Banco Sabadell has a promising solo future ahead of the takeover bid's outcome.

Sant CugatBanco Sabadell has drawn a lonely and promising future for itself, or at least without BBVA. To defend it, and before it arrives the outcome of the hostile takeover that looms over the entitySabadell has used all its available artillery with the presentation this Thursday of historic earnings for the first half of the year (975 million euros), but also of the 2025-2027 strategic plan through which it promises sky-high returns (16%) in 2021 and a return of 6.3 billion euros to shareholders between now and then. It was a presentation that had a testimonial impact on the stock market, with a rise of only 0.6%. The bank is very concerned about the operation. BBVA does not plan to complete the prospectus until the end of August, so the acceptance period (for Sabadell shareholders) must be accommodated. "[The probability of BBVA's takeover bid being successful] is extremely low. Based on total and absolute conviction, it won't fly," predicted the bank's CEO, César González-Bueno. They will be able to merge for three years, with the possibility of five, BBVA will obtain "zero synergies [or cost savings]"

Neither BBVA nor TSB

Beyond growing without BBVA, how much more does Sabadell want to grow? Initially, without its British subsidiary TSB. "We will be a fundamentally Spanish bank," González-Bueno argued. On August 6, the financial institution will hold two general shareholder meetings to approve its sale to Banco Santander for €3.1 billion and distribute a €2.5 billion dividend from the transaction.

The move was interpreted as yet another defensive gesture in the face of BBVA's takeover bid, something the bank rejects: "TSB is selling for the price. [...] We had exhausted our growth capacity," stated the CEO. TSB's contribution to Banc Sabadell's results is €171 million through June, representing a 77.2% year-on-year increase thanks to commercial activity (mainly mortgages) and cost control. Mexico, Sabadell's other, albeit small, market, was not mentioned during the presentation of the strategic plan, but González-Bueno stated that it is "in a process of constant improvement."

This path leaves Sabadell as a smaller bank, which could be a boon for financial institutions outside of Spain seeking to gain a foothold on a European scale, especially at a time when the Old Continent yearns for strategic autonomy. "I don't consider a [cross-border] transaction undesirable, but it is unlikely," said the executive, who assumed that the European Commission "would bless it because there would be no competition issues." Within Spain, the bank is open to a friendly merger with other banks of the same size, but rules out an acquisition—that is, launching a takeover bid for an entity like the one BBVA has proposed—at least for the three years that the strategic plan lasts: "I completely rule it out," stated González-Bueno.

Beyond the Operations

Sabadell has informed the market that it expects to grow its business volume over the next three years: mortgages (in line with other entities), consumer loans (well above those forecast by competitors), and loans to large companies and, above all, SMEs (above the average consensus for the sector). This growth will be "healthy and without taking excessive risks" in accordance with a macroeconomic framework in which Spain stands out among the rest of the European economies: falling debt, a healthy labor market, and GDP growth that will exceed that of the Eurozone, according to Sabadell's projections.

although the ECB has just asked banks to be cautious with remuneration: "We are not going all out [...] We have informed the ECB of everything we will do, in detail, and they have not raised even the slightest objection," the CEO defended.

Leaving projections behind, for now, between January and June, the entity recorded historic profits of 975 million euros, which is 23.3% more than in the same period of the previous year. With this figure on the table, Sabadell has earned more in just six months than it earned during the entire 2022. The announced results allow Sabadell to raise its profitability up to 14%.

In terms of business performance, the Catalan bank's net interest income stood at €2.425 billion, 2.7% less than the same period last year as a result of interest rate cuts by the ECB, although it put the brakes on this on Thursday. However, Sabadell has found a way to offset this decline through net commissions and cost containment. Specifically, net commissions amounted to €694 million, up 3% due to the increase in its asset management and insurance businesses, while costs fell by 0.3%, reaching €1.51 billion. Total banking revenue reached €3.119 billion through June, down 1.5% compared to the first half of 2024. Meanwhile, the bank's non-performing loan ratio, which measures the proportion of loans at risk of default, stands at 2.5%.