González-Bueno (Banco Sabadell): "The takeover bid remains off track."

MadridThis Friday will mark one year since BBVA launched its hostile takeover bid for Banc Sabadell, and despite the uproar (still pending resolution), the Valles-based bank continues to see business booming. Between January and March, Sabadell earned €489 million, representing a 58.6% increase compared to the same period in 2024, as the financial institution announced this Thursday morning in a statement to the National Securities Market Commission (CNMV). To understand the magnitude of the profit, it represents having earned in just three months half of what it earned in all of 2023 (€1 billion).

These results, however, have been aided by the new design of the extraordinary tax on banks, which allows banks to pay quarterly rather than settle the entire amount in a single, upfront payment. Thus, the bank has reported that it has paid 31 million euros through March, far from the 192 million it had to assume in the first quarter of 2024.

"The results obtained in the first three months of the year are aligned with the financial objectives established for the solo project," highlights the entity chaired by Josep Oliu in a press release. Sabadell is expected to shortly present its strategic plan for the next three years (the timing will depend on how the takeover bid process evolves), through which it hopes to reaffirm its potential and profitability. Specifically, regarding BBVA's hostile takeover bid, the bank's CEO, César González Bueno, reaffirmed this Thursday that "it remains on track."

The reasons why González Bueno believes the takeover bid will not be successful are the "unanimous rejection" of the operation by society and businesses, as well as the offer made by BBVA: "The offer does not reflect the bank's future prospects, and I believe time has proven us right. The premium [today] is rolling."

In any case, the strategic plan will arrive with the authorization of the National Commission of Markets and Competition (CNMC) for BBVA's takeover bid, while it remains to be determined what the Spanish government will do. For the moment, Pedro Sánchez's government has launched a public consultation to gather social and business opinions regarding the takeover bid and then decide whether to toughen the CNMC's conditions for reasons of "general interest" (it has a month and a half to do so) or endorse the ruling. "Obviously, we are going to participate [in the government consultation]," the Sabadell CEO anticipated.

With shareholders in mind, who will have the final say if BBVA maintains its plans to continue with the takeover bid and the acceptance period is reached, Sabadell has announced an increase in its remuneration through dividends and share buybacks thanks to the capital increase. Thus, the bank has improved its forecast for shareholder remuneration from 2025 results by €100 million, to €1.3 billion. "We estimate that the sum of dividends and share buybacks in 2024 and 2025 will total €3.4 billion," the bank said in a press release.

Less net interest income, but more credit

The normalization of interest rates by central banks, particularly the European Central Bank (ECB), is beginning to be felt in Sabadell's business, as it is in the sector in general. Revenue from banking activities (interest income plus net commission income) amounted to €1.56 billion in the first quarter of the year, a slight drop of 0.7%. Regarding net interest income, where the rate hike is most noticeable, revenue stood at €1.216 billion, a drop of 1.3%. In contrast, net commissions grew by 1.3%, to €334 million. Lending activity grew in all areas, but mortgage lending stood out, rising 81% to €1.645 billion, and consumer lending, which increased 26% to €698 million in the first quarter.

All in all, return on tangible equity (ROTE) stands at 15%. The bank's results have also been boosted by a 29.2% reduction in provisions (allocations made by the bank in anticipation of future losses), and by a stronger contribution from TSB, the bank's British subsidiary, which stood at €94 million between January and March.