Banco De Sabadell Sa · BME:SAB
Banco De Sabadell Sa — Banco De Sabadell Sa Ord — Q1 2024 Earnings Presentation
41 slides from Banco De Sabadell Sa's earnings presentation, Apr 25, 2024
Slide 1: 1Q24 results
©Sabadell 1024 results April 25, 2024
Slide 2: Index
1 1Q24 highlights 2 Financial results index 3 Balance sheet 4 Closing remarks
Slide 3: 1Q24 highlights
1Q24 1 highlights
Slide 4: 1Q24 key messages
1Q24 key messages Net Interest Income Asset quality keeps increases +1.7% QoQ improving Customer margin at 3.09% Total cost of risk at 50bps (+10bps QoQ) RoTE1 (-5bps QoQ) 12.2% CET1 FL Group net profit of 13.30% Share buyback €308M programme After €192M banking tax payment €340M starting today (non
Slide 5: Positive performance despite quarterly seasonality
Positive performance despite quarterly seasonality… Performing loans across geographies Total customer funds €M €M Mar-24 QoQ YoY Mar-24 QoQ YoY Spain 94,619 +0.0% -3.0% On-balance sheet 161,419 +0.3% -0.5% Constant FX -0.2% -1.4% UK (TSB) 42,330 +2.3% +0.8% Constant FX +0.7% -2.0% Off-balance sheet
Slide 6: Management initiatives to foster new lending growth while reducing cost of risk
Management initiatives in place to foster new lending growth while reducing cost of risk 250 remote specialized RMs deployed, Improved distribution model supporting 100% of our branch network Origination through remote specialized Enhanced capabilities to attract 55% RMs, offering Revamped digital j
Slide 7: New lending is gaining momentum in households
2.100 41.000 1.900 36.000 1.700 New lending is gaining momentum in households… 31.000 1.500 26.000 1.300 21.000 1.100 Mortgages 1,095 16.000 €M, quarterly and monthly new lending in Spain 900 1,025 11.000 890 908 700 6.000 754 500 1.000 1,025 New mortgages trend 300 -4.000 908 1Q23 2Q23 3Q23 4Q23 1Q
Slide 8: New lending in business banking
…and also in business banking… Loans and credit facilities – Business Banking Working capital1 – Business Banking €M, quarterly new lending in Spain €M, quarterly new lending in Spain 3,894 7,651 7,547 7,255 2,638 2,692 +48% -5% Var. YoY Var. YoY +45% -4% Var. QoQ Var. QoQ 1Q23 4Q23 1Q24 1Q23 4Q23 1
Slide 9: Strong growth in payment services; savings and investment products increase
Strong growth in payment services continues. Savings & investment products increase Merchant acquiring business deal Cards Retailer payment services (PoS) expected to close Quarterly turnover in Spain (in €M) Quarterly turnover in Spain (in €M) in 2Q24 13,513 12,445 +7% 11,261 +11% 6,212 Var. YoY Va
Slide 10: Stable volumes in Spain with positive momentum
Stable volumes in Spain with positive momentum… Performing loans by segment, ex-TSB €bn Mar-24 QoQ YoY Mar-24 QoQ YoY Mexico 4.8 +4.2% +16.1% Mortgages 37.5 -0.8% -3.7% Constant FX X.X% +1.0% +10.7% Miami 5.6 -1.3% +2.0% Consumer loans 4.0 +2.9% +13.8% Constant FX X.X% -3.4% +1.4% Foreign branches 3
Slide 11: Upturn in new mortgage lending and applications (TSB)
Upturn in new mortgage lending and applications Quarterly new mortgage lending TSB customer deposits2 £M £bn +25% Mortgage Mar-24 QoQ YoY 1Q24 Cost 1,787 2,226 applications Current Accounts 14.1 -1.1% -8.7% 0.08% Savings 20.8 +1.0% +1.9% 2.40% 1,346 1,182 1.38% 957 +41% Total 34.8 +0.1% -2.7% 1.47%
Slide 12: TSB contributed €46M to the Group in 1Q24
TSB contributed €46M to the Group in 1Q24 TSB standalone P&L and its contribution to Sabadell P&L trends for remaining 2024 £M 1Q24 1Q24/4Q23 1Q24/1Q23 NII in 2H24 NII 238 0.3% -10.9% Fees & commissions 1 25 -12.0% 3.1% Fees ≈ Recurrent Costs -194 4.2% 0.8% Costs in 2H24 Core results2 70 -13.2% -29.
Slide 13: €340M share buyback program to start today
A solid set of results in 1Q24 drives an improvement in RoTE guidance towards >12% 1Q24 (€M) 1Q24/4Q23 1Q24/1Q23 NII 1,231 +1.7% +11.9% Fees 340 +0.2% -3.1% 13.30% CET1 FL +52bps YoY Recurrent costs -751 +0.0% +2.9% Core results1 820 +2.6% +13.8% Provisions -208 -8.5% -11.6% 12.2% Net profit 308 +1.
Slide 14: Financial results
Financial results rb
Slide 15: Net profit increased by +50% YoY
Net profit increased by +50% YoY Sabadell ex-TSB Sabadell Group €M 1Q24 1Q24/4Q23 1Q24/1Q23 1Q24 1Q24/4Q23 1Q24/1Q23 Net interest income 953 1.6% 19.6% 1,231 1.7% 11.9% Fees & commissions 310 1.3% -3.9% 340 0.2% -3.1% Core banking revenue 1,263 1.5% 12.8% 1,571 1.3% 8.3% Trading income & forex 24 n.
Slide 16: Higher customer margin underpinned NII growth
Higher customer margin underpinned NII growth Group NII Group NII QoQ evolution €M €M 1,211 1,231 +3 1,100 1,211 +20 +3 1,231 273 278 1Q24/4Q23 +1.7% -6 303 • Customer • ALCO: +18 margin: +32 • Wholesale • Volumes: -20 funding costs: +3 • FX impact: +8 • Liquidity: -18 938 953 797 1Q24/1Q23 QoQ +11.
Slide 17: NII performed better than anticipated
NII performed better than anticipated underpinned by customer margin in Spain … Group customer margin and NIM breakdown Spain customer margin breakdown % % 4.20% 4.33% 4.01% 3.80% 3.95% 3.67% 3.60% 3.29% 3.27% 3.13% 2.99% 2.99% 3.09% 2.82% 2.97% 2.99% 2.73% 2.89% 2.61% 2.87% 2.02% 2.01% 2.08% 1.79%
Slide 18: Dynamics that will continue to support NII
… with dynamics that will continue to support NII further… Repricing 2024 2025 ▪ €5.5bn of SMEs & Corporates fixed rate ▪ Higher commercial activity and volumes Loan book loans to be renewed in the reminder of margin ex-TSB ▪ Fixed rate mortgages in Spain >60% of stock 2024 at higher rates Customer
Slide 19: Fees remained flattish in the quarter
Fees remained flattish in the quarter Group fees & commissions Group fees & commissions €M 1Q24/4Q23 1Q24/1Q23 Credit and +€0M +0.3% -€1M -1.0% 350 contingent risk 339 340 28 33 30 Services -€2M -0.9% -€6M -3.0% 72 71 71 1Q24/4Q23 +0.2% Asset Mgmt.1 +€2M +2.8% -€4M -5.2% 174 164 166 1Q24/1Q23 -3.1%
Slide 20: Efficiency ratios improved with no cost savings at TSB yet
Efficiency ratios improved with no cost savings at TSB yet Group costs Efficiency ratio2 €M % 784 -3.8pp 41.5% 751 730 33 Efficiency ratio 124 124 ex-TSB 138 1Q24/4Q231 51.4% 1Q24 +0.0% 185 194 188 47.6% 405 442 433 1Q24/1Q23 +2.9% 1Q23 4Q23 1Q24 2023 1Q24 Ex-TSB expenses TSB expenses Amortisation &
Slide 21: Robust asset quality drives total CoR to 50bps
Robust asset quality drives total CoR to 50bps Group credit provisions Group total provisions 1Q24 breakdown €M €M 186 174 1Q24/4Q23 12 208 17 166 31 25 18 -4.4% 166 -1 169 149 148 1Q24/1Q23 -10.6% 1Q23 4Q23 1Q24 Credit Foreclosed NPA Other Total provisions for asset management provisions provisions
Slide 22: Balance sheet
Balance sheet o
Slide 23: Retail mortgages account for more than half of the loan book
Retail mortgages account for more than half of the loan book Retail mortgages 51% ➢ Mortgages to individuals, TSB 26% 38% ➢ SMEs & Corporates2 ▪ Avg. length of customer ▪ Avg. loan size: £136K Group relationship: >10 years ▪ Weighted avg. LTV: 57% performing loans ▪ Commercial Real Estate ▪ Interest
Slide 24: Improved NPL ratio with higher coverage
Improved NPL ratio with higher coverage Group NPLs and NPL ratio Exposure by stage and coverage ratio €M €M, % Stage 2 Stage 3 58% 59% Mar-24 YoY Mar-24 YoY 55% Exposure (€M) 11,827 -2,234 5,718 -174 3.52% 3.52% % of total loan book 7.2% -125bps 3.5% -6bps 3.46% Total provisions over stage 3 NPL rat
Slide 25: NPAs reduced by -5% in the year
NPAs reduced by -5% in the year Group foreclosed assets Group NPAs €M €M 38% 40% 39% 52% 56% 56% -5% YoY -16% YoY 7,008 6,748 6,657 1,117 971 939 Mar-23 Dec-23 Mar-24 Mar-23 Dec-23 Mar-24 Coverage ratio Group key ratios Mar-23 Dec-23 Mar-24 ▪ 21% of the stock sold in the last 12 Gross NPA ratio1 4.2
Slide 26: Robust liquidity position after repaying TLTRO-III
Robust liquidity position even after repaying TLTRO-III in full Liquidity metrics Credit ratings Sabadell Group Group long-term credit rating and outlook Standard & BBB+ New Fitch BBB- Poor’s Stable Ratings Positive 94% 144% 205% Baa2 A (low) Loan-to- NSFR LCR Moody’s New DBRS deposit Positive Stabl
Slide 27: Ample MREL buffer
Ample MREL buffer MREL position, Sabadell Group YTD public issuances % Risk Weighted Assets (RWAs), % Leverage Ratio Exposure (LRE) Maturity Instrument Date Size (€M) Coupon (Years) Senior Preferred Jan 15th 750 6NC5 4.00% Covered bonds (TSB) Mar 5th 500 5 3.32% 29.34% 9.93% Senior Non Preferred Mar
Slide 28: Solid organic capital generation
Solid organic capital generation… MDA Evolution of capital ratios, fully loaded 437bps +9bps Shareholder value creation2 QoQ 18.42% +14.8% 18.09% 17.78% +29bps -8bps -12bps QoQ +64bps 0.05 +21bps 0.04 13.21% 13.21% 13.30% QoQ YoY 12.78% +33bps +2.3% 2.23 Group 2.02 QoQ Mar-23 CET1 FL Dec-23 CET1 FL
Slide 29: Closing remarks
Closing remarks 29
Slide 30: Upgrade of 2024 guidance
A stronger than anticipated outlook in 1Q24 allows to upgrade 2024 guidance 2024 guidance 1Q24 2024 new guidance Net Interest Income (YoY) Low-single digit growth +11.9% c.3% Fees & Commissions Mid-single digit decline -3.1% = (YoY) Recurrent costs (YoY) c.2.5% growth +2.9% = Total Cost of Risk < 55
Slide 31: Appendix
1 NIM and customer margin 6 RWAs breakdown 2 Debt maturities and 7 MDA buffer Appendix issuances 3 ALCO portfolio 4 ESG milestones 5 TSB asset quality, solvency and liquidity position 31
Slide 32: NIM and customer margin
1. NIM and customer margin Sabadell Group Sabadell ex-TSB %, in euros %, in euros 2.99% 3.09% 2.89% 2.99% 3.05% 3.20% 3.23% 3.32% 2.73% 2.80% 1.96% 2.00% 2.05% 2.08% 1.65% 1.77% 2.02% 2.01% 1.88% 1.79% 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23 2Q23 3Q23 4Q23 1Q24 TSB %, in euros Customer margin 2.55% 2.50% NIM
Slide 33: Debt maturities and issuances
2. 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 Instrument Date Size Coupon 4.1% Covered bonds 26/01/2024 €550M 4.18% 3.5% 4.1% 3.6% Covered bonds (TSB) 15/02/2024 €584M 6.09% 1.2% 3.1%
Slide 34: ALCO portfolio
3. ALCO portfolio Evolution of fixed income portfolio Composition of fixed income portfolio Sabadell Group. €bn Sabadell Group. €bn. Mar-24. 10.9% 11.7% 12.1% 15.8 3.9 2.0 3.8 2.5 0.7 27.5 28.6 27.0 5.2 6.0 6.4 Spain Agencies & Covered bonds Italy Other governments and Corporates & Financials UK Por
Slide 35: ESG Milestones in 1Q24
4. ESG Milestones in 1Q24 ▪ New €500M green bond issuance (6.5NC5.5 green senior non-preferred, 4.25% coupon). This issuance brings the Bank’s total outstanding green E issues to 8. Sustainable finance mobilised S ▪ Improved Carbon Disclosure Project (CDP) score of A-, making us one of €bn in cumula
Slide 36: TSB asset quality, solvency and liquidity position
5. TSB asset quality, solvency and liquidity position Asset quality TSB core mortgage portfolio overview % Mar-23 Dec-23 Mar-24 3% 6% Mortgages NPL ratio 1.4% 1.5% 1.5% 2% 83% >90% 82% 9% total loan Coverage ratio 41% 42% 40% book (YtD) Cost of risk1 0.16% 0.19% 0.17% £33.6bn Residential repayment S
Slide 37: RWAs breakdown
6. RWAs breakdown Mar-24 RWAs: €79,285M By type: ▪ Credit risk: €69.7bn ▪ Market risk: €0.5bn ▪ Operational risk: €9.0bn ▪ Other: €0.1bn By geography: ▪ Spain: €61.2bn ▪ UK: €13.8bn ▪ Mexico: €4.3bn 37 37
Slide 38: Ample MDA buffer at 437bps
7. Ample MDA buffer at 437bps, better than guidance Group capital requirements Group capital position MDA buffer Leverage Pillar 1 CET1 4.50% ratio Pillar 2 CET1 437bps phase-in Requirement (P2R) 1.27%1 +9bps QoQ 5.3% Capital Conservation Buffer 2.50% Countercyclical Buffer 0.42% Other Systemically
Slide 39: Glossary
Glossary Term Definition AuM Assets Under Management CET 1 FL Common equity Tier 1 Fully Loaded CoR Cost of Risk HQLA High Quality Liquid Assets LCR Liquidity Coverage Ratio: short-term liquidity ratio Leverage Ratio Exposure denominator is equivalent to total assets and a variety of off-balance she
Slide 40: 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 41: Need a bank?
©Sabadell Need a bank?
Banco De Sabadell Sa Ord — Q1 2024 Earnings Presentation on 6ix