Banco De Sabadell Sa · BME:SAB
Banco De Sabadell Sa — Banco De Sabadell Sa Ord — FY2023 Earnings Presentation
49 slides from Banco De Sabadell Sa's earnings presentation, Feb 1, 2024
Slide 1: FY2023 results
FY2023 results February 1, 2024
Slide 2: Index
1 2023 highlights 2 Financial results index 3 Balance sheet 4 Closing remarks
Slide 3: 2023 highlights
2023 1 highlights
Slide 4: 2023 key messages
2023 key messages NII increases Good performance +24% YoY of asset quality +34% YoY at Sabadell ex-TSB Total NPA -3% YoY RoTE NPA coverage ratio 56% (+3p.p.) Total cost of risk at 55bps 11.5% CET1 FL Group net profit of 13.21% Pay-out ratio at 50% €1,332M (+55% YoY) Total cash dividend £175M at TSB
Slide 5: Commercial gap improved by €2bn in the year
Commercial gap improved by €2bn in the year Performing loans across geographies Total customer funds €M €M Dec-23 QoQ YoY Dec-23 QoQ YoY Spain 94,619 -1.3% -4.8% On-balance sheet 160,888 -0.7% -2.0% Constant FX -0.4% -2.6% UK (TSB) 41,381 -1.0% -4.0% Constant FX -0.5% -5.9% Off-balance sheet 40,561
Slide 6: Different trends in new lending across products
Different trends in new lending across products Mortgages Consumer loans Quarterly new lending in Spain (in €M) Quarterly new lending in Spain (in €M) 1,508 -50% 439 559 521 +19% 890 Var. YoY -34% Var. YoY 754 +25% -15% 2023/2022 -7% 2023/2022 Var. QoQ 4Q22 3Q23 4Q23 Var. QoQ 4Q22 3Q23 4Q23 Loans an
Slide 7: Good momentum in payment services continues
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) 14,799 13,513 +6% 12,236 +10% 5,887 6,148 6,212 Var. YoY +7% Var. YoY +11% +1% 2023/2022 -9% 2023/2022
Slide 8: Volumes subdued in Spain, growth in international geographies
Volumes subdued in Spain, growth in international geographies in the year Performing loans by segment, ex-TSB €bn Dec-23 QoQ YoY Dec-23 QoQ YoY Mexico 4.6 -1.9% +11.0% Mortgages 37.8 -1.4% -3.6% Constant FX X.X% +0.6% +7.1% Miami 5.7 +0.4% -2.8% Consumer loans 3.9 +2.7% +14.5% Constant FX X.X% +4.8%
Slide 9: TSB new mortgage lending stabilised in the quarter
TSB new mortgage lending stabilised in the quarter Quarterly new mortgage lending TSB customer deposits £M £bn +1% Dec-23 QoQ YoY 4Q23 Cost Mortgage 1,777 1,787 applications Current Accounts (PCAs) 12.4 -2.4% -11.8% 0.01% 1,905 Savings 19.9 +1.1% +1.7% 2.40% Business Banking Deposits 2.5 -0.9% -9.2%
Slide 10: TSB more than doubled its contribution to the Group
TSB more than doubled its contribution to the Group TSB standalone P&L and its contribution to Sabadell TSB NII, QoQ £M £M Quarterly NII bottomed out -7.1% 4Q23 4Q23/3Q23 2022 2023 2023/2022 NII 238 -7.1% 982 1,022 4.1% 1 Fees & commissions 29 2.3% 114 108 -5.4% 2 256 Recurrent Costs 1 -186 -5.6% -7
Slide 11: TSB's turnaround shows a positive trend
TSB’s turnaround shows a positive trend 1 Focus on the bank’s core business: mortgages 2 With a turnaround in results TSB Mortgage book evolution TSB Net profit evolution After-tax one-offs £Bn £M 213 +10% 38 149 94% 130 33.7 47 of loan book 8.9% 175 30.6 Best fixed rate RoTE mortgage lender 102 sta
Slide 12: Room to improve profitability
Room to improve profitability Impact on NII Cost of deposit Net Mortgage margins Net Interest Income Net Interest Income to grow in 2025 Interest to decline low-single onwards supported Structural hedge Income digits in 2024 by structural hedge Volumes ≈ Improvement Worsening ≈ Stability yrs £53M ✓
Slide 13: All-time high net profit, above €1.3Bn
All-time high net profit, above €1.3Bn 2022 (€M) 2023 (€M) 2023/2022 NII 3,799 4,723 +24.3% 13.21% Fees 1,490 1,386 -7.0% CET1 FL +67bps YoY Recurrent costs -2,883 -2,982 +3.5% Core results1 2,406 3,127 +29.9% Provisions -1,032 -910 -11.8% 11.5% Net profit 859 1,332 +55.1% RoTE 2023 1 NII + fees – r
Slide 14: Exceeding the strategic plan targets
Exceeding the strategic plan targets 2020 Targets 2023 FY 2023 Net Interest Income €3.4bn Low single digit growth +18% (CAGR 2021-23) Pre-Provision Profit / RWA Fees & Commissions (CAGR 2021-23) €1.4bn Mid-single digit growth +1% ×̴̴ 2023e FY 2023 >250 363 Total costs €3.1bn €2.9bn €3.0bn ̴ bps bps
Slide 15: The decisive strategy since 2021 has transformed the bank
The decisive strategy undertaken since 2021 has transformed the bank, turning our financial results around RoTE Cost to income c.-20% Workforce reduction • Significant reduction of our cost base (Dec-23 vs Dec-20) Retail • New direct banking capabilities… c.-30% Branch reduction 2020 2020 Banking (D
Slide 16: Ready to reap the fruits of our strategy
We are now ready to reap the fruits of our strategy, boosting our growth going forward Retail • Radical growth in digital customers’ acquisition Banking • Become the main bank of more customers Business • Leap forward in customer engagement through an enhanced value proposition Banking • Further red
Slide 17: Improving shareholder remuneration
Improving shareholder remuneration Recurrent shareholder remuneration in 2023 Non-recurrent remuneration 50% €666M >10% 2023 pay-out +55% YoY Dividend yield1 Excess capital above 13% CET1 FL proforma €326M cash dividend €340M to share buyback New post-BIS IV ▪ Interim cash dividend of ▪ Increase of
Slide 18: Financial results
Financial results rb
Slide 19: 11.5% RoTE, in line with guidance
11.5% RoTE, in line with guidance Sabadell ex-TSB Sabadell Group €M 4Q23 2023 4Q23/3Q23 2023/2022 4Q23 2023 4Q23/3Q23 2023/2022 Net interest income 938 3,549 -0.6% 34.0% 1,211 4,723 -2.5% 24.3% Fees & commissions 306 1,262 -3.6% -6.9% 339 1,386 -3.2% -7.0% Core banking revenue 1,244 4,811 -1.4% 20.2
Slide 20: NII grew +24% in 2023
NII grew +24% in 2023 supported by higher customer margin and NIM Group NII Group NII QoQ evolution €M €M Ex-TSB +3 1,242 1,211 +13 1,242 1,077 4Q23/3Q23 298 273 1,211 -2.5% -10 -9 304 • Customer • ALCO: +8 -25 margin: +10 • Wholesale • Volumes: -16 funding costs: -11 944 938 2023/2022 • FX impact:
Slide 21: NII to grow low-single digits in 2024
NII to grow low-single digits in 2024 Repricing Funding Dynamics ▪ Average customer margin in 2024 to remain at 4Q23 levels ex-TSB ex-TSB margin ex-TSB o Variable rate loans to reprice upwards until 1Q24 Customer Loan book Deposits o >€8bn of fixed rate loans to reprice in 2024 Positive (€109bn) (€1
Slide 22: Fees pressured by higher interest rate environment
Fees pressured by higher interest rate environment Group fees & commissions Group fees & commissions €M 4Q23/3Q23 2023/2022 Credit and -€2M -3.3% +€4M +1.4% 372 contingent risk 31 350 339 33 72 33 Services -€11M -5.0% -€73M -8.4% 73 4Q23/3Q23 71 -3.2% Asset Mgmt.1 +€2M +2.3% -€35M -10.4% 187 175 164
Slide 23: Recurrent costs met +3.5% YoY guidance
Recurrent costs met +3.5% YoY guidance Group costs1 Efficiency ratio2 €M % 784 -4.2pp 45.4% 753 33 Efficiency ratio 720 4Q23/3Q231 ex-TSB 119 124 55.6% 136 -0.2% 2023 199 185 51.4% 184 2023/20221 400 435 442 +3.5% 4Q22 3Q23 4Q23 Ex-TSB expenses TSB expenses 2022 2023 Amortisation & depreciation Rest
Slide 24: Wider jaws underpinned by NII growth
Wider jaws underpinned by NII growth Group core results evolution1 Group core results YoY1 €M €M +29.9% 799 3,127 +924 3,127 -104 -100 839 2,406 769 720 1Q23 2Q23 3Q23 4Q23 2023 2022 NII Fees Costs 2023 YoY variation +24.3% -7.0% +3.5% Quarterly core results have been consistently higher NII more th
Slide 25: Total cost of risk at 55bps, beating the YE guidance
Total cost of risk at 55bps, beating the YE guidance Group credit provisions Group total provisions 4Q23 breakdown €M €M 247 22 4Q23/3Q23 23 228 +9.0% 22 174 9 160 174 25 21 225 2023/2022 139 149 -4.8% Credit Foreclosed NPA Other Total provisions 4Q22 3Q23 4Q23 provisions for asset management provis
Slide 26: Total CoR to improve further in 2024
Total CoR to improve further in 2024 Group total provisions breakdown Total CoR €M 1bps +12bps = €17M 60bps 55bps 43bps 1bps 8bps 3bps -11.8% 2024 outlook 1.032 1,032 1.032 49 910 104 104 910 128 ▪ Better trend in credit CoR 707 26 in 2024 driven by a robust 910 910 75 78 78 balance sheet, improved
Slide 27: Balance sheet
Balance sheet o
Slide 28: Lower NPLs while improving coverage ratios
Lower NPLs while improving coverage ratios Group NPLs and NPL ratio Exposure by stage and coverage ratio €M €M, % Stage 2 Stage 3 58% Dec-23 YoY Dec-23 YoY 57% 55% Exposure (€M) 12,221 -2,116 5,777 -37 3.41% 3.54% 3.52% % of total loan book 7.4% -96bps 3.5% +11bps Total provisions over stage 3 NPL r
Slide 29: NPAs decreased by 3% while increasing coverage ratios
NPAs decreased by 3% while increasing coverage ratios by 3p.p. Group foreclosed assets Group NPAs €M €M 38% 39% 40% 52% 54% 56% -3% YoY -16% YoY 6,971 6,930 6,748 1,157 1,039 971 Dec-22 Sep-23 Dec-23 Dec-22 Sep-23 Dec-23 Coverage ratio Group key ratios Dec-22 Sep-23 Dec-23 ▪ 21% of the stock sold in
Slide 30: Positive outlook in asset quality in 2024
Positive outlook in asset quality in 2024 Asset quality improvement and lower CoR in 2023 2022 2023 YoY Stage 2 (€bn) 14.3 12.2 -17% Stage 2 coverage ratio 3.6% 4.1% +54bps Continued focus on risk management Total NPAs (€bn) 7.0 6.7 -3% NPAs coverage ratio 52% 56% +3p.p. Total CoR 60bps 55bps -5bps
Slide 31: Ample liquidity buffers
Ample liquidity buffers Liquidity metrics Credit ratings Sabadell Group Group long-term credit rating and outlook Standard & BBB Fitch BBB- Poor’s Positive Ratings Positive 94% 140% 228% Baa2 A (low) New Loan-to- NSFR LCR Moody’s DBRS deposit Stable Stable Positive outlook for two credit agencies To
Slide 32: Ample MREL buffer
Ample MREL buffer MREL position, Sabadell Group 2023 public issuances % Risk Weighted Assets (RWAs), % Leverage Ratio Exposure (LRE) ▪ In 2023 >€6bn issued across the whole capital structure 25.65% 6.35% 27.86% 2024 9.34% 2024 Requirement Requirement 4.60% 1.54% 2024 public issuances YTD Maturity In
Slide 33: CET1 FL at 13.21% increasing 67bps in 2023
CET1 FL at 13.21% increasing 67bps in 2023 MDA Evolution of capital ratios fully loaded 428ps1 Shareholder value creation3 +26bps YoY 18.35% 17.78% 17.01% +19bps +2bps +12.5% -13bps QoQ -57bps +8bps 0.05 QoQ YoY 0.04 13.13% 13.13% 13.32% 13.21% +77bps +2.3% 12.54% Group 2.19 2.03 QoQ +8bps Dec-22 Se
Slide 34: Closing remarks
Closing remarks 34
Slide 35: Almost all annual 2023 targets have been achieved
Almost all annual 2023 targets have been achieved… 2023 guidance Initial guidance (4Q22) Updated guidance (2Q23) Final guidance (3Q23) FY23 Net Interest Income (YoY) High-teens growth >20% ~25% +24.3% ̴ Fees & Commissions (YoY) Low-single digit decline Mid-single digit decline = -7.0% Total recurr
Slide 36: 2024 guidance
2024 guidance Net interest income Non-interest income Low-single digit growth Fees: Mid-single digit decline2 SRF & DGF payments: RoTE1 RoTE not material >11.5% Recurrent costs Total (including amortisation) Cost of Risk 2.5% growth Better than 2023 Stable solvency position in the quarter 1 Excludes
Slide 37: Appendix
1 Group NIM and customer margin 6 Group performing loans distribution 2 Debt maturities and 7 RWAs breakdown Appendix issuances 3 ALCO portfolio 8 MDA buffer 4 ESG milestones 5 TSB asset quality, solvency and liquidity position 37
Slide 38: 1. NIM and customer margin
1. NIM and customer margin Sabadell Group Sabadell ex-TSB %, in euros %, in euros 3.05% 3.20% 3.23% 2.89% 2.99% 2.99% 2.80% 2.53% 2.73% 2.53% 1.96% 2.00% 1.65% 1.77% 1.49% 2.02% 2.01% 1.88% 1.79% 1.64% 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 TSB %, in euros Customer margin 2.50% 2.55% 2.50
Slide 39: 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 % the last 6 months Instrument Date Size Coupon Senior non preferred bonds 08/09/2023 €580M 1.75% 2.4% 3.5% 3.7% 4.2% Covered bonds 20/10/2023 €950M 0.13% 1.
Slide 40: 3. ALCO portfolio
3. ALCO portfolio Evolution of fixed income portfolio Composition of fixed income portfolio Sabadell Group. €bn Sabadell Group. €bn. Dec-23. 10.6% 11.0% 11.7% 3.4 2.1 0.7 15.7 3.5 2.0 26.2 26.7 27.5 5.4 5.1 6.0 Spain Agencies & Covered bonds Italy Other governments and Corporates & Financials UK Por
Slide 41: 4. ESG milestones
4. ESG milestones We keep driving forward our ESG objectives and commitments... Closing in on the objectives set for 2025 in relation to the four ESG pillars: Institution, customers, investors and society Decarbonisation pathways • The Bank published new decarbonisation targets for three emissions-i
Slide 42: 4. ESG milestones
4. ESG milestones We continue to make progress with our ESG objectives and commitments Institution (Moving forward as a sustainable institution) 33% 30% 32.2% ▪ Presence of women in management teams increases to 32.2% 29% ▪ 100% of electricity is from renewable sources 2021 2022 2023 … 2025 Customer
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 % Dec-22 Sep-23 Dec-23 3% 6% Mortgages NPL ratio 1.3% 1.4% 1.5% 82% >90% 9% total loan Coverage ratio 42% 41% 42% book (YtD) Cost of risk1 0.14% 0.17% 0.19% £33.4bn Residential repayment Solvency
Slide 44: 6. Group performing loans distribution by segments
6. Group performing loans distribution by segments ➢ Mortgages to individuals, TSB 26% 39% ➢ SMEs & Corporates1 ▪ Weighted avg. LTV: 56% ▪ Avg. loan size: £135K Group ▪ Avg. loan duration: <2 years performing loans ▪ Avg. customer longevity: >10 years €150bn ➢ Mortgages to individuals, 25% Sabadell
Slide 45: 7. RWAs breakdown
7. RWAs breakdown Dec-23 RWAs: €78,343M By type: ▪ Credit risk: €68.8bn ▪ Market risk: €0.4bn ▪ Operational risk: €9.0bn ▪ Other: €0.1bn By geography: ▪ Spain: €61.0bn ▪ UK: €13.5bn ▪ Mexico: €4.0bn 45 45
Slide 46: 8. Ample MDA buffer at 428bps, better than guidance
8. 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 428bps2 phase-in Requirement (P2R) 1.27%1 +26bps YoY 5.2% Capital Conservation Buffer 2.50% Countercyclical Buffer 0.42% Other Systemicall
Slide 47: Glossary
Glossary Term Definition CCyB Countercyclical Buffer CCB Capital Conservation Buffer Commercial gap Total on-balance sheet customer funds – total gross loans DGF Deposit Guarantee Fund HQLA High Quality Liquid Assets LCR Liquidity Coverage Ratio: short-term liquidity ratio Leverage Ratio Exposure de
Slide 48: 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 49: Need a bank?
©Sabadell Need a bank?
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