Banco De Sabadell Sa · BME:SAB
Banco De Sabadell Sa — Banco De Sabadell Sa Ord — Q2 2024 Earnings Presentation
48 slides from Banco De Sabadell Sa's earnings presentation, Jul 23, 2024
Slide 1: 2Q24 Results
©Sabadell 2024 Results July 23, 2024
Slide 2: Index
1 2Q24 highlights 2 Financial results index 3 Balance sheet 4 Closing remarks
Slide 3: 2Q24 highlights
2024 1 highlights
Slide 4: Sabadell is a simple, low-risk and increasingly profitable bank
Sabadell is a simple, low-risk and increasingly profitable bank with further value to be unlocked ▪ Profitability keeps improving and has not yet peaked o Improved RoTE guidance for 2024 and 2025 ▪ Our profitability is sustainable: high visibility on future earnings o Negligible exposure to volatile
Slide 5: 2Q24 key messages
2Q24 key messages Positive momentum in Net Interest Income commercial activity increases +2.5% QoQ Performing loans Customer margin at 3.18% +3% QoQ RoTE1 (+9bps QoQ) 13.1% CET1 FL Strong asset quality 13.48% Group net profit of trend €791M in 1H24 Total NPAs -5% QoQ €95M contribution NPA coverage r
Slide 6: Loan books growing in the quarter and in the year
Loan books growing in the quarter and in the year… Performing loans across geographies Total customer funds €M €M Jun-24 QoQ YoY Jun-24 QoQ YoY Spain 97,440 +3.0% -0.4% 163,169 +1.1% +0.2% On-balance sheet +0.9% -0.1% Constant FX UK (TSB) 42,907 +1.4% +0.9% Constant FX +0.3% -0.5% Other Off-balance
Slide 7: Confirmation of new lending strength in households
Confirmation of new lending strength in households… Mortgages €M, quarterly new lending in Spain ▪ Positive momentum will continue as the early-stage applications anticipate: 4Q23 1Q24 2Q24 +20% 1,499 1Q24 vs.4Q23 QoQ early-stage app. +13% +59% +9% 1,095 +37% QoQ new lending +20% +65% 908 Var. YoY +
Slide 8: …and more intensive growth in business banking
…and more intensive growth in business banking Loans and credit facilities – Business Banking €M, quarterly new lending in Spain ▪ Business banking loan portfolio RaRoC remains +45% 1Q24 vs.4Q23 stable in the year 4,780 +26% 3,801 3,894 ▪ 84% of new lending granted to target customers in Var. YoY +3
Slide 9: Strong growth in payment services continues; savings and investment products increase
Strong growth in payment services continues. Savings & investment products increase Cards Retailer payment services (PoS) XXXX Quarterly turnover in Spain (in €M) Quarterly turnover in Spain (in €M) 13,247 14,428 12,445 +7% +9% 5,803 5,727 6,191 Var. YoY Var. YoY +7% +10% +8% 1H24/1H23 +16% 1H24/1H2
Slide 10: Merchant acquiring business partnership postponed
Merchant acquiring business partnership postponed ➢ Regulatory approvals have been obtained ➢ Deal to be closed after the hostile tender offer ends ➢ Closing and capital gain expected in 2025 ➢ Postponing the deal will have neutral impact on 2024 P&L 10
Slide 11: Current levels of new lending set the trend for loan growth
Current levels of new lending set the trend for loan growth across different products and segments Performing loans by segment, ex-TSB €bn Jun-24 QoQ YoY Jun-24 QoQ YoY Mexico 4.6 -2.7% +7.1% Mortgages 37.8 +0.8% -2.2% Constant FX X.X% +1.1% +9.1% Miami 6.4 +14.0% +16.7% Consumer loans 4.2 +4.9% +15
Slide 12: New mortgage lending also drives loan growth in the UK
New mortgage lending also drives loan growth in the UK Quarterly new mortgage lending TSB customer deposits2 £M £bn Jun-24 QoQ YoY 2Q24 Cost +43% Current Accounts1 13.9 -1.3% -7.7% -0.02% Var. YoY +42% Savings 21.1 +1.7% +3.5% -2.49% -4% 1H24/1H23 1.47% Total 35.0 +0.5% -1.3% -1.52% Var. QoQ 1Q24 Co
Slide 13: 2024 is a transition year for TSB
2024 is a transition year for TSB TSB standalone P&L and its contribution to Sabadell £M 2Q24 2Q24/1Q24 1H24 1H24/1H23 NII 241 1.3% 480 -9.2% 16.3% Regulatory capital CET1 FL Fees & commissions 21 -18.6% 46 -9.3% Fully-loaded Total Costs -195 0.5% -388 -2.7% Core results1 68 -3.7% 138 -23.5% Total p
Slide 14: Higher NII and lower costs to drive profitability improvement in 2025
Higher NII and lower costs to drive profitability improvement in 2025 Net Structural hedge contribution Net Interest Income to grow at Interest to improve by >£100M in 2025 high single digit in 2025 and 2026 Income and even higher delta in 2026 £53M Total costs to decline by: Costs cost savings ▪ c.
Slide 15: Highest H1 net profit in Sabadell's history
Highest H1 net profit in Sabadell’s history 2Q24 (€M) 2Q24/1Q24 1H24 (€M) 1H24/1H23 NII 1,262 +2.5% 2,493 +9.8% 13.48% Fees 335 -1.4% 674 -3.3% CET1 FL +61bps YoY Total costs -764 +1.7% -1,515 +2.5% Core results1 833 +1.6% 1,652 +11.0% Provisions -181 -13.2% -389 -16.9% 13.1% Net profit 483 +56.8% 7
Slide 16: Financial results
Financial results rb
Slide 17: Profitability continued to increase in the quarter
Profitability continued to increase in the quarter Sabadell ex-TSB Sabadell Group €M 2Q24 1H24 2Q24/1Q24 1H24/1H23 2Q24 1H24 2Q24/1Q24 1H24/1H23 Net interest income 979 1,932 2.7% 15.9% 1,262 2,493 2.5% 9.8% Fees & commissions 310 620 0.2% -2.9% 335 674 -1.4% -3.3% Core banking revenue 1,289 2,552 2
Slide 18: Higher customer margin underpinned NII growth
Higher customer margin underpinned NII growth Group NII Group NII QoQ evolution €M €M +48 1,262 1,262 1,231 1,231 1,170 -13 -4 283 2Q24/1Q24 278 • Customer • ALCO + Liquidity: -5 300 +2.5% margin: +34 • Wholesale funding • Volumes: +13 costs: -8 • FX impact: +1 870 953 979 1H24/1H23 QoQ +9.8% +2.3%
Slide 19: NII keeps performing better than anticipated
NII keeps performing better than anticipated, driven by customer margin, volumes and higher interest rates… Group customer margin and NIM breakdown Spain customer margin breakdown % % 4.33% 4.41% +8bps 4.01% 4.20% Var. QoQ 3.80% 3.95% 3.98% +3bps 3.67% 3.60% Var. QoQ 3.27% 3.13% 3.15% 2.99% 2.99% 3.
Slide 20: NII in 2025 to be higher than in 2024
NII in 2025 to be higher than in 2024 2025 NII 2025 NII Repricing previous guidance (1Q24) New guidance ▪ Volumes subdued in 2024 and 2025 ▪ Loan volume growth YTD is +4% Loan book margin ex-TSB Performing Loans Customer (€112bn) YoY avg. growth % 2024 2025 Previous -1.0% +1.0% ▪ Higher rates enviro
Slide 21: Fees performed in line with upgraded guidance
Fees performed in line with upgraded guidance Group fees & commissions Leader in fee revenues €M FY23, in % Sabadell Spanish ex-TSB peers2 avg. 347 340 335 #1 Fees / RWAs 1.94% 1.73% 30 30 24 71 71 72 2Q24/1Q24 #1 Fees / Business Volume 0.46% 0.39% -1.4% #1 170 166 166 Fees / Total Assets 0.69% 0.55
Slide 22: Evolution of costs aligned with guidance
Evolution of costs aligned with guidance Group costs Efficiency ratio1 €M % -3.8pp 748 751 764 124 125 2Q24/1Q24 42.2% 136 Efficiency ratio +1.7% 52.0% ex-TSB 194 197 1H24 199 48.3% 412 433 443 1H24/1H23 +2.5% 2Q23 1Q24 2Q24 1H23 1H24 Ex-TSB expenses TSB expenses Amortisation & depreciation Guidance
Slide 23: Strong asset quality reduced total CoR further, to 46bps
Strong asset quality reduced total CoR further, to 46bps Group credit provisions Group total provisions 2Q24 breakdown €M €M 187 2Q24/1Q24 166 27 181 15 -34.6% 18 35 109 109 10 4 173 148 1H24/1H23 104 -26.3% 2Q23 1Q24 2Q24 Credit Foreclosed NPA Other Total provisions for asset management provisions
Slide 24: Risk management actions already yielding positive outcomes in asset quality
Risk management actions already yielding positive outcomes in asset quality Default rates by vintages, consumer loans Cumulative default rates, in % 10% 9% 2021 ✓ Default rates in consumer loans 8% 7% have been declining consistently 6% across recent vintages since new risk 5% 2022 4% management act
Slide 25: Balance sheet
Balance sheet o
Slide 26: NPL ratio decreased by 25bps while coverage ratio increased
NPL ratio decreased by -25bps in the quarter while coverage ratio increased Group NPLs and NPL ratio Exposure by stage and coverage ratio €M €M, % Stage 2 Stage 3 60% Total provisions Jun-24 YoY Jun-24 YoY 59% over stage 3 56% Exposure (€M) 12,133 -1,323 5,439 -450 % of total loan book 7.2% -82bps 3
Slide 27: Asset quality indicators improved further in the quarter
Asset quality indicators improved further in the quarter Group foreclosed assets Group NPAs €M €M Coverage 39% 39% 39% Coverage 53% 56% 57% ratio ratio -9% YoY -17% YoY 6,971 6,657 6,341 1,083 939 902 Jun-23 Mar-24 Jun-24 Jun-23 Mar-24 Jun-24 Group key ratios Jun-23 Mar-24 Jun-24 ▪ 20% of the stock
Slide 28: Robust liquidity position and improved credit ratings
Robust liquidity position and improved credit ratings Liquidity metrics Credit ratings Sabadell Group Group long-term credit rating and outlook Standard & BBB+ Fitch BBB New Poor’s Positive New Ratings Stable 96% 146% 198% Baa2 A (low) Loan-to- NSFR LCR Moody’s DBRS deposit Positive Stable Total liq
Slide 29: 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 15 th 750 6NC5 4.00% th Covered bonds (TSB) Mar 5 500 5 3.32% 29.36% 9.80% Senior Non Preferred M
Slide 30: Current impact from Basel IV lowered to 20bps
Current impact from Basel IV lowered to 20bps Basel IV estimated impact breakdown In bps 50 According to CRR3 (Regulation (EU) 2024/1623) just published on 19th June 2024 -20 20 A. No application of LGD floor on NPLs as iinitially assumed (-20bps) -10 B. Other dynamics in Balance Sheet and P&L 30bps
Slide 31: CET1 FL at 13.48% after increasing by 18bps QoQ
CET1 FL at 13.48% after increasing by 18bps QoQ… MDA Shareholder value creation2 Evolution of capital ratios, fully loaded 454bps +14% QoQ 18.54% +11bps 18.42% +44bps 18.10% 0.06 -10bps -3bps -13bps QoQ YoY 0.05 +31bps +44bps +2.3% Group 2.31 2.26 QoQ 2.08 +18bps Jun-23 Jun-24 QoQ YoY 1 +2.3% +61bps
Slide 32: Closing remarks
Closing remarks 32
Slide 33: Another solid set of results allows guidance to be upgraded further
Another solid set of results and accelerated profitability allow 2024 and 2025 guidance to be upgraded further 1H24 2024 guidance (Jan’24) 2024 guidance (Apr’24) 2024 new guidance Net Interest Income +9.8% Low single-digit growth c.3% Mid-single digit growth (YoY) Fees & Commissions -3.3% Mid-single
Slide 34: The guidance has been revised upwards and consistently beaten
The guidance has been revised upwards and has been consistently beaten RoTE guidance Year end RoTE Jan-2022 Jul-2022 Guidance in >6% >7% 7.8% 2022 Dec-22 Jan-2023 Jul-2023 Oct-2023 Guidance in 2023 >9% >2023 >2023 ~11.5% >2023 11.5% ~10.5% Dec-23 Jan-2024 Apr-2024 Jul-2024 Jun-24 RoTE Guidance in 20
Slide 35: Large capacity to remunerate shareholders
Large capacity to remunerate shareholders: €2,650M over 2024-25 results, plus suspended SBB… Commitment of Board of Shareholder remuneration Directors Pay-out of recurrent profits (1st Feb-24) €M 250 2,900 €2,650M 250 2,650 €49 cts/share1 Recurrent distribution of excess (Recurrent) capital above 13
Slide 36: Interim dividend of 8 cents is just 15% of remuneration commitment
Interim dividend of 8 cents is just 15% of shareholder remuneration commitment Board of Directors 2024 Annual Second 2025 Annual Meeting General Meeting Half General Meeting (June 2024) (Spring 2025) 2025 (Spring 2026) New Final dividend Interim dividend Final dividend 60% ✓ In the upper range of th
Slide 37: Closing remarks
Closing remarks 1 Loan growth Solvency across different geographies, products and position Loan growth across different geographies, products and segments segments 2 Resilient NII Risk management actions lead to 3 Risk management CoR actions andlead to quality asset CoR and asset quality improvement
Slide 38: 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 38
Slide 39: 1. NIM and customer margin
1. NIM and customer margin Sabadell Group Sabadell ex-TSB %, in euros %, in euros 3.18% +9bps 2.99% 3.09% Var. QoQ 3.41% 2.89% 2.99% 3.05% 3.20% 3.23% 3.32% 1.96% 2.00% 2.05% 2.06% 1.77% 2.08% 2.10% +2bps 2.02% 2.01% Var. QoQ 1.88% 2Q23 3Q23 4Q23 1Q24 2Q24 2Q23 3Q23 4Q23 1Q24 2Q24 TSB %, in euros Cu
Slide 40: 2. 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 % last 6 months Instrument Date Nominal Coupon amount 3.9% Covered bonds 26/01/2024 €550M 4.18% 3.5% 4.1% Covered bonds (TSB) 15/02/2024 €584M 6.09% 3.6% Sen
Slide 41: 3. ALCO portfolio
3. ALCO portfolio Evolution of fixed income portfolio Composition of fixed income portfolio Sabadell Group. €bn Sabadell Group. €bn. Jun-24. 10.9% 12.1% 11.9% 15.9 3.9 2.0 3.8 2.8 0.7 28.6 29.0 27.0 6.4 6.3 Spain Agencies & Covered bonds 5.1 Italy Other governments and Corporates & Financials UK Por
Slide 42: 4. ESG Milestones Q2 2024
4. ESG Milestones Q2 2024 ▪ Launch of first sustainable synthetic securitisation involving a €1.1bn portfolio of loans related to renewable energy projects Mobilisation of sustainable finance E ▪ Support offered to public administrations of various autonomous communities towards a solutions S sustai
Slide 43: 5. TSB asset quality, solvency and liquidity position
5. TSB asset quality, solvency and liquidity position Asset quality TSB core mortgage portfolio overview % Jun-23 Mar-24 Jun-24 3% 6% Mortgages NPL ratio 1.4% 1.5% 1.5% 2% 83% >90% 82% 9% total loan Coverage ratio 40% 40% 37% book (YtD) Cost of risk1 0.15% 0.17% 0.10% £33.6bn Residential repayment S
Slide 44: 6. RWAs breakdown
6. RWAs breakdown Jun-24 RWAs: €80,071M By type: ▪ Credit risk: €70.4bn ▪ Market risk: €0.5bn ▪ Operational risk: €9.1bn ▪ Other: €0.1bn By geography: ▪ Spain: €62.1bn ▪ UK: €14.0bn ▪ Mexico: €4.0bn 44 44
Slide 45: 7. Ample MDA buffer at 454bps, better than guidance
7. Ample MDA buffer at 454bps, better than guidance Group capital requirements Group capital position MDA buffer Leverage Pillar 1 CET1 4.50% ratio Pillar 2 CET1 454bps phase-in Requirement (P2R) 1.27%1 +17bps QoQ 5.2% Capital Conservation Buffer 2.50% Countercyclical Buffer 0.42% Other Systemically
Slide 46: Glossary
Glossary Term Definition AuM Assets Under Management CET 1 FL Common Equity Tier 1 Fully Loaded CoR Cost of Risk CRR3 Capital Requirements Regulation 3 HQLA High Quality Liquid Asset LCR Liquidity Coverage Ratio: short-term liquidity ratio Leverage Ratio Exposure denominator is equivalent to total a
Slide 47: 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 48: Need a bank?
©Sabadell Need a bank?
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