Banco De Sabadell Sa · BME:SAB
Banco De Sabadell Sa — Banco De Sabadell Sa Ord — Q1 2023 Earnings Presentation
43 slides from Banco De Sabadell Sa's earnings presentation, Apr 27, 2023
Slide 1: 1Q23 results
©Sabadell 1023 results April 27, 2023
Slide 2: Index
1 1Q23 highlights 2 Financial index results 3 Balance sheet 4 Closing remarks
Slide 3: 1Q23 highlights
1Q23 1 highlights
Slide 4: 1Q23 key messages
1Q23 key messages Focus on margins in the NII keeps improving current environment +28% YoY Loan to deposit ratio at Customer spread 95% (-0.6pp QoQ) RoTE1 +51bps YoY 9.9% CET1 FL TSB profit before 12.78% Group net profit of taxes of £77M €205M +67% YoY +69% YoY excluding banking tax Stable solvency
Slide 5: Volumes reflect seasonality and lower mortgage lending in the UK in the quarter
Volumes reflect seasonality and lower mortgage lending in the UK in the quarter Performing loans across geographies Total customer funds €M €M Mar-23 QoQ YoY Mar-23 QoQ YoY Spain1 97,529 -1.9% -0.4% On-balance sheet 162,307 -1.1% +0.6% Constant FX -1.4% +1.4% UK (TSB) 41,993 -2.6% -5.2% Constant FX
Slide 6: Very stable deposit base
Very stable deposit base Group deposits breakdown by customer €bn;% 161.3 164.1 162.3 24% 25% 24% Non-retail % deposits insured by Loan to deposit ratio 76% 75% 76% Retail guaranteed schemes improvement Mar-22 Dec-22 Mar-23 Group deposits breakdown by type €22k c.61% 95% €bn;% Sabadell Group -0.6pp
Slide 7: Different market trend in mortgages and consumer loans
Different market trend in mortgages and consumer loans. Working capital continues to outperform longer-term facilities Mortgages Consumer loans Quarterly new lending in Spain (in €M) Quarterly new lending in Spain (in €M) 1,508 -19% +32% 1,261 490 1,025 Var. YoY 371 439 Var. YoY -32% +12% Var. QoQ V
Slide 8: Strong growth in payment services continues. Insurance impacted by product mix
Strong growth in payment services continues. Insurance impacted by product mix Cards Retailer payment services (PoS) Quarterly turnover in Spain (in €M) Quarterly turnover in Spain (in €M) 5,887 12,236 11,261 4,793 5,330 +11% 9,500 +19% Var. YoY Var. YoY -9% Impacted by -8% Impacted by Var. QoQ seas
Slide 9: Good commercial momentum in Spain continues
Good commercial momentum in Spain continues Product performance Key elements for each product A A Enhancement of value proposition resulting in sustained growth both in Consumer loans new lending and market share. Cards Strong growth of turnover, in line with the market. B Business Banking New lendi
Slide 10: The results of our transformation are already visible and we have a clear roadmap
The results of our transformation are already visible and we have a clear roadmap to continue our journey Strategic approach Progress Relevant KPIs Looking forward ✓ >50% customer acquisition via • Increasing engagement with new digital customers More digital customers digital onboarding (0% in 2021
Slide 11: We have deployed a more efficient IT model, which enables additional investment in digital solutions
We have deployed a more efficient IT model, which enables additional investment in digital solutions “Discovery ▪ Upgrade of data centers to gain scalability, Project” resilience and efficiency -38% + -10% Evolved IT Unitary IT Cost avoidance infrastructure projects cost on data centres and producti
Slide 12: Strategic partnership with Nexi to create a national champion in merchant acquiring
Strategic partnership with Nexi to create a national champion in merchant acquiring European PayTech Nexi to acquire 80% of Sabadell’s merchant acquiring business and enter into a 10-year strategic agreement with Banco Sabadell Banco Sabadell’s number of PoS market share ▪ Long-term strategic partne
Slide 13: Lower volumes ex-TSB in the quarter as expected
Lower volumes ex-TSB in the quarter as expected Performing loans by segment, ex-TSB €bn Mar-23 QoQ YoY Mar-23 QoQ YoY Mexico 4.1 -0.3% +9.5% Mortgages 38.9 -0.8% +0.7% Constant FX X.X% -2.1% +2.7% Miami 5.5 -5.9% +12.7% Consumer loans 3.5 +3.6% +11.7% Constant FX X.X% -4.1% +10.4% Foreign branches 3
Slide 14: New mortgage lending at TSB subdued in the quarter
New mortgage lending at TSB subdued in the quarter Quarterly new mortgage lending Monthly new mortgage applications £M 2.1% £M Stock mortgage 850 2022 market 747 monthly avg. share2 703 1,905 1,905 . -44% 1,715 1,715 . Var. YoY 425 1.7% New lending 957 957 -50% mortgage 265 Var. QoQ market 194 share
Slide 15: Highest quarterly net profit since 2017
Highest quarterly net profit since 2017 TSB standalone P&L and its contribution to Sabadell TSB core results, YoY £M £M 1Q23 1Q23/4Q22 1Q23/1Q22 +59.4% NII 268 1.3% 18.2% Fees & commissions 25 -7.5% -2.7% Costs -192 3.4% 1.7% +41 100 1 Core results 100 -4.5% 59.4% -1 -3 Total provisions & impairment
Slide 16: RoTE c.10% including the Spanish banking tax
RoTE c.10% including the Spanish banking tax 1Q23 (€M) 1Q23/4Q22 1Q23/1Q22 NII 1,100 +2.2% +28.3% 12.78% Fees 350 -5.9% -2.4% CET1 FL +33bps YoY Total costs -730 +1.4% +0.7% Core results1 720 -1.2% +46.7% Provisions -236 -27.0% +4.0% 9.9% RoTE 1Q23 Net profit 205 +37.2% -4.0% Net profit ex-banking t
Slide 17: Financial results
Financial results rb
Slide 18: Net profit ex-banking tax c.+70% YoY
Net profit ex-banking tax c.+70% YoY Sabadell ex-TSB Sabadell Group €M 1Q23 1Q23/4Q22 1Q23/1Q22 1Q23 1Q23/4Q22 1Q23/1Q22 Net interest income 797 3.1% 35.8% 1,100 2.2% 28.3% Fees & commissions 322 -5.7% -1.9% 350 -5.9% -2.4% Core banking revenue 1,119 0.4% 22.3% 1,450 0.1% 19.2% Trading income & fore
Slide 19: Higher customer spread boosted NII, partially offset by the end of TLTRO-III contribution
Higher customer spread boosted NII, partially offset by the end of TLTRO-III contribution Group NII Group NII QoQ evolution €M €M +71 1,077 1,100 1Q23/4Q22 -5 1,100 1,077 -30 +2.2% 858 304 303 • ALCO: +40 Of which: -13 • Wholesale • Customer • TLTRO-III: -58 271 funding costs: -45 margin: +107 • Exc
Slide 20: Fees declined in the quarter as anticipated
Fees declined in the quarter as anticipated Group fees & commissions Group fees & commissions €M 1Q23/4Q22 1Q23/1Q22 372 Credit and 359 350 -€0.5M -0.7% +€3.9M +5.7% 30 31 contingent risk 28 68 72 72 Services -€15.9M -7.4% -€5.1M -2.5% 1Q23/4Q22 -5.9% Asset Mgmt.1 -€5.7M -6.6% -€7.3M -8.4% 176 187 1
Slide 21: The cost saving initiatives undertaken in Spain and TSB improved efficiency ratios
The cost saving initiatives undertaken in Spain and TSB improved efficiency ratios Group costs Efficiency ratio1 €M 726 720 730 59.0% 136 136 1Q23/4Q22 138 +1.4% 53.6% 191 184 188 399 400 405 1Q23/1Q22 +0.7% 1Q22 4Q22 1Q23 1Q22 1Q23 Ex-TSB expenses TSB expenses Amortisation & depreciation 1 Group co
Slide 22: NII is the main driver of core results improvement
NII is the main driver of core results improvement Group core results YoY Group core results YoY €M €M +46.7% +46.7% +40.1% +25.6% +242 720 +16.5% -8 -5 491 2Q 3Q 4Q 1Q221Q 1Q23 1Q22 NII Fees Costs 1Q23 YoY variation +28.3% -2.4% +0.7% 2021 2022 22
Slide 23: Total cost of risk to date better than our YE guidance
Total cost of risk to date better than our YE guidance Group credit provisions Group total provisions 1Q23 breakdown €M €M 247 22 1Q23/4Q22 172 186 -24.6% 14 236 36 11 17 00 186 225 1Q23/1Q22 161 169 +8.1% 1Q22 4Q22 1Q23 Credit Foreclosed NPA Other Total provisions for asset management provisions pr
Slide 24: Balance sheet
Balance sheet o
Slide 25: Small increase of NPLs in the quarter while improving YoY
Small increase of NPLs in the quarter while improving YoY Group NPLs and NPL ratio Exposure567 by stage and coverage ratio €M Stage 1 Stage 2 Stage 3 56% 55% 55% % of total book 88.1% 8.4% 3.5% 3.66% 3.52% Coverage, Group 0.3% 3.7% 39.5% 3.41% Total provisions over stage 3 NPL ratio Total provisions
Slide 26: NPAs reduced by -7% in the year
NPAs reduced by -7% in the year Group foreclosed assets Group NPAs €M €M 38% 38% 38% 53% 52% 52% -14% YoY -7% YoY 7,508 6,971 7,008 1,299 1,157 1,117 Mar-22 Dec-22 Mar-23 Mar-22 Dec-22 Mar-23 Coverage ratio Group key ratios Mar-22 Dec-22 Mar-23 95% of total foreclosed assets are Gross NPA ratio1 4.4
Slide 27: Hefty liquidity buffers
Hefty liquidity buffers Liquidity metrics Credit ratings Sabadell Group Group long-term credit rating and outlook 250% Standard & BBB Fitch BBB- LCR Poor’s Positive New Ratings Stable 95% 141% 220% ex-TSB Baa3 A (low) Loan-to- NSFR LCR Moody’s DBRS deposit Positive Stable 202% LCR TSB1 Central bank
Slide 28: Ample MREL buffer
Ample MREL buffer MREL position, Sabadell Group YTD public issuances % Risk Weighted Assets (RWAs), % Leverage Ratio Exposure (LRE) ▪ 18-Jan: €500M PerpNC5.5 Additional Tier 1 (9.375% coupon) 27.57% 8.65% 6.36% 25.35% ▪ 7-Feb: €750M 6NC5 Senior non-preferred 2024 2024 3.75% Requirement 1.18% Require
Slide 29: CET1 FL increased by +24bps in the quarter
CET1 FL increased by +24bps in the quarter MDA 413bps Shareholder value Capital ratios evolution +11bps creation2 QoQ +5% 18.09% QoQ 16.99% 17.01% +108bps +13bps +7bps +4bps 0.02 QoQ YoY • Spanish banking +110bps +2.3% 2.01 tax: -10bps Group 2.03 12.54% 12.74% 12.81% 12.78% 12.45% 1.93 QoQ +24bps Ma
Slide 30: Closing remarks
Closing remarks 30
Slide 31: A solid set of results in 1Q23
A solid set of results in 1Q23 The results of our transformation are already visible… 1Q23 2023 guidance Net Interest Income +28.3% High-teens growth (YoY) Fees & Commissions -2.4% Low single digit decline (YoY) Total costs €730M ~ €3bn Total Cost of Risk 57bps < 65bps RoTE (inc. banking tax) 9.9% >
Slide 32: Appendix
1 Group NIM and customer spread 6 TSB asset quality 2 Service quality 7 RWAs breakdown Appendix 3 Debt maturities and issuances 8 MDA buffer 4 ALCO portfolio 5 ESG 32
Slide 33: 1. NIM and customer spread
1. NIM and customer spread Sabadell Group Sabadell ex-TSB 3.51% %, in euros %, in euros 2.83% 2.73% 2.80% 2.53% 2.11% 2.12% 2.24% 2.72% 2.53% 2.32% 1.50% 2.22% 2.23% 2.11% 1.19% 1.22% 1.79% 1.49% 1.64% 1.64% 1.27% 1.46% 0.40% 1.38% 1.40% 1.33% -0.35% 1.07% 1.13% 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q
Slide 34: 2. Service quality index and NPS
2. Service quality index and NPS Spain Service quality index Net promoter score (NPS) NPS Online banking SMEs 8% 8.22 46% Corporates 31% Personal banking 13% Sector average Retail banking -10% NPS Mobile 7.73 7,81 40% -1% YoY +7,7p.p. YoY Note: Service quality source: STIGA, EQUOS (1Q23). NPS source
Slide 35: 3. Debt maturities and issuances
3. Debt maturities and issuances Debt maturities and average cost Main debt maturities and Maturities in €M and average cost in % redemptions in the last 6 months 2.1% Instrument Date Size Coupon 3.5% Covered bonds 05/12/2022 €100M 0.86% 3.6% 2.9% TSB Covered bonds 07/12/2022 €578M 2.45% 1.2% 2.5% C
Slide 36: 4. ALCO portfolio
4. ALCO portfolio Evolution of fixed income portfolio. Sabadell Group. €bn Composition of fixed income portfolio. Sabadell Group. €bn. Mar-23. 8.7% 10.6% 10.9% 17.0 3.3 2.0 2.2 1.8 0.7 26.7 27.0 22.0 5.4 5.2 Spain Agencies & Covered bonds 7.0 Italy Other governments and Corporates & Financials UK Po
Slide 37: 5. ESG. Milestones achieved in 1Q23
5. ESG. Milestones achieved in 1Q23 ▪ Signed various funding agreements for renewable energy E projects amounting to €200M, most notably an agreement S Sustainable finance mobilised amounting to €47M to fund the construction of a 126MW G €bn in cumulative terms since 2021 photovoltaic plant ▪ Launch
Slide 38: 6. TSB asset quality, liquidity and solvency position
6. TSB asset quality, liquidity and solvency position Asset quality Mar-22 Dec-22 Mar-23 NPL ratio 1.4% 1.3% 1.4% Coverage ratio 39% 42% 41% (YtD) Cost of risk1 0.10% 0.14% 0.16% Solvency Mar-22 Dec-22 Mar-23 CET1 ratio2 15.9% 17.2% 17.2% Leverage ratio3 3.6% 3.7% 3.8% Liquidity Mar-22 Dec-22 Mar-23
Slide 39: 7. RWAs breakdown
7. RWAs breakdown Mar-23 RWAs: €77,659M By type: ▪ Credit risk: €68.6bn ▪ Market risk: €0.8bn ▪ Operational risk: €8.2bn ▪ Other: €0.1bn By geography: ▪ Spain: €61.0bn ▪ UK: €13.1bn ▪ Mexico: €3.5bn 39 39
Slide 40: 8. Ample MDA buffer at 413bps, better than guidance
8. Ample MDA buffer at 413bps, better than guidance Group capital requirements Group capital position MDA buffer Leverage 413bps Ratio, phase-in Pillar 1 CET1 4.50% Pillar 2 CET1 +11bps QoQ 4.7% Requirement (P2R) 1.21%1 Capital Conservation Buffer 2.50% Countercyclical Buffer 0.18% ▪ MDA stands 413b
Slide 41: 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 42: 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 43: Need a bank?
©Sabadell Need a bank?
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