Banco Sabadell earns 1.39 billion, 7.3% more, after overcoming BBVA's takeover bid

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. which was rejected after only receiving the support of 25.47% of the voting rightsAnd, they are presenting themselves in a state of euphoria following the successful acquisition of the Basque bank, and the private party this Saturday is approaching. The Sant Jordi Palace in Barcelona has been rented, and some 9,000 employees are expected to attend to celebrate and thank them for their efforts during this time.

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

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 will have to compensate for, for example, the sale of its British subsidiary. Its strategic plan anticipates achieving a return on tangible equity (ROTE) of 16%. Currently, it stands at 14.1%, with the goal of closing the year at 14.5%, compared to 13.2% a year ago. The commitment is to distribute to shareholders the surplus of 13% of CET1 capital (the highest quality). By 2025, shareholder remuneration has reached €1.45 billion.

The group's CEO, César González-Bueno, highlighted in a statement that "the dividend per share will be higher in the next three years than the 20.44 cents paid in 2024." At the same time, the return on equity 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%. The CFO, Sergio Palavecino, emphasized "the positive contribution of all business segments." A key highlight was a further reduction in the non-performing loan ratio to 2.45%. Net interest income, calculated as the difference between what the company charges for lending money and what it pays for custody, reached €3.628 billion through September, a year-on-year decrease of 3.2% 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 credit also increased at a healthy pace, rising 19% year-on-year to €2.216 billion. New business loans reached €13.902 billion through September, a year-on-year decrease of 1%. Customer deposits on the balance sheet, at €167.78 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 president, 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."