Sabadell responds to BBVA takeover bid with macro dividends and record profits | Companies

Banco Sabadell goes on the attack hostile takeover from BBVA with dividends and incentives. The Catalan company announced that it will pay an interim dividend of 0.08 euros per share in October, almost three times the 0.03 euros it paid in interim dividends last year and will make its largest cash payment since 2010. The bank is also finishing the best first semester in its history with a profit of 791 million, an improvement of 40%.

The bank he runs Josep Oliu He had already used the generous shareholder payout policy as the main argument for rejecting a BBVA takeover bid last May. That later turned into a hostile takeover. The Catalan bank’s board then promised to distribute $2.4 billion to its shareholders over the next two years as the main argument for 4.83 BBVA shares for each Sabadell share, The Basque organisation said it underestimated the Catalan’s solo career.

Now, which coincided with the first results presentation after the hostile takeover launched by Carlos Torresis repeating that promise and expanding it. The company is promising to pay out $2.9 billion to shareholders between 2024 and 2025 at a rate of 53 cents per share. That’s up 500 million, thanks to a €250 million charge for the reduced impact of Basel IV and another €250 million from a buyback program that was underway when BBVA announced its takeover bid and remained in suspense. The figure represents 27% of the bank’s market capitalization, about $11 billion, and has tripled from $846 million in the past two years.

As a sign of commitment, the bank’s board has agreed to pay a macro dividend of eight cents a share next October, representing 15% of its expected total payout over those two years. That’s nearly three times last year’s interim payment of three cents a share, and four times what it will pay in 2022. It will be the largest cash interim dividend payout since 2010, 14 years ago. And with that payout alone – which includes the extra dividends typically paid at the start of the year – it already exceeds the six cents it paid last year between the two payments.

Although the company’s dividend policy is constrained by the board’s duty to be passive under the takeover ruleThe payment is in line with the bank’s current policy and is likely to be approved by the National Securities Market Commission (CNMV). pay (percentage of profits paid out as dividends) at 60%, although the company’s policy sets a range of 40% to 60%. The bank also committed to returning to its shareholders any capital in excess of the company’s minimum target (13%).

Results

In the first quarter, interest margin increased by 9.8% to 2,493 million, while net fees decreased by 3.3%. Gross profit increased by 9% to 3,061 million, despite the first interest rate cut taken by the European Central Bank (ECB).

The company explains the increase in profits by the good development of business in the Spanish market. Particularly noteworthy is the increase in loans to companies, with commercial strength in the small and medium business segment being one of the main attractions of the bank, having increased by 35%, to 8.674 million. As for mortgages, until June, the issuance of these loans increased by 14%, and consumer loans – by 17%. The credit balance increased by 0.9%, to 155.164 million dollars.

In contrast to the Spanish market figures, its UK subsidiary TSB saw its profits fall by 25% year-on-year to £79m (€93m), representing a total of 95% of the group’s revenue. The company’s profit margins fell by 1.5% year-on-year to £480m (€570m), while net fees fell by 9.3% to £46m (€54m). In contrast, mortgage lending rose by 43% and consumer lending rose by 60%.

The bank also set its CET 1 capital adequacy ratio at 13.48%, up 18 basis points from the end of Q1. Provisions were down 16%, with the share of non-performing loans at 3.21% compared to 3.46% in Q1, the coverage rate of non-performing assets at 56% and the liquidity ratio at 198%. Return on equity ROTE increased to 13.1%.

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