Sabadell earns 50% extra and soars within the inventory market: “2024 profits should be the best in the bank's history” | EUROtoday

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Sabadell Bank has simply sealed a document first quarter and its CEO, Csar González-Buenodidn’t need something, not even the shock letter from Pedro Sánchez and its potential impression on the economic system, to overshadow the milestone, which is why the supervisor has restricted himself to celebrating and explaining the outcomes that the entity has achieved till March: 308 million of euros in income, 50.4% extra, even after paying the 192 million equivalent to the extraordinary tax on the sector (35 million greater than in 2023).

“We are satisfied,” stated González-Bueno throughout the presentation of the info to the press. “We are pleased to see that the market reception has been good,” he added, alluding to the trail that the shares within the Ibex 35 have taken because the starting of the session. The titles accumulate a revaluation of 10% – though at some instances it has reached 13% – which locations their worth at 1,704 euros. The days when the financial institution fought to regain the extent of the euro now appear distant.

Behind this reception should not solely the online income, the discount of non-performing loans, the development of the financial institution's business enterprise, the nonetheless impact of excessive charges or the development of asset high quality, but in addition the development of the forecasts that the entity manages for this yr and, above all, for 2025. “The benefits [de 2024] They should be the best in the history of the bank“It's pure arithmetic,” said the CEO.

Among other things, because their profitability forecast is even better than what they had predicted. In the first quarter of the year, the return on tangible capital (RoTE) has risen to 12.2%, compared to 11.5% in December. This dynamic has allowed the group to improve the outlook for this year to above 12% (compared to the previous 11.5%) and predict that “it is going to be even larger by 2025.” Something that has finally convinced investors, according to the analysis carried out by the bank itself.

“The adjustments in our steerage on 2024 are reasonable. Where there’s a substantial change in technique is that earlier than there was no steerage for 2025 and ours has been a good shock, as a result of for that yr the analysts had a load of excessive pessimism,” said González-Bueno.

“The uncertainty out there is what’s going to occur to the banks when charges go down. In our case, the diversification that we now have within the United Kingdom (TSB) goes to profit us as a result of, though when the ECB lowers charges it hurts us in Spain, the progress within the United Kingdom will assist us preserve a steady margin in 2025,” added Leopoldo de Alvear, financial director of the entity.

This is one of the keys to the future; In the present, another key is in Frankfurt. In 2023, the ECB's rate hike collapsed credit demand but entities compensated for this drop with the effect of rates on interest margins; For this year, the sector planned for the situation to turn around due to the change in monetary policy, however, the rate cut in the Eurozone is being delayed and that could alter the sector's initial forecasts. In the case of Sabadell, for the better, because the fixed rate has a lot of weight in its credit portfolio and that makes it appreciate more slowly; In fact, this slowness explains a good part of its growth in margins. The other part is due to an incipient reactivation of the demand for financing and the greater commercial dynamism that the entity has begun to display.

Regarding the income statement, the interest margin it grew by 11.9% year-on-year, up to 1,231 million euros; while the commissions They stood at 340 million euros, with a decrease of 3.1% year-on-year, in line with expectations. In this way, the income of the banking business (interest margin plus net commissions) reached 1,571 million euros, 8.3% more in year-on-year terms and 1.3% above the previous quarter.

For their part, total costs rose to 751 million euros between January and March, which represents an increase of 2.9% year-on-year. He customer margin continued with its upward trend due to the higher credit yield as a result of the portfolio revaluation. In this way, it stood at 3.09% between January and March of this year, after registering a growth of 36 basis points year-on-year and 10 basis points with respect to the previous quarter.

The accounts also record a 11.6% reduction in provisions and impairments, which stood at 208 million. This decrease was mainly the result of the 8.5% drop in provisions for credit provisions due to the better quality of the entity's risk. The CET1 capital ratio [que mide la solvencia] has risen to 13.3%, from 13.2% at the end of 2023.

Credit and fewer mortgages

Banco Sabadell's outstanding credit closed the first quarter of the year with a balance of 150,796 million euros, which represents a year-on-year decrease of 1.2% and a quarterly increase of 0.7%. By segments, the new production of credit to companiesthat is, medium and long-term financing plus lines of credit, amounted to 3,894 million euros, which represents an increase of 48% compared to the same period of the previous year, while the volume of currency decreased by 5%, up to 7,255 million euros.

The new granting of consumer credit also continues to show dynamism, after growing by 13% between January and March 2024 compared to the same period of the previous year, up to 552 million euros.

The mortgage activity It also reflected a positive evolution, so that in the first quarter of this year the granting of mortgages grew by 20% compared to the previous quarter, up to 908 million, with a gradually positive increase month by month. However, in year-on-year terms, the formalization of these loans still decreased by 11%.

For its part, customer resources managed by the entity, both on and off balance sheet, grew by 0.9% year-on-year. At the end of the first quarter, they totaled 203,569 million euros, after the transfer of sight accounts to off-balance sheet resources, mainly investment funds, as well as to time deposits.

Customer resources in products savings and investment In Spain they performed the best, and stood at 58.7 billion, after growing by 2.1 billion euros quarterly. Of this increase, around 500 million were recorded in time deposits, while off-balance sheet resources increased by 1,600 million, mainly due to the increase in investment funds, both due to net inflows and the positive evolution of the market.

In total, off-balance sheet resources amounted to 42,150 million euros at the end of last March, which represents a quarterly increase of 3.9%, while on-balance sheet resources remained practically in line with the previous quarter. (+0.3%), and stood at 161,419 million euros. For its part, the Group's total assets stood at 236,135 million euros, which represents a decrease of 5% year-on-year, mainly motivated by the return of the entire TLTRO III.


The quality of the balance sheet is better in terms of liquidity and credit quality. Specifically, the ratio loan to deposits (shows the ratio between loans and deposits) improved to 94.3% in the first quarter of the year, with a balanced retail financing structure, while the LCR (shows the ratio between loans and deposits) improved to 94.3% in the first quarter of the year, with a balanced retail financing structure, while the LCRliquidity coverage ratio) reached 205% at the end of March (238% excluding TSB).

Los problematic assets They fell during the first quarter by 92 million euros, ending with a balance of 6,657 million, of which 5,718 million are doubtful loans and 939 million are foreclosed assets.

The default ratio stood at 3.46% in March, compared to 3.52% in the previous quarter. As a result of all this, the cost of risk of credit improved compared to the same period a year earlier and stood at 41 basis points. The Group's total cost of risk also observes a positive trend and stood at 50 basis points at the end of March 2024.

TSB completed the first quarter of 2024 with an individual net profit of 38 million pounds, 30.7% less year-on-year. The positive contribution to the accounts of the Banco Sabadell Group amounted to 46 million euros.

Share buybacks

On the other hand, Banco Sabadell has decided to begin executing this Thursday the repurchase of shares for an amount of up to 340 million euros recently approved by the General Meeting of Shareholders (AGM) and proposed by the Board of Directors, as it has communicated to the National Securities Market Commission (CNMV).

These shares, representing 4% of the entity's share capital, will be amortized gradually and will consequently allow the bank's share capital to be reduced, which will mean, once the buyback is executed, an increase of 4% in profit per share.