Sabadell earns 1,028 million until September, the best result in its history

The entity announces a dividend of 0.03 euros per share

Banco Sabadell has obtained a net attributable profit of 1,028 million euros, 44.9% more than the same period of the previous year, and thus achieves the best result in its history, according to the information it sent to the Commission this Thursday. National Securities Market (CNMV).

These results have been supported, above all, by the growth of interest margins, driven by the rate increases of the central banks. The entity highlights that the recurring margin - the result of adding the interest margin and commissions, and subtracting the costs - increased by 38.8% year-on-year, up to 2,328 million euros.

Thus, banking business income (interest margin plus net commissions) reached 4,559 million euros, 18.7% more compared to the first three quarters of 2022, while the interest margin grew by 29.0%, until reaching 3,512 million.

On the contrary, net commissions decreased by 6.3% in the first nine months of the year, to 1,047 million euros, while total costs grew by 3.2%, to 2,231 million euros.

As a result of income growth and cost control, despite inflation, the group's efficiency ratio improved by 5.3 points in one year, reaching 48.7%, 43.1% without taking into account account to TSB.

Furthermore, the customer margin has continued its upward trend, since at the end of September it had risen to 2.99%, after growing more than half a point in a year.

In this way, the return on tangible capital (RoTE) reached 11.6% at the end of September, compared to the 10.8% registered in June, while the CET1 'full-loaded' capital ratio was 13.13 %, which represents an increase of 26 basis points in the quarter. The total capital ratio amounts to 18.35%.

In this way, Sabadell meets and exceeds the financial objectives established in its strategic plan for 2021-2023, which set a RoTE greater than 6% at the end of 2023 and maintain a 'fully-loaded' CET1 ratio greater than 12% throughout. throughout the plan.

The MDA cushion (maximum distributable amount) stood at 428 basis points, offering a "large cushion" above the requirements, while the credit-to-deposit ratio was 94.6% at the end of the third quarter. Likewise, the liquidity coverage ratio (LCR) reached 220% at the end of September.

The CEO, César González-Bueno, highlighted that the end of the third quarter "once again shows significant progress in results, thanks to the involvement of all the bank's teams." "We continue with the radical transformation of our business in order to expand the customer base and increase their loyalty, offering them the best quality of service," he added.

For his part, the financial director, Leopoldo Alvear, has indicated that, once again, the bank has been able to generate capital organically, which has allowed the CET1 'fully-loaded' ratio to be placed at 13.13%. "This has been possible thanks to the improvement in our profitability, which is increasing above expectations and is already close to covering the cost of capital," he explained.

EVOLUTION OF TSB

On the other hand, TSB closed the third quarter of 2023 with an individual profit after tax of 152 million pounds, 48.1% more year-on-year. The positive contribution to the accounts of the Banco Sabadell Group amounts to 161 million euros.

The British entity increased its recurring margin by 15.4% in the year-on-year comparison, up to 280 million pounds (321 million euros), while the interest margin grew by 9.3%, up to 784 million pounds (898 millions of euros). Net commissions decreased by 9.6%, to 79 million pounds (90 million euros), and costs increased by 3.7% and stood at 583 million pounds (668 million euros).

3.3% FALL IN CREDIT BALANCE

On the other hand, Banco Sabadell's outstanding credit closed September with a balance of 151,627 million euros, which represents a year-on-year drop of 3.3% due to mortgage repayments, the lower strength of business investment, and the maturities of loans from Public Administrations. In the quarter-on-quarter comparison, credit decreased by 1.4%, partly impacted by seasonality.

In Spain, the new production of credit to companies, that is, medium and long-term financing without including working capital, amounted to 9,024 million euros in the first nine months of the year, which represents an increase of 8% compared to the previous year. same period of the previous year. However, the granting of mortgages fell by 29%, to 3,010 million euros.

Sabadell highlights that the moderation in demand for credit for home acquisition contrasts with the dynamism of consumer credit, which grew by 27% in the first three quarters, up to 1,581 million.

Card turnover increased by 7%, reaching 17,281 million euros in the first nine months, while POS turnover increased by 12%, to 39,307 million euros. In addition, these dataphones carried out 1,201 million transactions between January and September.

On the other hand, customer funds on balance closed the third quarter at 161,973 million euros, which represents 0.8% less year-on-year and 0.5% less quarter-on-quarter. Demand account balances stood at 136,511 million euros, with a decrease of 7.6% year-on-year. For their part, time deposits total 24,184 million euros, with an increase of 52.1% compared to September 2022 and 12.6% compared to the previous quarter.

Off-balance sheet customer funds reached €39,342 million at the end of September 2023, which represents an increase of 3.4% year-on-year. This increase is mainly explained by the good performance of investment funds.

In this way, the group's total assets amounted to 243,261 million euros, 6.6% less in the year-on-year comparison due to the early return of the TLTRO III. In the quarter they remain stable.

REDUCTION OF PROBLEMATIC ASSETS

Problematic assets had a balance of 6,930 million as of September 2023, of which 5,891 million were doubtful loans and 1,039 million were foreclosed assets. In the last year, problematic assets have been reduced by 109 million euros, while in the quarter the reduction is 41 million.

The entity indicates that the reduction in the outstanding balance of credit prevents the fall in problematic assets from also translating into a fall in the delinquency ratio, which stood at 3.54% as of September, compared to 3.40% in a year before. Compared to the previous quarter, it remains practically stable.

On the other hand, Sabadell has increased the coverage of problematic assets which, incorporating total provisions, stands at 53.9%. Only for doubtful loans (or credits classified as 'stage 3') the coverage rises to 56.5%, and for foreclosed assets it rises to 38.9%.

In this way, the cost of credit risk improves compared to the previous quarter and stands at 43 basis points. The group's total cost of risk also observes a positive trend and stands at 55 basis points, five basis points better than at the beginning of the year.

INCREASES THE INTERIM DIVIDEND

On the other hand, it has announced the payment of an interim dividend against 2023 results of 0.03 euros gross per share to be paid in cash on December 29.

This dividend represents 50% more than the same payment made last year, when 0.02 euros gross per share were distributed as an interim dividend.