Bankia is progressing in cleaning up its balance sheet and reducing its asset quality gap with that of its largest domestic peers. Its core operating profitability remains subdued amid low interest rates, the significant weight of mortgages in its loan book, and ongoing deleveraging. We anticipate that Bankia's risk-adjusted capital ratio will reach 8.0%-8.5% by end-2020, which we deem adequate for the risks it bears. We are affirming our 'BBB/A-2' issuer credit ratings on Bankia and the 'BBB-/A-3' ratings on its nonoperating parent holding company, BFA Tenedora de Acciones. The outlook on both entities remains stable, reflecting our expectations that, despite a potentially more supportive domestic economic environment, capital strengthening is unlikely to be material enough to drive an upgrade
