Banco Sabadell boosts profits one year after BBVA's takeover bid

MadridThis Friday will mark one year since BBVA launched its hostile takeover bid for Banc Sabadell, and despite the uproar (still pending resolution), the Valle del Cauca-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 payment. Thus, the bank has reported that it has paid 31 million euros up to the month of 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 the strategic plan for the next three years to reaffirm its potential and profitability in the midst of a hostile takeover bid.

The plan will arrive with the authorization of the National Commission of Markets and Competition (CNMC) for the BBVA takeover bid, while it remains to be decided what the Spanish government will do. For now, Pedro Sánchez's administration has launched a public consultation to gather social and business opinions regarding the takeover bid and then decide whether to tighten the CNMC's conditions for reasons of "general interest" (it has a month and a half to do so) or endorse the ruling.

With shareholders in mind, who will have the final say if BBVA maintains its plans, 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," said Sabadell 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.