Banco Sabadell earned 308 million in the first quarter, up 50%

Banco Sabadell Group acquired net net profit of €308 million in the first quarter of 2024, up 50.4% from the same period last year. According to the company, this benefit is due to the dynamism of business activities and improved asset quality, which increased the interest margin and reduced provisions.

At this level of benefits RoTE profitability increased to 12.2%compared to 11.5% at the end of the year, and the CET1 capital adequacy ratio increased to 13.3% from 13.2% at the end of 2023.

Regarding the income statement for the first quarter, Net interest income increased by 11.9% compared to the same period last year., up to 1.231 million euros; while commissions amounted to €340 million, down 3.1% year-on-year, in line with expectations. Thus, banking business income (interest margin plus net commissions) reached EUR 1.571 million, up 8.3% year-on-year and 1.3% higher than the previous quarter.

The item “Other operating results” represents the cost of 162 million after the credit is shown in this line 192 million emergency tax.

In its turn, Total costs rose to €751 million between January and March. which represents 2.9% year-on-year growth. As a result of higher banking revenues and containment of cost trends within the expected range, recurring margin increased by 13.8% to 820 million and the Group’s efficiency ratio improved by 3.8 points compared to the end of the 2023 financial year, reaching 47.6% in the first quarter of 2024.

In addition, client margins continued their upward trend due to higher credit yields resulting from portfolio revaluations. Thus, From January to March this year it was 3.09%. after recording growth of 36 basis points year over year and 10 basis points from the previous quarter.

The development of results was also influenced decrease in reserves and impairment by 11.6%, which amounted to 208 million. This decrease occurred mainly as a result of a decrease in loan provisions by 8.5% due to an improvement in the quality of the enterprise’s risks.

On the other side, Banco Sabadell’s outstanding loan ended the first quarter of the year with a balance of €150.796 million. representing a 1.2% year-on-year decline and a quarterly increase of 0.7%. By segment, new production of corporate loans, that is, medium- and long-term financing plus credit lines, amounted to EUR 3.894 million, which
which represents an increase of 48% compared to the same period of the previous year, while the currency volume decreased by 5%, to 7.255 million euros.

New concession Consumer lending also continues to show dynamism after growing by 13% between January and March 2024. compared to the same period last year, up to 552 million euros. There is also a growth trend in card payments (it grew by 7% year on year, to 5.727 million euros at the end of March) and the volume of transactions carried out at POS terminals (increased by 11%, to 12,445 million euros). Banco Sabadell phones recorded 403 million transactions between January and March this year, up 13% from the first quarter of the previous year.

mortgage activity This also reflected a positive trend: in the first quarter of this year, mortgage issuance increased by 20% compared to the previous quarter, to 908 million, with gradual positive growth month on month. However, in annual terms, the processing of these loans still down 11%.

Customer savings

In turn, client resources managed by the enterprise, both on-balance sheet and off-balance sheet, increased by 0.9% compared to the same period last year. At the end of the first quarter they amounted to €203,569 million after transfer of demand accounts to off-balance sheet resourcesmainly investment funds, as well as time deposits.

Client resources in the field of savings and investment products in Spain showed the best results and were placed in 58.7 billion after a quarterly increase of 2.1 billion euros.. Of this increase, about 500 million came from time deposits, while off-balance sheet resources increased by 1,600 million, mainly due to an increase in investment funds, both from net inflows and positive market evolution.

In total, off-balance sheet resources amounted to EUR 42,150 million at the end of March last year, representing a quarterly increase of 3.9%, while on-balance sheet resources remained almost the same as the previous quarter (+0.3%). and amounted to 161.419 million euros.

In its turn, The group’s total assets amounted to 236.135 million euros.which represents a 5% year-over-year decline, primarily driven by the return of the entire TLTRO III.

At the end of the first quarter, The CET1 coefficient at full load was 13.3%. implying an increase of nine basis points for the quarter. At the same time, the total capital ratio was 18.42% and the MDA buffer was 437 basis points, which provides a greater cushion compared to regulatory requirements.

Balance sheet quality has also improved in terms of liquidity and creditworthiness. Notably, the loan-to-deposit ratio (measuring the ratio of loans to deposits) improved to 94.3% in the first quarter of the year with a balanced retail funding mix, and the LCR (liquidity coverage ratio) reached 205% at the end of the year. March (238% excluding TSB).

Problem assets decreased during the first quarter by 92 million euros, ending with a balance of 6.657 million, of which 5.718 million are doubtful loans and 939 million are collateral assets.

The default rate in March was 3.46%. which compares favorably with 3.52% in the previous quarter. The strengthening of the balance sheet quality is also reflected in the increase in the coverage of problem assets, which amounted to 55.8% (+3.8 points compared to last year). Coverage of doubtful loans (3rd stage) increased to 58.5% (+3.9 points), collateral – 39.4% (+1 point).

As a result, the cost of credit risk improved from the same period a year earlier to 41 basis points. The Group’s total cost of risk is also showing positive dynamics and amounted to 50 basis points at the end of March 2024.

TSB contributes 46 million euros

TSB completed the first quarter of 2024 with individual net profit of £38 million, down 30.7% in interannual comparison. The positive contribution to the accounts of Banco Sabadell Group amounted to 46 million euros.

TSB’s business activity is showing signs of recovery, as reflected in 41% year-on-year growth in new mortgage originations and a 25% increase in applications for home equity loans between January and March compared to the previous quarter, all in an environment marked by signs of economic uncertainty in a particularly competitive mortgage market such as that of the United Kingdom.

TSB cut its recurring profit by 29.9% year on year to £70m. Net interest income fell 10.9% to £238 million year-on-year and remained stable in the quarter, supported by higher volumes. Net commissions for the quarter fell 3.1% to £25 million.

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