securities underwriting and placement 9,265 3,877 5,387 138.94 Securities trading 32,348 31,672 676 2.13 Securities administration and custody 32,106 32,188-82 -0.26 Wealth management 21,637 15,347 6,290 40.98 On marketed non-banking financial products 197,953 168,101 29,852 17.76 Asset management 136,969 113,838 23,132 20.32 Insurance and pension funds 60,984 54,264 6,721 12.39 Other fees and commissions 36,330 34,207 2,123 6.21 Total fee and commission income 528,768 470,849 57,919 12.30 NET FEES AND COMMISSIONS 423,491 379,110 44,381 11.71
12 11. Cumulative yields and costs in % 31/12/2017 31/12/2016 Weighting Rate Weighting Rate Cash and deposits with central banks 5.88% 0.57% 1.04% 1.21% Loans and advances to credit institutions 4.39% 0.13% 4.98% 0.15% Loan and advances to customers (a) 73.50% 2.01% 75.28% 2.08% Debt securities 11.93% 2.65% 13.37% 2.83% Of which ALCO portfolio 8.07% 2.85% 7.87% 3.33% Equity portfolio 0.59% 1.72% 0.53% 3.03% Other unweighted income 0.09% 0.11% Average earning assets (b) 96.27% 1.93% 95.19% 2.09% Other assets 3.73% 4.81% AVERAGE TOTAL ASSETS 100.00% 1.86% 100.00% 1.99% Deposits from central banks 8.49% 0.24% 4.75% 0.05% Deposits from credit institutions 4.11% 1.92% 5.53% 1.79% Customer funds (c) 73.98% 0.12% 76.95% 0.31% Customer deposits 63.89% 0.09% 62.18% 0.22% Marketable debt securities 10.09% 0.32% 14.77% 0.70% Subordinated liabilities 1.50% 3.56% 1.02% 4.30% Other unweighted costs 0.13% 0.11% Average interest-bearing funds (d) 88.08% 0.37% 88.27% 0.49% Other liabilities 11.92% 11.73% AVERAGE TOTAL FUNDS 100.00% 0.33% 100.00% 0.44% Customer margin (a-c) 1.89% 1.77% Net interest margin (b-d) 1.56% 1.60%
13 12. Quarterly yields and costsin % en % 4Q17 3Q17 2Q17 1Q17 4Q16 Weighting Rate Weighting Rate Weighting Rate Weighting Rate Weighting Rate Deposits with central banks 6.89% 0.53% 6.49% 0.57% 7.27% 0.51% 2.73% 0.88% 1.19% 2.02% Loans and advances to credit 3.08% 0.23% 4.07% 0.17% 4.38% 0.12% 6.09% 0.07% 6.89% 0.06% institutions Loans and advances to customers (a) 73.46% 2.00% 73.61% 1.93% 72.33% 2.08% 74.64% 2.06% 75.13% 2.10% Debt securities 12.37% 2.45% 11.55% 2.67% 11.85% 2.73% 11.96% 2.75% 11.76% 2.83% Of which ALCO portfolio 8.02% 2.92% 8.14% 2.80% 8.02% 2.83% 8.11% 2.86% 7.48% 3.24% Equity portfolio 0.58% 1.10% 0.63% 1.60% 0.57% 1.64% 0.56% 2.62% 0.58% 2.12% Other unweighted assets 0.08% 0.08% 0.09% 0.10% 0.11% Average earning assets (b) 96.37% 1.91% 96.35% 1.86% 96.39% 1.96% 95.97% 2.01% 95.55% 2.06% Other assets 3.63% 3.65% 3.61% 4.03% 4.45% AVERAGE TOTAL ASSETS 100.00% 1.84% 100.00% 1.79% 100.00% 1.89% 100.00% 1.92% 100.00% 1.97% Deposits from central banks 9.18% 0.27% 9.30% 0.24% 9.22% 0.28% 6.14% 0.13% 6.07% 0.01% Deposits from credit institutions 4.00% 1.51% 4.09% 1.73% 4.15% 2.16% 4.22% 2.29% 3.99% 2.10% Customer funds (c) 72.88% 0.09% 73.03% 0.10% 73.36% 0.11% 76.77% 0.18% 77.14% 0.22% Customer deposits 63.43% 0.06% 63.38% 0.08% 63.69% 0.10% 65.09% 0.12% 64.53% 0.15% Marketable debt securities 9.45% 0.29% 9.64% 0.20% 9.67% 0.23% 11.68% 0.54% 12.62% 0.59% Subordinated liabilities 1.65% 3.46% 1.68% 3.45% 1.63% 3.46% 1.00% 4.06% 1.04% 4.00% Other unweighted liabilities 0.14% 0.12% 0.13% 0.12% 0.11% Average interest-bearing funds (d) 87.72% 0.35% 88.11% 0.34% 88.37% 0.38% 88.15% 0.41% 88.27% 0.41% Other liabilities 12.28% 11.89% 11.63% 11.85% 11.73% AVERAGE TOTAL FUNDS 100.00% 0.30% 100.00% 0.30% 100.00% 0.34% 100.00% 0.36% 100.00% 0.36% Customer margin (a-c) 1.91% 1.83% 1.97% 1.87% 1.88% Net interest margin (b-d) 1.56% 1.51% 1.58% 1.60% 1.65% Average Total Assets (ATA, in thousands of euros) 70,780,938 69,881,669 70,502,763 67,484,246 66,419,976 Quarterly customer margin / credit yield and cost of funds (%) 1.88 1.87 1.97 1.83 1.91 4Q16 1Q17 2Q17 3Q17 4Q17 l Coste de los recursos de clientes l Margen de clientes trimestral l Rendimiento del crédito
14 13. Contribution by business area thousands of euros Variation 31/12/2017 31/12/2016 Amount % Customer segments 1,225,863 1,107,806 118,056 10.66 Commercial and private banking 510,256 454,597 55,659 12.24 Corporate banking 555,903 532,020 23,883 4.49 Bankinter Consumer Finance 159,704 121,189 38,515 31.78 Bankinter Portugal 133,037 90,227 42,810 47.45 Capital markets 230,749 240,379-9,630-4.01 Línea Directa Aseguradora 393,741 359,358 34,384 9.57 Corporate Centre -132,074-80,380-51,693 64.31 Gross operating income 1,851,316 1,717,389 133,927 7.80 14. Shareholders equity and ratings Variation 31/12/2017 31/12/2016 Amount % Share capital and reserves 4,231,107 3,961,056 270,051 6.82 Treasury shares -813-132 -681 517.32 CET1 deductions -521,742-338,886-182,856 53.96 Common Equity Tier 1 3,708,552 3,622,038 86,514 2.39 AT1 instruments 199,000 199,000 0 0.00 AT1 deductions -88,177-153,504 65,327-42.56 Tier 1 3,819,375 3,667,534 151,841 4.14 T2 instruments 697,018 273,661 423,358 154.70 T2 deductions -41,576-70,537 28,962-41.06 Tier 2 655,443 203,123 452,319 222.68 Total Equity 4,474,817 3,870,657 604,160 15.61 Risk-weighted assets 31,341,324 30,763,509 577,815 1.88 CET 1 capital ratio (%) 11.83 11.77 0.06 0.50 Tier 1 (%) 12.19 11.92 0.26 2.22 Tier 2 (%) 2.09 0.66 1.43 216.73 Capital adequacy ratio (%) 14.28 12.58 1.70 13.48 (*) The CET1 amount includes third-quarter retained earnings. Long term Short term Outlook Date Moody s Baa2 P-2 Stable June 2015 Standard & Poor s BBB A2 Positive February 2017 DBRS A (low) R-1 (low) Stable July 2017
15 15. Change in net worth thousands of euros Balance at 1 January 2016 3,798,177 Dividends -189,453 Valuation adjustments 1,117 Profit for the period 490,109 Other changes -2,574 Balance at 31 December 2016 4,097,376 Balance at 1 January 2017 4,097,376 Dividends -224,500 Valuation adjustments -2,337 Profit for the period 495,207 Other changes -8,606 Balance at 31 December 2017 4,357,140
16 16. Shareholder value Period per share data ( ) Earnings per share 0.55 Dividend per share 0.25 Book value per share 4.85 Opening price 7.36 Lowest price 7.58 Highest price 8.18 Closing price 7.90 Revaluation in last quarter (%) -1.25 Revaluation in last 12 months (%) 7.39 Stock market ratios Price/Book value (times) 1.63 Price/Earnings Ratio (times) 14.35 Dividend yield (%) 3.16 Number of shareholders 54,911 Number of shares 898,866,154 Number of shares held by non-residents 417,965,351 Average daily trading (number of shares) 2,323,969 Average daily trading (thousands of euros) 18,340 Market capitalisation (thousands of euros) 7,104,638 Share price. Relative variation (%) (december-16 base 100) 125% 120% 115% 110% 105% 100% 95% 90% Dec. 16 Dec. 17 l Ibex 35 l Bankinter l Eurostoxx Banca (SX7P)
17 17. People 31/12/2017 31/12/2016 Variation % Banking group employees (*) 5,578 5,486 92.00 1.68% Average number of years with Bankinter Group 12.71 12.54 0.17 1.36% Average age (in years) 41.81 41.40 0.41 0.99% Employee distribution by gender (%) Men 49.18 48.87 0.31 0.62% Women 50.82 51.13-0.31-0.60% Internal job rotation (%) 18.15 17.97 0.18 1.00% External rotation (%) 5.10 4.45 0.65 14.68% *Full-time at Bankinter Group. *Data on average mobile turnover in last 12 months.
18 18. Quarterly events Bankinter s capital adequacy levels well above minimum required by ECB According to the European Central Bank s recent supervisory review and evaluation in mid-december, Bankinter s capital adequacy levels were once again well above the EU supervisor s minimum capital requirements set for 2018. Thus, ECB will not change its prudential requirements for Bankinter in terms of fully-loaded CET1 (Common Equity Tier 1) capital. These requirements demonstrate full compliance with the capital adequacy regulations known as Basel III, which will take effect in 2019. In terms of phased-in capital, the ECB s requirement for Bankinter Group in 2018 is to maintain a ratio of 7.125%, with a Total Capital ratio of 10.625%. Therefore, Bankinter is comfortably above this minimum, especially since it closed out December 2017 with a phased-in CET1 ratio of 11.82%, with a Total Capital ratio of 14.28%. This required minimum level is the lowest set by the European Central Bank for Spanish banks thus far. It was also the lowest in the Spanish banking system last year. Teresa Martín-Retortillo, new Bankinter board member The board of directors of Bankinter, S.A., on the recommendation of its appointments and corporate governance committee, voted in November to co-opt Ms Teresa Martín-Retortillo Rubio as an independent external director of Bankinter, in order to fill a post on the board which, until now, had been vacant. The new director s term of office will be for four years and must be confirmed in the next general shareholders meeting. In view of this appointment, the board of directors will consist of 10 members, with five independent external directors, two executive directors, two external proprietary directors and one external director. Bankinter and EIB agreement Bankinter and the European Investment Bank (EIB) boost their partnership to help small and medium enterprises access credit. In November, the EU bank granted a 300-million-euro loan to Bankinter, which will, in turn, contribute an additional 300 million to this credit facility. Ultimately, the total amount available to SMEs will be 600 million euros. Thanks to the EIB, this funding comes with very favourable terms and conditions for companies in terms of repayment periods and interest rates, so that they may develop their initiatives. This agreement was signed in Madrid by EIB vice-president Román Escolano and Bankinter CEO María Dolores Dancausa. This is the fifth loan agreement with these features that these institutions have signed. In particular, this funding aims to help industrial and commercial SMEs invest in innovative and modern equipment. Bankinter launches first fully online mortgage, with no change of bank required. Bankinter has reached another online banking milestone with the launch of the first fully online mortgage in the market through its online financial services platform, COINC. This automatic mortgage loan can be taken out directly via mobile phone, computer or tablet. It is approved online, with no customer affiliation or additional products required. Accordingly, it is open to non-customers of Bankinter and COINC. COINC is pricing this mortgage at 0.99% interest during the first year, after which it will be annually revised at the Euribor rate, plus a spread of 0.99%. These conditions are currently the most competitive in the market. The price is closed, without any fees; and does not offer discounts for taking out other COINC products. This new mortgage is being released within an ecosystem intended to provide thorough solutions for all issues, questions and procedures concerning home purchases and financing, without leaving the COINC website.
19 Fourth edition of the Involvement and Solidarity awards In December, Bankinter held its fourth annual Involvement and Solidarity (Implicados y Solidarios) ceremony. As usual, this event was attended by NGOs, foundations and associations from all over Spain to learn the five projects selected to receive donations from customers who have put 5% of their purchases made with the Visa Solidaria card toward social initiatives. Almost 200 projects were submitted, up 40% from last year. The event s guest of honour was Teresa Perales, a champion swimmer with 26 Paralympic medals who is an example of personal and professional excellence. Projects were announced and promoted internally by Bankinter employees and executives who sponsored the various causes they represented. Votes were cast both internally by bank employees and externally by over 7,300 of Bankinter s followers on Facebook, each of whom voted for a project on the bank s page on the social network. The following initiatives were finalists: the winner of the Tarjeta Solidaria Oro ( gold ) prize for 13,000 euros was Fundación Dacer, with the NAO Therapist robot project, an innovative therapeutic tool for children with brain damage. The Tarjeta Solidara Plata ( silver ) prize for 11,000 euros went to Fundación Jaime Alonso Abruña for the Cada niño importa ( Every child matters ) academy, which provides academic support to 40 children with different abilities. The Tarjeta Solidaria Bronce ( bronze ) prize for 9,000 euros was awarded to As Neves-Zona 0 and its Plantando vida (Planting life) project to spread awareness and set up initiatives to recover the forests area reduced to ashes in a fire that affected 90% of the town of As Neves (Galicia).
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