Sabadell Bank between January and September it earned 25.9% more than in the same period of the previous year, thus reaching a record profit figure of 1,295 million euros and practically equaling in nine months the profit of all of 2023, as highlighted in the press release sent this Thursday to the National Securities Market Commission (CNMV).
The entity states that this result is based on the good performance of the interest marginin the increase in volumes, investment in companies, SMEs and individuals, as well as the positive evolution of asset quality, which has led to a reduction in provisions and an improvement in the total cost of risk.
Specifically, the interest margin, which rose to 3,746 million euros after growing by 6.7% year-on-year, driven mainly by a higher credit performance and an increase in portfolio income fixed income; At the same time, net commissions stood at 1,010 million euros, with a decrease of 3.6% year-on-year, but “remaining within the expected range.”
As a result, the income of the banking business (interest margin plus net commissions) rose to 4,756 million euros between January and September 2024, 4.3% more in year-on-year terms.
Total costs stood at 2,307 million euros in the first nine months of the year, which represents an increase of 3.4% year-on-year after recording TSB restructuring expenses. Recurring costs, which do not take into account extraordinary elements, rose 2.5% year-on-year.
In this way, the recurring margin (interest margin plus commissions minus recurring costs) grew 6.1% year-on-yearreaching 2,470 million euros at the end of September, while the efficiency ratio improved 2.3 percentage points compared to the same period of the previous year, reaching 48.6% in the third quarter of 2024.
Regarding total provisions, these decreased by 17.7% year-on-year, to 561 million euros in September. This decrease is mainly supported by the improvement in the credit risk profile in all segments of the Banco Sabadell Group and the lower provisions made for real estate.
Banco Sabadell thus registered a new improvement of the cost of credit riskwhich already stands at 31 basis points at the end of September, while the group’s total cost of risk stood at 44 basis points at the end of the third quarter.
The entity has increased its profitability, measured in terms of RoTE, by 296 basis points in year-on-year terms, reaching 13.2% at the end of September. So far this year, Banco Sabadell has improved its RoTE by 174 basis points, after closing 2023 at 11.5%.
At the end of last September, the ‘fully loaded’ CET1 ratio stood at 13.8%, which implies an increase of 32 basis points in the quarter and 59 basis points compared to the end of 2023. Sabadell highlights that this ratio already incorporates the 60% pay-out. The Total Capital ratio stood at 18.84% at the end of September 2024, and the MDA buffer stood at 485 basis points.
The evolution of the balance
Regarding the evolution of the balance sheet, the entity highlights that its outstanding credit showed a growth of 1.8% year-on-year until September, with a balance of 154,364 million euros, where the increase in credit to companies, SMEs and individuals stands out fundamentally.
The production of credit to companies in Spain, that is, medium and long-term financing plus credit lines, amounted to 11,413 million euros between January and September, which represents an increase of 26% compared to the same period of the year. previous year.
Likewise, mortgage activity grew by 34% in the first nine months, up to 3,126 million euros, while in the third quarter alone, mortgages were granted for 1,618 million euros, 82% more compared to the same period a year earlier. and 8% compared to the immediately previous quarter.
The granting of consumer credit experienced an increase of 17% between January and September compared to the same period of the previous year, after granting 1,856 million euros, while card billing advanced at a rate of 7% year-on-year, up to 18,470 million euros at the end of September. The volume of operations carried out with POS terminals increased by 9%, up to 44,782 million euros.
On the liabilities side, customer resources managed by Banco Sabadell, both on and off balance sheet, grew by 3.4% year-on-year, and at the end of September, they totaled 208,249 million euros. On-balance sheet customer funds amounted to 163,468 million euros in September, 0.9% more, while off-balance sheet funds stood at 44,781 million euros, with an increase of 13.8% year-on-year.
Credit quality
Likewise, Sabadell points out that its loan to deposits ratio (which shows the proportion between loans and deposits) stood at 95.2% in the third quarter, while the liquidity coverage ratio (LCR) reached 209% at the end of September, with a total liquid asset figure of 62,080 million euros.
The balance of problematic assets was reduced by 775 million euros in the last twelve months, ending September with a balance of 6,155 million euros, of which 5,283 million are doubtful loans and 872 million euros are foreclosed assets. The non-performing loan ratio stood at 3.14% in September, below the 3.21% of the previous quarter and compared to 3.54% in the third quarter of the previous year.
Evolution of TSB
TSB recorded an individual net profit of 59 million pounds in the third quarter, 44.7% more in the quarterly comparison, and 138 million pounds between January and September, which is equivalent to a decrease of 9.5%.
Thus, the positive contribution to the accounts of the Banco Sabadell Group rose to 73 million euros in the third quarter, 48.7% more in the quarterly rate, and to 168 million euros in the first nine months, 4.3% more than in the same period of 2023.
The interest margin decreased by 7% year-on-year, to 730 million pounds (871 million euros), and net fees fell 11.6%, to 70 million pounds (83.5 million euros).
Sabadell points out that the quarter’s results show “extraordinary elements” among which are the restructuring costs and the sanction imposed by the FCA for “unfair treatment” of vulnerable clients or at risk of vulnerability, in whose investigation they fully cooperated and The necessary contingency measures were quickly put into practice. However, the company states that these planned one-offs “have been offset by insurance recoveries.”
Regarding commercial activity at TSB, Sabadell points out that a 24% year-on-year growth was recorded in the granting of new mortgages in the first nine months of the year, which allows the balance of mortgages on the balance sheet to close flat (-0. 2%) compared to a year before.
Shareholder remuneration
Regarding shareholder remuneration, it recalls its commitment to deliver in 18 months some 2.9 billion euros charged to the results of 2024 and 2025, which is equivalent to around 30% of Sabadell’s value on the Stock Market. In addition, the entity has updated its profitability forecasts, which it plans to maintain above 13% in 2024.
On October 1, the entity paid a cash dividend of 0.08 euros per share (429 million euros), which represented “barely 15%” of the total planned for the period, in which at least 0.45 euros per share more.
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