Banco Sabadell earns €1.39 billion and establishes minority shareholders as the "true core" against takeovers

BarcelonaBanc Sabadell sets a new profit record. The bank earned a total of €1.39 billion between January and September of this year, representing a 7.3% increase compared to the same period in 2014. These third-quarter results are the bank's first since the lengthy BBVA takeover bid process. which was rejected after receiving the support of only 25.47% of the voting rightsAnd these announcements come as the euphoria of having overcome the takeover bid by the Basque bank is still palpable, and as the private celebration this Saturday approaches. The bank has rented the Sant Jordi Palace in Barcelona and expects some 9,000 employees to attend to celebrate the resolution of the case and thank them for their efforts during this time.

Banco Sabadell's CEO, César González-Bueno, stated this Thursday at the usual press conference presenting the results that the failed BBVA takeover bid has demonstrated that the bank has "a core group of 40% of small shareholders." When asked about the possibility of seeking stable partners to avoid further takeovers, the executive emphasized the importance of retail shareholders, 30% of whom are also customers. He also said that he does not foresee any new mergers or acquisitions in the Spanish banking sector in the near future.

The profits obtained in the first nine months, although below analysts' forecasts, allow us to "reaffirm the year-end targets set out in the 2025-2027 strategic plan," as well as confirm the planned shareholder payout of £6.45 billion over this three-year period. Part of this will come from the extraordinary dividend of £2.5 billion (50 pence gross per share) approved by the shareholders' meeting in August from the sale of TSB to Santander. This subsidiary has still contributed £242 million (€274 million) through September, representing 19.7% of total profit.

Minority shareholders, the core

In response to questions about potential acquisitions to fuel growth, the CEO stated that none are currently planned. He added that the three major banks, CaixaBank, BBVA, and Santander, "are already large enough" and any acquisition could raise issues similar to those experienced with BBVA's takeover bid. "It's unnecessary to engage in corporate transactions that might make perfect sense, but which won't happen in the foreseeable future," he concluded. He reiterated that Sabadell's retail shareholders have proven to be a true "core group." A dividend of €6.45 billion

The financial institution now faces the challenge of demonstrating that, as it claimed during the takeover bid, it will perform better independently than with the integration with BBVA, and it will have to compensate for, for example, the sale of its British subsidiary. The strategic plan aims to achieve a return on tangible equity (ROTE) of 16%. Currently, it stands at 14.1%, with the objective of closing the year at 14.5%, compared to 13.2% a year ago. The commitment is to distribute to shareholders the surplus from the 13% of CET1 capital (the highest quality). This year, 2025, shareholder remuneration reaches €1.45 billion, of which €350 million in interim dividends remain to be paid on December 29.

González-Bueno highlighted that "the dividend per share will be higher in the next three years than the 20.44 cents paid from 2024 earnings." At the same time, profitability will be 16% at the end of the plan and will focus "on improving revenue, cost management, and execution, with Spain as the core market." The CET1 capital ratio stood at 13.74%. González-Bueno explained that the company aims to "gain market share, but not radically, rather moderately." The Chief Financial Officer, Sergio Palavecino, emphasized "the positive contribution of all business segments." A key highlight is a further reduction in the non-performing loan ratio, to 2.45% across the group. Net interest income, calculated as the difference between lending fees and custody fees, reached €3.628 billion through September, a 3.2% year-on-year decrease due to lower interest rates. This was offset by net fee income of €1.032 billion, up 2.1%.

Mortgage growth

In the group's business in Spain, new mortgage production stands out, growing by 26% to €5.062 billion. Consumer lending also increased at a healthy pace, rising 19% year-on-year to €2.216 billion. New business lending reached €13.902 billion through September, a year-on-year decrease of 1%. Customer deposits on the balance sheet, at €167.780 billion, increased by 2.6% year-on-year due to current accounts, while off-balance sheet deposits, at €51.670 billion, grew by 15.4% due to investment funds and insurance.

The bank is determined to demonstrate that it can achieve strong results independently. In his address at the Economists' Conference in Barcelona last week, the bank's chairman, Josep Oliu defended the existence of smaller banks"We need solvent and efficient banks capable of providing services to businesses," he said. And in this context, where there is talk of creating large European banks, he clarified that "it's not just about creating pan-European banks, since the broader their scope, the more difficult it is for them to be competitive locally." In the future, he added, there must be "large European institutions, but also regional ones, that solve problems at the local level."