Equity

Bankinter has adapted quickly to the requirements of the regulators, without recourse to state aid, making it one of the best capitalised institutions in the sector.

The Group's computable equity at year-end 2014 amounted to €3.36 billion and its solvency ratio to 13.1%.

Strengthening solvency and creating value for shareholders. One of the Bankinter Group's strategic objectives is the continuous strengthening of solvency, as a basis for sustained growth and long-term value creation for shareholders. Thanks to its management policies, its business model and its prudent risk profile, it has been able to operate with levels of capital in excess of those required by the supervisory authorities.

Since the onset of the financial crisis, both the regulators and the markets have significantly increased their capital requirements. Bankinter has adapted quickly to the new situation, increasing its ratios every year and enhancing the quality of its capital in a sustained manner, without having to resort to state aid, which has placed it among the best capitalised institutions in the sector. Proof of this is the result obtained by Bankinter in the stress tests on European banks carried out by the European Central Bank (EBB) and the European Banking Authority (EBA) during 2014. Bankinter came through the most adverse scenario with twice the minimum capital required, the best results of any Spanish listed bank in these stress tests.

On 1 January 2014 the new solvency regulations known as Basel III came into force. They were transposed into EU law by Regulation EU 575/2013 of 26 June on prudential requirements for credit institutions and investment firms and Directive 2013/36/EU of 26 June on access to the activity of credit institutions and their prudential supervision. These new regulations raise the level of minimum capital requirements for institutions, establish a much stricter definition of the instruments considered as capital and introduce certain changes to the way riskweighted assets are estimated.

In accordance with these new solvency rules, the Group's computable equity at year-end 2014 amounted to €3.36 billion and its solvency ratio to 13.1%. The highest-quality capital (Common Equity Tier 1 – CET1) stood at €3.05 billion at year-end, 6.5% more than at the end of the previous year. The CET1 ratio as at 31 December 2014 was 11.9%, well in excess of the regulatory minimum. Tier 1 Capital also increased by 6.5% in the year, to reach €3.05 billion, with a Tier 1 ratio of 11.9%, and Tier 2 Capital increased by 1.89% to €309 million for a Tier 2 ratio of 1.2%.

The main changes in Bankinter's CET1 ratio over the course of the year came from:

  • The organic generation of profits, which improved relative to the previous year.
  • The impact on reserves of application of IFRIC 21 on levies.
  • The distribution of an extraordinary dividend by LDA, which involved a transfer of surplus reserves from the subsidiary to the parent bank, improving the treatment of the investment in the insurance company for purposes of consolidated solvency.
  • Growth in credit and counterparty risk weighted assets as a result of the growth in the business and the increased exposure to companies. Market and operational risk weighted assets also grew due to the increased activity.

Rating

Bankinter regains its ‘investment grade' rating which it had lost at the onset of the economic crisis.

It thus becomes the only Spanish bank to form part of Standard & Poor’s select list of Rising Stars.

International prestige. During 2014 Bankinter achieved credibility and international standing among investors, as reflected both in its share price and in the improvement in its ratings by the main credit rating agencies, which now position the Bank as 'investment-grade'.

The Bank maintains permanent and fluid relations with the rating agencies, and every year it carries out at least one detailed review of the Bank's performance with each of them. In 2014 both the major agencies, Standard & Poor´s and Moody's, revised their ratings of Bankinter upwards, restoring it to the 'investment grade' category, which it had lost, in common with the rest of the sector, at the onset of the economic crisis.

As a result Bankinter is one of 31 companies worldwide, only two of them Spanish, and one of only five from the financial sector worldwide, to form part of Standard & Poor´s select list of ‘Rising Stars’ or companies that have been upgraded to investment grade.

Bankinter share performance

With a gain of 34.4% in 2014, Bankinter was, for the second consecutive year, the Spanish bank with the biggest gain in its share price for the year.

Furthermore, it is the only financial institution to have paid all its dividends in 2014 in cash and quarterly.

Share capital. At 31 December 2014, the share capital of Bankinter S.A. was represented by 898,866,154 shares, each with a nominal value of €0.30 fully subscribed and paid up. All the shares are represented by book entries, listed on the Madrid and Barcelona stock exchanges and traded on the Spanish computerised trading system.

Bankinter has 65,735 shareholders. The main features of the shareholder structure are as follows:

  • Resident shareholders hold 58.65% of the share capital.
  • Non-residents hold 41.35% of the share capital.
  • Treasury stock at year-end consisted of 114,117 shares.
  • Shareholders of record holding more than 5% of the share capital at 2014 year end are shown in the following table.

The salient data for Bankinter stock during the year are described in the following table:

Performance of Bankinter shares. Bankinter's stock performed very favourably during the year compared with the major indices such as the Spanish Stock Exchange's IBEX 35 and the Eurostoxx Banks, which comprises all listed European banks.

A safe stock. With a gain of 34.4%, Bankinter was the bank that gained most on the Spanish stock market in 2014 and one of the best performers in the IBEX 35.

The graph shows the 34.4% gain posted by Bankinter in comparison with the 3.7% advance of the IBEX 35 and the 2.8% decline of the Eurostoxx Banks (SX7P).

This upbeat performance, which brought the stock close to its all-time high, together with the income from the dividends distributed up until the date of publication of this report, produced an annual return for shareholders of 36.4%.

Dividend policy. Bankinter was the only bank to pay all its dividends in cash and, what is more, quarterly, thanks to the solid growth of the business and its good solvency position, which allowed it to remain immune from the restrictions imposed by the supervisory authorities in the interests of preserving capital.

In this regard, the solvency situation of the Spanish banking sector led Banco de España and the European Central Bank (EBB) to introduce certain practical rules regarding the banks' policies for strengthening their solvency. One of the restrictive measures was that banks could not pay dividends in cash from 2014 earnings in excess of 25% of consolidated profit attributable to the parent.

However, this limit could be exceeded in exceptional cases, providing the bank could show prospects of particularly favourable margins and a CET1 ratio in excess of 11.5% as at 31 December 2013. In other words, 3.5 percentage points above the level of CET1 established as a reference for the comprehensive assessment of the European banking system carried out by the ECB in 2014.

Bankinter became that exception. Thanks to its excellent solvency ratios, it was the only bank to pay in excess of that limit, distributing to its shareholders approximately 34% of the profit for the nine months to the end of September 2014, with the fourth and last dividend to be paid from full-year profits still pending as at the date of this report and to be approved by the 2015 AGM.

The distribution of dividends for 2014 as at the date of publication of this report is as follows:

 

ADRs (American Depositary Receipts). ADRs are a product which US residents use to invest in foreign companies in their own currency, US dollars; dividends are also paid in US dollars, which proves very convenient for them.

Bankinter's ADR programme is a Level 2 programme administered by Bank of New York Mellon which at the end of December 2014 had 307,620 ADRs in circulation, compared with 140,494 at the end of 2013, an increase of 119%.

Shareholders' Office

Transparency. The relationship with shareholders is based on the ‘You first’ project. With these two words Bankinter seeks to show that each one of its shareholders is the number one priority.

With a view to keeping them informed at all times, the Bank punctually communicates all news items of interest about the Company to its shareholders, through a variety of channels such as post, SMS and e-mail.

By means of a system of alerts, Bankinter contacts shareholders so that they are the first to learn of the payment of a dividend or its amount, quarterly results and the 'significant events' that have to be advised to the CNMV (National Securities Market Commission) for publication (capital increases, changes in Board membership, etc.)

Shareholders' mailbox

The Shareholders' Office was set up in 2005 in response to the demand for greater transparency of listed companies. It provides its support from Central Services in Madrid. Its main function is to act as a fluid communication channel at the service of current small shareholders - or potential ones - allowing them to formulate their proposals or request any clarification they might need, with the aim of cementing their confidence by means of direct, personalised communication. Shareholders’ requests for information tend to focus on matters such as current or past share prices, the amounts and dates of payment of dividends, delivery of copies of the Corporate Report, explanations concerning the Annual General Meeting of Shareholders, etc. In order to meet these demands, since 2009 Bankinter has periodically issued communications addressed to its shareholders and of interest to them.

The Annual General Meeting of Shareholders is the main pillar of shareholder participation in the Bank’s decisions. The Shareholders' Office is responsible for managing the procedures for calling meetings, providing information, recording and checking votes, proxies and attendees at meetings.

Other functions performed by the Shareholders' Office include supplying information about the composition of shareholders and changes to it, both internally and to supervisory bodies, and control tasks in connection with the Spanish Securities Market Code of Ethics, with which certain employees of the Bank are required to comply as regards Bankinter shares.

Shareholders' Office
Alfonso Martínez Vaquero
Avda. de Bruselas, 12
28108 Alcobendas (Madrid)
Tel. : 913398330 - 913397500
Fax : 913397445
E-mail : [email protected]

Investor relations

Bankinter ended 2014 with a total of 65,735 shareholders, 41.35% of which were non-resident investors, the great majority of them institutional.

Bankinter has a fluid relationship with the investor community (shareholders, financial analysts and rating agencies), and is transparent in keeping them informed about the performance, periodic results and strategy of the Group.

The main objective of this department is to provide the national and international investor community with timely information on the progress of the business, the quarterly financial results and the general strategy of Bankinter Group.

This team, which forms part of the Finance Division so as to take advantage of synergies, is also in charge of relations with the rating agencies, and it organises a host of other functions, including the annual ratings review meetings, and is responsible for the flow of periodic financial information.

Sustainability and Corporate Governance. Investors increasingly rate not only a company's financial development, but also a whole range of other factors relating to corporate responsibility, such as good corporate governance or social and environmental aspects; all factors which, in the long term, have an impact on the improved financial performance of companies and contribute to the creation of value.

In this respect there is a close relationship with the agencies that assess Bankinter using sustainability criteria. The Investor Relations area, working together with the Corporate
Responsibility department, takes charge of informing all the agencies of the Bank’s strategy in matters of good governance, corporate reputation and, in general, its commitment to its
various stakeholder groups.

Investor Relations
Alfonso Alfaro Llovera
David López Finistrosa
Pº Castellana, 29
28046 Madrid
Tel.: 91 339 75 00
E-mail: [email protected]

Equity

Bankinter has adapted quickly to the requirements of the regulators, without recourse to state aid, making it one of the best capitalised institutions in the sector.

The Group's computable equity at year-end 2014 amounted to €3.36 billion and its solvency ratio to 13.1%.

Strengthening solvency and creating value for shareholders. One of the Bankinter Group's strategic objectives is the continuous strengthening of solvency, as a basis for sustained growth and long-term value creation for shareholders. Thanks to its management policies, its business model and its prudent risk profile, it has been able to operate with levels of capital in excess of those required by the supervisory authorities.

Since the onset of the financial crisis, both the regulators and the markets have significantly increased their capital requirements. Bankinter has adapted quickly to the new situation, increasing its ratios every year and enhancing the quality of its capital in a sustained manner, without having to resort to state aid, which has placed it among the best capitalised institutions in the sector. Proof of this is the result obtained by Bankinter in the stress tests on European banks carried out by the European Central Bank (EBB) and the European Banking Authority (EBA) during 2014. Bankinter came through the most adverse scenario with twice the minimum capital required, the best results of any Spanish listed bank in these stress tests.

On 1 January 2014 the new solvency regulations known as Basel III came into force. They were transposed into EU law by Regulation EU 575/2013 of 26 June on prudential requirements for credit institutions and investment firms and Directive 2013/36/EU of 26 June on access to the activity of credit institutions and their prudential supervision. These new regulations raise the level of minimum capital requirements for institutions, establish a much stricter definition of the instruments considered as capital and introduce certain changes to the way riskweighted assets are estimated.

In accordance with these new solvency rules, the Group's computable equity at year-end 2014 amounted to €3.36 billion and its solvency ratio to 13.1%. The highest-quality capital (Common Equity Tier 1 – CET1) stood at €3.05 billion at year-end, 6.5% more than at the end of the previous year. The CET1 ratio as at 31 December 2014 was 11.9%, well in excess of the regulatory minimum. Tier 1 Capital also increased by 6.5% in the year, to reach €3.05 billion, with a Tier 1 ratio of 11.9%, and Tier 2 Capital increased by 1.89% to €309 million for a Tier 2 ratio of 1.2%.

The main changes in Bankinter's CET1 ratio over the course of the year came from:

  • The organic generation of profits, which improved relative to the previous year.
  • The impact on reserves of application of IFRIC 21 on levies.
  • The distribution of an extraordinary dividend by LDA, which involved a transfer of surplus reserves from the subsidiary to the parent bank, improving the treatment of the investment in the insurance company for purposes of consolidated solvency.
  • Growth in credit and counterparty risk weighted assets as a result of the growth in the business and the increased exposure to companies. Market and operational risk weighted assets also grew due to the increased activity.

Rating

Bankinter regains its ‘investment grade' rating which it had lost at the onset of the economic crisis.

It thus becomes the only Spanish bank to form part of Standard & Poor’s select list of Rising Stars.

International prestige. During 2014 Bankinter achieved credibility and international standing among investors, as reflected both in its share price and in the improvement in its ratings by the main credit rating agencies, which now position the Bank as 'investment-grade'.

The Bank maintains permanent and fluid relations with the rating agencies, and every year it carries out at least one detailed review of the Bank's performance with each of them. In 2014 both the major agencies, Standard & Poor´s and Moody's, revised their ratings of Bankinter upwards, restoring it to the 'investment grade' category, which it had lost, in common with the rest of the sector, at the onset of the economic crisis.

As a result Bankinter is one of 31 companies worldwide, only two of them Spanish, and one of only five from the financial sector worldwide, to form part of Standard & Poor´s select list of ‘Rising Stars’ or companies that have been upgraded to investment grade.

Bankinter share performance

With a gain of 34.4% in 2014, Bankinter was, for the second consecutive year, the Spanish bank with the biggest gain in its share price for the year.

Furthermore, it is the only financial institution to have paid all its dividends in 2014 in cash and quarterly.

Share capital. At 31 December 2014, the share capital of Bankinter S.A. was represented by 898,866,154 shares, each with a nominal value of €0.30 fully subscribed and paid up. All the shares are represented by book entries, listed on the Madrid and Barcelona stock exchanges and traded on the Spanish computerised trading system.

Bankinter has 65,735 shareholders. The main features of the shareholder structure are as follows:

  • Resident shareholders hold 58.65% of the share capital.
  • Non-residents hold 41.35% of the share capital.
  • Treasury stock at year-end consisted of 114,117 shares.
  • Shareholders of record holding more than 5% of the share capital at 2014 year end are shown in the following table.

The salient data for Bankinter stock during the year are described in the following table:

Performance of Bankinter shares. Bankinter's stock performed very favourably during the year compared with the major indices such as the Spanish Stock Exchange's IBEX 35 and the Eurostoxx Banks, which comprises all listed European banks.

A safe stock. With a gain of 34.4%, Bankinter was the bank that gained most on the Spanish stock market in 2014 and one of the best performers in the IBEX 35.

The graph shows the 34.4% gain posted by Bankinter in comparison with the 3.7% advance of the IBEX 35 and the 2.8% decline of the Eurostoxx Banks (SX7P).

This upbeat performance, which brought the stock close to its all-time high, together with the income from the dividends distributed up until the date of publication of this report, produced an annual return for shareholders of 36.4%.

Dividend policy. Bankinter was the only bank to pay all its dividends in cash and, what is more, quarterly, thanks to the solid growth of the business and its good solvency position, which allowed it to remain immune from the restrictions imposed by the supervisory authorities in the interests of preserving capital.

In this regard, the solvency situation of the Spanish banking sector led Banco de España and the European Central Bank (EBB) to introduce certain practical rules regarding the banks' policies for strengthening their solvency. One of the restrictive measures was that banks could not pay dividends in cash from 2014 earnings in excess of 25% of consolidated profit attributable to the parent.

However, this limit could be exceeded in exceptional cases, providing the bank could show prospects of particularly favourable margins and a CET1 ratio in excess of 11.5% as at 31 December 2013. In other words, 3.5 percentage points above the level of CET1 established as a reference for the comprehensive assessment of the European banking system carried out by the ECB in 2014.

Bankinter became that exception. Thanks to its excellent solvency ratios, it was the only bank to pay in excess of that limit, distributing to its shareholders approximately 34% of the profit for the nine months to the end of September 2014, with the fourth and last dividend to be paid from full-year profits still pending as at the date of this report and to be approved by the 2015 AGM.

The distribution of dividends for 2014 as at the date of publication of this report is as follows:

 

ADRs (American Depositary Receipts). ADRs are a product which US residents use to invest in foreign companies in their own currency, US dollars; dividends are also paid in US dollars, which proves very convenient for them.

Bankinter's ADR programme is a Level 2 programme administered by Bank of New York Mellon which at the end of December 2014 had 307,620 ADRs in circulation, compared with 140,494 at the end of 2013, an increase of 119%.

Shareholders' Office

Transparency. The relationship with shareholders is based on the ‘You first’ project. With these two words Bankinter seeks to show that each one of its shareholders is the number one priority.

With a view to keeping them informed at all times, the Bank punctually communicates all news items of interest about the Company to its shareholders, through a variety of channels such as post, SMS and e-mail.

By means of a system of alerts, Bankinter contacts shareholders so that they are the first to learn of the payment of a dividend or its amount, quarterly results and the 'significant events' that have to be advised to the CNMV (National Securities Market Commission) for publication (capital increases, changes in Board membership, etc.)

Shareholders' mailbox

The Shareholders' Office was set up in 2005 in response to the demand for greater transparency of listed companies. It provides its support from Central Services in Madrid. Its main function is to act as a fluid communication channel at the service of current small shareholders - or potential ones - allowing them to formulate their proposals or request any clarification they might need, with the aim of cementing their confidence by means of direct, personalised communication. Shareholders’ requests for information tend to focus on matters such as current or past share prices, the amounts and dates of payment of dividends, delivery of copies of the Corporate Report, explanations concerning the Annual General Meeting of Shareholders, etc. In order to meet these demands, since 2009 Bankinter has periodically issued communications addressed to its shareholders and of interest to them.

The Annual General Meeting of Shareholders is the main pillar of shareholder participation in the Bank’s decisions. The Shareholders' Office is responsible for managing the procedures for calling meetings, providing information, recording and checking votes, proxies and attendees at meetings.

Other functions performed by the Shareholders' Office include supplying information about the composition of shareholders and changes to it, both internally and to supervisory bodies, and control tasks in connection with the Spanish Securities Market Code of Ethics, with which certain employees of the Bank are required to comply as regards Bankinter shares.

Shareholders' Office
Alfonso Martínez Vaquero
Avda. de Bruselas, 12
28108 Alcobendas (Madrid)
Tel. : 913398330 - 913397500
Fax : 913397445
E-mail : [email protected]

Investor relations

Bankinter ended 2014 with a total of 65,735 shareholders, 41.35% of which were non-resident investors, the great majority of them institutional.

Bankinter has a fluid relationship with the investor community (shareholders, financial analysts and rating agencies), and is transparent in keeping them informed about the performance, periodic results and strategy of the Group.

The main objective of this department is to provide the national and international investor community with timely information on the progress of the business, the quarterly financial results and the general strategy of Bankinter Group.

This team, which forms part of the Finance Division so as to take advantage of synergies, is also in charge of relations with the rating agencies, and it organises a host of other functions, including the annual ratings review meetings, and is responsible for the flow of periodic financial information.

Sustainability and Corporate Governance. Investors increasingly rate not only a company's financial development, but also a whole range of other factors relating to corporate responsibility, such as good corporate governance or social and environmental aspects; all factors which, in the long term, have an impact on the improved financial performance of companies and contribute to the creation of value.

In this respect there is a close relationship with the agencies that assess Bankinter using sustainability criteria. The Investor Relations area, working together with the Corporate
Responsibility department, takes charge of informing all the agencies of the Bank’s strategy in matters of good governance, corporate reputation and, in general, its commitment to its
various stakeholder groups.

Investor Relations
Alfonso Alfaro Llovera
David López Finistrosa
Pº Castellana, 29
28046 Madrid
Tel.: 91 339 75 00
E-mail: [email protected]