Banco De Sabadell Sa · BME:SAB
Banco De Sabadell Sa — Banco De Sabadell Sa Ord — Q3 2023 Earnings Presentation
40 slides from Banco De Sabadell Sa's earnings presentation, Oct 26, 2023
Slide 1: 3Q23 results
3Q23 results October 26, 2023
Slide 2: Index
1 3Q23 highlights 2 Financial index results 3 Balance sheet 4 Closing remarks
Slide 3: 3Q23 highlights
3Q23 1 highlights
Slide 4: 3Q23 key messages
3Q23 key messages NII keeps improving Asset quality remains +6% QoQ stable NIM +14bps QoQ Total cost of risk RoTE 55bps 11.6% CET1 FL Group net profit of 13.13% Interim cash dividend €1,028M in 9M23 of €3cts/share £152M at TSB +50% YoY Stable solvency position in the quarter to be paid in December 4
Slide 5: Higher rates impact loan demand while customer funds remain stable
Higher interest rate environment impacts loan demand while customer funds remain stable in the year Performing loans across geographies Total customer funds €M €M Sep-23 QoQ YoY Sep-23 QoQ YoY Spain 95,831 -2.0% -4.1% On-balance sheet 161,973 -0.5% -0.8% Constant FX -0.4% -1.2% UK (TSB) 41,793 -1.7%
Slide 6: The radical transformation undertaken in Retail Banking has advanced at a fast pace
The radical transformation undertaken in Retail Banking has advanced at a fast pace May 2021 Today Strategic priorities set Results of the transformation for Retail Banking are already visible Workforce reduction Branch reduction Cost reduction c.-20% -30% • We have significantly reduced our Sep-20
Slide 7: We are ready to boost our growth in Retail Banking in a profitable way
We are ready to boost our growth in Retail Banking in a profitable way We launched our digital account in the second quarter We have revamped our digital account to continue of 2022 with successful results so far attracting new customers and become their main bank • The digital account has been a re
Slide 8: Different market trends in mortgages and consumer loans
Different market trends in mortgages and consumer loans. New lending in Business Banking increasing in the year Mortgages Consumer loans Quarterly new lending in Spain (in €M) Quarterly new lending in Spain (in €M) 1,472 1,095 -40% +27% 890 532 559 Var. YoY -29% 439 Var. YoY +27% 9M23/9M22 -19% +5%
Slide 9: Good momentum in payment services; increase of savings & investment products
Good momentum in payment services continues. Increase of savings & investment products Cards Retailer payment services (PoS) Quarterly turnover in Spain (in €M) Quarterly turnover in Spain (in €M) 13,604 14,799 13,247 5,826 5,803 6,148 +6% +9% Var. YoY Var. YoY +7% +12% +6% 9M23/9M22 +12% 9M23/9M22
Slide 10: Volumes declined in Spain and grew in other international geographies
Volumes declined in the quarter in Spain and grew in other international geographies Performing loans by segment, ex-TSB €bn Sep-23 QoQ YoY Sep-23 QoQ YoY Mexico 4.7 +7.7% +9.8% Mortgages 38.3 -0.8% -1.9% Constant FX X.X% +6.4% +11.7% Miami 5.7 +3.2% -6.8% Consumer loans 3.8 +4.1% +14.3% Constant FX
Slide 11: TSB new mortgage lending shows some signs of recovery
TSB new mortgage lending shows some signs of recovery coming from low levels Quarterly new mortgage lending TSB’s Customer deposits £M £bn +9% Mortgage Sep-23 QoQ YoY 3Q23 Cost applications 1,777 Current Accounts (PCAs) 12.7 -3.7% -11.6% 0.01% 1,902 1,632 -38% Var. YoY Savings 19.7 -0.1% +7.0% 1.85%
Slide 12: TSB increased its contribution to the Group by 73% in 9M23
TSB increased its contribution to the Group by 73% in 9M23 TSB standalone P&L and its contribution to Sabadell TSB core results1, YoY £M £M +15.4% 3Q23 3Q23/2Q23 9M23 9M23/9M22 NII 256 -1.8% 784 9.3% +67 Fees & commissions 28 7.6% 79 -9.6% 280 243 -8 Costs -197 1.3% -583 3.7% -21 Core results1 88 -5
Slide 13: Net profit above €1bn in 9M23
Net profit above €1bn in 9M23 3Q23 (€M) 3Q23/2Q23 9M23 (€M) 9M23/9M22 NII 1,242 +6.2% 3,512 +29.0% 13.13% Fees 350 +0.9% 1,047 -6.3% CET1 FL +61bps YoY Total costs -753 +0.7% -2,231 +3.2% Core results1 839 +9.1% 2,328 +38.8% Provisions -214 -8.0% -683 -3.8% 11.6% Net profit 464 +29.4% 1,028 +44.9% R
Slide 14: Improvement in profitability and shareholder remuneration support value creation
Improvement in profitability and shareholder remuneration support value creation Increasing profitability… … along with shareholder remuneration Shareholder value creation1 New Earnings per share (€) Interim cash dividend2 of €3cts/share +10.2% ▪ Increased by +50% YoY (€2cts/share paid + 65% YoY in
Slide 15: Financial results
Financial results rb
Slide 16: Profitability keeps increasing in the quarter
Profitability keeps increasing in the quarter Sabadell ex-TSB Sabadell Group €M 3Q23 9M23 3Q23/2Q23 9M23/9M22 3Q23 9M23 3Q23/2Q23 9M23/9M22 Net interest income 944 2,611 8.5% 39.3% 1,242 3,512 6.2% 29.0% Fees & commissions 317 956 0.2% -5.7% 350 1,047 0.9% -6.3% Core banking revenues 1,261 3,568 6.3
Slide 17: Customer margin continues to improve in the quarter
Customer margin continues to improve in the quarter Group NII Group NII QoQ evolution €M €M +6 1,242 1,242 +30 1,170 +37 298 3Q23/2Q23 1,170 -1 965 300 • ALCO: +27 +6.2% • Wholesale • Customer 296 margin: +44 funding costs: -30 • Volumes: -15 • Liquidity: +33 • FX impact: +8 870 944 9M23/9M22 QoQ 66
Slide 18: Fees remained stable in the quarter
Fees remained stable in the quarter Group fees & commissions Group fees & commissions €M 3Q23/2Q23 9M23/9M22 Credit and 388 +€2M +3.2% +€5M +2.6% 39 347 350 contingent risk 30 33 72 Services +€7M +3.7% -€53M -8.1% 71 73 3Q23/2Q23 +0.9% Asset Mgmt.1 -€6M -8.0% -€23M -9.2% 197 170 175 9M23/9M22 81 76
Slide 19: Costs on track to meet the +3.5% YoY guidance
Costs on track to meet the +3.5% YoY guidance Group costs Efficiency ratio1 €M % -5.3pp 723 748 753 3Q23/2Q23 137 136 119 +0.7% 54.0% 199 199 50.6% 190 48.7% 435 9M23/9M22 396 412 +3.2% 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Ex-TSB expenses TSB expenses Amortisation & depreciation 43.1% Efficiency ratio ex-T
Slide 20: Wider jaws underpinned by NII growth
Wider jaws underpinned by NII growth Group core results evolution Group core results YoY €M €M +38.8% 3Q23/2Q23 +790 2,328 +9.1% -71 839 -68 769 1,677 631 3Q22 2Q23 3Q23 9M22 NII Fees Costs 9M23 YoY variation +29.0% -6.3% +3.2% Core revenues (NII + Fees) Costs 20
Slide 21: Total cost of risk at 55bps, better than YE guidance
Total cost of risk at 55bps, better than YE guidance Group credit provisions Group total provisions 3Q23 breakdown €M €M 187 3Q23/2Q23 12 214 158 15 160 35 21 -14.8% 21 7 160 173 137 139 9M23/9M22 +7.4% 3Q22 2Q23 3Q23 Credit Foreclosed NPA Other Total provisions for asset management provisions provi
Slide 22: Balance sheet
Balance sheet o
Slide 23: NPLs remained stable in the quarter
NPLs remained stable in the quarter Group NPLs and NPL ratio Exposure567 by stage and coverage ratio €M Stage 1 Stage 2 Stage 3 55% 56% 57% % of total book 88.7% 7.7% 3.5% 3.50% 3.54% 3.40% Coverage, Group 0.3% 3.9% 40.8% Total provisions over stage 3 NPL ratio Coverage, ex-TSB 0.3% 4.8% 43.8% 5,830
Slide 24: NPAs continued to decrease alongside increasing coverage ratios
NPAs continued to decrease alongside increasing coverage ratios Group foreclosed assets Group NPAs €M €M 39% 39% 39% 52% 53% 54% -14% YoY 7,039 6,971 6,930 1,209 1,083 1,039 Sep-22 Jun-23 Sep-23 Sep-22 Jun-23 Sep-23 Coverage ratio Group key ratios Sep-22 Jun-23 Sep-23 ▪ 20% of the stock sold in the
Slide 25: Hefty liquidity buffers
Hefty liquidity buffers Liquidity metrics Credit ratings Sabadell Group Group long-term credit rating and outlook Standard & BBB Fitch BBB- Poor’s Positive Ratings Positive 95% 140% 220% Baa3 A (low) Loan-to- NSFR LCR Moody’s DBRS deposit Positive Stable Positive outlook for three credit agencies To
Slide 26: 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) Additional Tier 1 Jan 18th 500 PerpNC6 9.375% 28.35% 25.35% 9.25% 6.36% 2024 Senior Non-Pref. th 2024 Feb 7 750 6NC5 5
Slide 27: CET1 FL at 13.13% increasing 59bps YTD
CET1 FL at 13.13% increasing 59bps YTD MDA Evolution of capital ratios fully loaded 428bps +6bps QoQ 18.10% 18.35% QoQ 16.95% +31bps +25bps -1bps -4bps +26bps QoQ YoY +140bps +2.3% Group Total Capital 12.87% 12.87% 13.16% 13.08% 13.13% 12.52% CET1 FL QoQ +26bps QoQ YoY Sep-22 Jun-23 Organic CET1 Fai
Slide 28: Closing remarks
Closing remarks 28
Slide 29: Another solid set of results allows a further upgrade to 2023 guidance
Another solid set of results and accelerating profitability allow a further upgrade to 2023 guidance 9M23 2023 initial guidance 2023 updated guidance 2023 new guidance Net Interest Income +29.0% High-teens growth >20% ~25% (YoY) Fees & Commissions -6.3% Low-single digit decline Mid-single digit decl
Slide 30: Appendix
1 Group NIM and customer margin 6 RWAs breakdown 2 Debt maturities and 7 MDA buffer Appendix issuances 3 ALCO portfolio 4 ESG 5 TSB asset quality, solvency and liquidity position 30
Slide 31: 1. NIM and customer margin
1. NIM and customer margin Sabadell Group Sabadell ex-TSB %, in euros %, in euros 3.20% 2.89% 2.99% 3.05% 2.73% 2.53% 2.24% 2.80% 2.53% 2.32% 1.96% 2.02% 1.88% 1.65% 1.77% 1.79% 1.49% 1.64% 1.27% 1.46% 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 TSB %, in euros Customer margin 2.55% 2.55% NIM
Slide 32: 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 % 4.1% the last 6 months Instrument Date Size Coupon 3.7% Senior preferred bonds 05/03/2023 €1,000M 0.88% 2.4% 3.6% Covered bonds 04/05/2023 €250M 2.62% 1.2%
Slide 33: 3. ALCO portfolio
3. ALCO portfolio Evolution of fixed income portfolio Composition of fixed income portfolio Sabadell Group. €bn Sabadell Group. €bn. Sep-23. 10.1% 10.9% 11.0% 16.4 3.3 1.8 2.5 2.0 0.7 26.2 27.0 26.7 5.6 5.1 5.1 Spain Agencies & Covered bonds Italy Other governments and Corporates & Financials UK Por
Slide 34: 4. ESG. Milestones 3Q23
4. ESG. Milestones 3Q23 Sustainable finance mobilised ▪ Financing and structuring of renewable energy projects amounting €bn in cumulative terms since 2021 E to ~ 250 million euros S ▪ Collaboration agreement signed with PYMAR, which represents 65 G Spain's major private shipyards, for the granting
Slide 35: 5. TSB asset quality, solvency and liquidity position
5. TSB asset quality, solvency and liquidity position Asset quality TSB core mortgage portfolio overview % Sep-22 Jun-23 Sep-23 Mortgages NPL ratio 1.4% 1.4% 1.4% 2% 6% >90% 83% 9% total loan Coverage ratio 40% 40% 41% book (YtD) Cost of risk1 0.13% 0.15% 0.17% £33.4bn Residential repayment Solvency
Slide 36: 6. RWAs breakdown
6. RWAs breakdown Sep-23 RWAs: €78,795M By type: ▪ Credit risk: €69.9bn ▪ Market risk: €0.5bn ▪ Operational risk: €8.2bn ▪ Other: €0.2bn By geography: ▪ Spain: €61.3bn ▪ UK: €13.4bn ▪ Mexico: €4.1bn 36 36
Slide 37: 7. Ample MDA buffer at 428bps, better than guidance
7. Ample MDA buffer at 428bps, better than guidance Group capital requirements Group capital position MDA buffer Leverage Pillar 1 CET1 4.50% ratio Pillar 2 CET1 428bps phase-in Requirement (P2R) 1.21%1 +6bps QoQ 5.0% Capital Conservation Buffer 2.50% Countercyclical Buffer 0.40% 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 HQLA High Quality Liquid Assets HTC Held to collect LCR Liquidity Coverage Ratio: short-term liquidity ratio L
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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