Banco De Sabadell Sa · BME:SAB
Banco De Sabadell Sa — Banco De Sabadell Sa Ord — Q2 2023 Earnings Presentation
40 slides from Banco De Sabadell Sa's earnings presentation, Jul 30, 2023
Slide 1: 2Q23 results
©Sabadell 2()23 results July 27, 2023
Slide 2: Index
1 2Q23 highlights 2 Financial index results 3 Balance sheet 4 Closing remarks
Slide 3: 2Q23 highlights
2Q23 1 highlights
Slide 4: 2Q23 key messages
2Q23 key messages NII keeps improving Asset quality remains +6% QoQ stable Customer margin Total cost of risk +16bps QoQ RoTE 56bps 10.8% CET1 FL Group net profit of 12.87% Share buyback €564M in 1H23 programme launched £105M in 1H23 at TSB 19% of €204M executed1 Stable solvency position in the quar
Slide 5: Volumes remained broadly stable in the quarter
Volumes remained broadly stable in the quarter Performing loans across geographies Total customer funds €M €M Jun-23 QoQ YoY Jun-23 QoQ YoY Spain 97,786 +0.3% -3.2% On-balance sheet 162,790 +0.3% -0.4% Constant FX -0.4% -0.4% UK (TSB) 42,526 +1.3% -3.1% Constant FX -1.1% -3.1% Off-balance sheet 39,7
Slide 6: The radical transformation in Retail Banking enables us to increase our customer base
The radical transformation in Retail Banking enables us to increase our customer base and direct business Digital Consumer loans sales Cards sales Mortgage origination customer-acquisition via digital & remote channels via digital channels through specialized relationship managers Retail 75% Banking
Slide 7: New lending, excluding mortgages, increased in the year
New lending, excluding mortgages, increased in the year Mortgages Consumer loans Quarterly new lending in Spain (in €M) Quarterly new lending in Spain (in €M) 1,501 1,025 1,095 -27% +23% Var. YoY -23% 434 490 532 Var. YoY +27% 1H23/1H22 +7% +9% 1H23/1H22 Var. QoQ Var. QoQ 2Q22 1Q23 2Q23 2Q22 1Q23 2Q
Slide 8: Good momentum in payment services continues
Good momentum in payment services continues. Gradual increase of savings & investment products Cards Retailer payment services (PoS) Quarterly turnover in Spain (in €M) Quarterly turnover in Spain (in €M) 12,111 13,247 11,261 5,803 +5% +9% 5,541 5,330 Var. YoY Var. YoY +8% +13% +9% 1H23/1H22 +18% 1H
Slide 9: Stable volumes in Spain while growing in other international geographies
Stable volumes in Spain in the quarter while growing in other international geographies Performing loans by segment, ex-TSB €bn Jun-23 QoQ YoY Jun-23 QoQ YoY Mexico 4.3 +5.4% +6.8% Mortgages 38.6 -0.8% -0.6% Constant FX X.X% +2.4% +3.0% Miami 5.5 -0.3% +2.2% Consumer loans 3.6 +3.5% +12.3% Constant
Slide 10: Deposits and loans are well balanced at TSB
Deposits and loans are well balanced at TSB Quarterly new mortgage lending TSB’s Customer deposits £M £bn +20% Mortgage applications 2Q23 1,632 Jun-23 QoQ YoY Cost 1,366 Current Accounts (PCAs) 13.2 -2.4% -7.7% 0.01% -40% Savings 19.7 +0.2% +7.7% 1.43% Var. YoY Business Banking Deposits 2.5 -1.8% -5
Slide 11: TSB contributed €106M to the Group in 1H23
TSB contributed €106M to the Group in 1H23 TSB standalone P&L and its contribution to Sabadell TSB core results1, YoY £M £M +35.6% 2Q23 2Q23/1Q23 1H23 1H23/1H22 NII 261 -2.6% 528 13.9% Fees & commissions 26 6.4% 51 -5.5% +64 193 Costs -194 1.2% -386 2.8% -3 -11 142 Core results1 93 -7.7% 193 35.6% T
Slide 12: RoTE above 10%
RoTE above 10% 2Q23 (€M) 2Q23/1Q23 1H23 (€M) 1H23/1H22 NII 1,170 +6.3% 2,270 +29.2% 12.87% Fees 347 -1.0% 697 -4.4% CET1 FL +39bps YoY Total costs -748 +2.4% -1,478 +2.7% Core results1 769 +6.8% 1,489 +42.3% Provisions -233 -1.4% -468 -1.4% 10.8% Net profit 359 +75.2% 564 +43.6% RoTE 1H23 1 NII + fe
Slide 13: Improvement in profitability and share buyback support shareholder value creation
Improvement in profitability and share buyback support shareholder value creation Increasing profitability… … and the share buyback programme Shareholder value creation3 Earnings per share (EPS). €. +8.5% +74% YoY €204M of share buyback already launched +6.6% 0.02 ▪ It represents 3.3% of current mar
Slide 14: Financial results
Financial results rb
Slide 15: Profitability keeps increasing in the quarter
Profitability keeps increasing in the quarter Sabadell ex-TSB Sabadell Group €M 2Q23 1H23 2Q23/1Q23 1H23/1H22 2Q23 1H23 2Q23/1Q23 1H23/1H22 Net interest income 870 1,667 9.2% 38.3% 1,170 2,270 6.3% 29.2% Fees & commissions 317 639 -1.8% -4.0% 347 697 -1.0% -4.4% Core banking revenue 1,187 2,306 6.0%
Slide 16: Higher customer spread enables improved NII guidance
Higher customer spread enables improved NII guidance Group NII Group NII QoQ evolution €M €M +60 +8 +6 1,170 1,100 1,170 2Q23/1Q23 -4 300 1,100 899 • ALCO: +36 303 +6.3% • Wholesale 280 • Customer funding costs: -52 margin: +72 • Liquidity :+24 • Volumes: -17 870 1H23/1H22 • FX impact:+5 797 QoQ 619
Slide 17: Fee growth subdued by services and asset management
Fee growth subdued by services and asset management Group fees & commissions Group fees & commissions €M 2Q23/1Q23 1H23/1H22 371 Credit and 350 347 -€0.7M -1.0% +€3.9M +2.8% 34 contingent risk 28 30 71 72 71 Services -€1.2M -0.6% -€24.4M -5.8% 2Q23/1Q23 -1.0% Asset Mgmt.1 -€1.6M -2.0% -€11.8M -7.0%
Slide 18: Evolution of costs in the quarter aligned with guidance
Evolution of costs in the quarter aligned with guidance Group costs Efficiency ratio1 €M % -6.1pp 714 730 748 56.7% 2Q23/1Q23 137 138 136 +2.4% 53.6% 188 199 50.6% 188 1H23/1H22 390 405 412 +2.7% 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 Ex-TSB expenses TSB expenses Amortisation & depreciation 44.0% Efficiency
Slide 19: Wider jaws led to core results improvement
Wider jaws led to core results improvement Group core results evolution Group core results YoY €M €M +42.3% 2Q23/1Q23 +513 +6.8% 1,489 -32 -38 769 1,046 720 555 2Q22 1Q23 2Q23 1H22 NII Fees Costs 1H23 YoY variation +29.2% -4.4% +2.7% Core revenues (NII + Fees) Costs 19
Slide 20: Total cost of risk at 56bps, better than YE guidance
Total cost of risk at 56bps, better than YE guidance Group credit provisions Group total provisions 2Q23 breakdown €M €M 186 187 166 2Q23/1Q23 35 233 17 15 +0.7% 10 187 12 -2 156 169 173 1H23/1H22 +10.4% 2Q22 1Q23 2Q23 Credit Foreclosed NPA Other Total provisions for asset management provisions prov
Slide 21: Balance sheet
Balance sheet o
Slide 22: Small improvement of NPL ratio and coverage ratios in the quarter
Small improvement of NPL ratio and coverage ratios in the quarter Group NPLs and NPL ratio Exposure567 by stage and coverage ratio €M Stage 1 Stage 2 Stage 3 55% 55% 56% % of total book 88.5% 8.0% 3.5% 3.52% 3.50% 3.31% Coverage, Group 0.3% 3.8% 40.1% Total provisions over stage 3 NPL ratio Coverage
Slide 23: Foreclosed assets continued to decrease
Foreclosed assets continued to decrease Group foreclosed assets Group NPAs €M €M 39% 38% 39% 52% 52% 53% -15% YoY 6,991 7,008 6,971 1,277 1,117 1,083 Jun-22 Mar-23 Jun-23 Jun-22 Mar-23 Jun-23 Coverage ratio Group key ratios Jun-22 Mar-23 Jun-23 ▪ 23% of the stock sold in the last 12 Gross NPA ratio1
Slide 24: Hefty liquidity buffers
Hefty liquidity buffers Liquidity metrics Credit ratings Sabadell Group Group long-term credit rating and outlook Standard & BBB Fitch BBB- New Poor’s Positive Ratings Positive 95% 141% 200% Baa3 A (low) Loan-to- NSFR LCR Moody’s DBRS deposit Positive Stable Positive outlook for three credit agencie
Slide 25: Ample MREL buffer
Ample MREL buffer c.€4.5bn MREL position, Sabadell Group YTD public issuances issued % Risk Weighted Assets (RWAs), % Leverage Ratio Exposure (LRE) in 1H23 ▪ 18-Jan: €500M PerpNC6 Additional Tier 1 (9.375% coupon) 27.21% 25.35% 8.86% 6.36% 2024 2024 ▪ 7-Feb: €750M 6NC5 Senior non-preferred Requireme
Slide 26: CET1 FL at 12.87% (+33bps YTD)
CET1 FL at 12.87% (+33bps YTD) MDA Evolution of capital ratios 422bps +9bps QoQ 18.09% 18.10% QoQ 16.98% +19bps +1bps -3bps -7bps QoQ YoY +9bps +112bps +2.3% Group Total Capital 12.78% 12.78% 12.91% 12.81% 12.87% 12.48% CET1 FL QoQ +9bps 1 QoQ YoY Jun-22 Mar-23 Organic CET1 Fair value reserve RWAs g
Slide 27: Closing remarks
Closing remarks 27
Slide 28: A solid and recurrent set of results in 1H23 allows to upgrade 2023 guidance
A solid and recurrent set of results in 1H23 allows to upgrade 2023 guidance 1H23 2023 guidance 2023 new guidance Net Interest Income +29.2% High-teens growth >20% (YoY) Fees & Commissions -4.4% Low single digit decline Mid single digit decline (YoY) Total costs €1,478M ~ €3bn (4% growth) c.3.5% gro
Slide 29: Appendix
1 Group NIM and customer margin 6 TSB asset quality 2 Service quality 7 RWAs breakdown Appendix 3 Debt maturities and issuances 8 MDA buffer 4 ALCO portfolio 5 ESG 29
Slide 30: 1. NIM and customer margin
1. NIM and customer margin Sabadell Group Sabadell ex-TSB 3.88% %, in euros 3.21% %, in euros 3.51% 2.73% 2.89% 2.83% 2.53% 3.05% 2.32% 2.57% 2.24% 2.23% 2.11% 2.12% 2.53% 2.80% 1.79% 1.88% 1.50% 1.64% 1.22% 1.40% 1.46% 1.65% 1.77% 1.27% 1.49% 0.40% 1.33% 1.13% 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q2
Slide 31: 2. Service quality index and NPS Spain
2. Service quality index and NPS Spain Service quality index Net promoter score (NPS) NPS Online banking SMEs 8% 8.18 46% Corporates 31% Personal banking 13% Sector average Retail banking -10% NPS Mobile 7.72 7,81 40% -1% YoY +7,7p.p. YoY Note: Service quality source: STIGA, EQUOS (2Q23). NPS source
Slide 32: 3. Debt maturities and issuances
3. Debt maturities and issuances Debt maturities and average cost Main debt maturities and redemptions in Maturities in €M and average cost in % the last 6 months 2.4% 3.8% Instrument Date Size Coupon AT1 23/02/2023 €400M 8.52% 3.6% 3.1% Senior preferred bonds 05/03/2023 €1,000M 0.88% 1.2% 2.5% Cove
Slide 33: 4. ALCO portfolio
4. ALCO portfolio Evolution of fixed income portfolio Composition of fixed income portfolio Sabadell Group. €bn Sabadell Group. €bn. Jun-23. 9.9% 10.9% 10.9% 16.7 3.3 1.9 2.4 1.9 0.7 27.0 27.0 25.4 5.2 5.1 Spain Agencies & Covered bonds 5.8 Italy Other governments and Corporates & Financials UK Port
Slide 34: 5. ESG. Milestones 2Q23
5. ESG. Milestones 2Q23 ▪ New green bond issuance of €750M (6NC5 year Senior preferred E Green, 5% coupon), demand c.2.5x amount offered Sustainable finance mobilised S ▪ Stock market debut (Spanish sub-market BME Growth) of Greening €bn in cumulative terms since 2021 G Group, a renewables firm spec
Slide 35: 6. TSB asset quality, solvency and liquidity position
6. TSB asset quality, solvency and liquidity position Asset quality TSB mortgage portfolio overview % Jun-22 Mar-23 Jun-23 NPL ratio 1.3% 1.4% 1.4% 3% 5% >90% 83% Loan book Coverage ratio 40% 41% 40% 9% (YtD) Cost of risk1 0.09% 0.16% 0.15% Residential repayment £33.7bn Residential interest only Sol
Slide 36: 7. RWAs breakdown
7. RWAs breakdown Jun-23 RWAs: €78,537M By type: ▪ Credit risk: €69.6bn ▪ Market risk: €0.5bn ▪ Operational risk: €8.2bn ▪ Other: €0.2bn By geography: ▪ Spain: €61.0bn ▪ UK: €13.6bn ▪ Mexico: €3.9bn 36 36
Slide 37: 8. Ample MDA buffer at 422bps, better than guidance
8. Ample MDA buffer at 422bps, better than guidance Group capital requirements Group capital position MDA buffer Leverage Pillar 1 CET1 4.50% ratio Pillar 2 CET1 422bps phase-in Requirement (P2R) 1.21%1 +9bps QoQ 4.9% Capital Conservation Buffer 2.50% Countercyclical Buffer 0.20% Other Systemically
Slide 38: Glossary
Glossary Term Definition CBR Combined Buffer Requirement CCyB Countercyclical Buffer CCB Capital Conservation Buffer Commercial gap Total on-balance sheet customer funds – total gross loans DGS Deposit Guarantee Scheme HQLA High Quality Liquid Assets HTC Held to collect LCR Liquidity Coverage Ratio:
Slide 39: Disclaimer
Disclaimer This presentation (the "Presentation") has been prepared and is issued by, and is the sole responsibility of, Banco de Sabadell, S.A. ("Banco Sabadell" or "the Company"). For the purposes hereof, the Presentation shall mean and include the slides comprised in this document, any prospectiv
Slide 40: Need a bank?
©Sabadell Need a bank?
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