Background on Sabadell and its Relevance
Sabadell is one of Spain’s top four banks by market capitalization. Recently, it has been in the spotlight following a hostile takeover attempt by BBVA. The bank’s performance and strategic decisions significantly impact the Spanish banking sector.
Key Financial Performance in Q3 2024
Net Profit: Sabadell reported a net profit of 414 million euros (approximately 483 million USD) for the third quarter of 2024, a decrease of 17.7% compared to the same period in 2024.
Interest Margin: The bank’s interest margin, which represents the earnings from loans minus the costs of deposits, fell by 4% year-on-year to 1.200 billion euros, falling short of the analysts’ expectations of 1.220 billion euros.
Outlook and Strategic Focus
For the current year, Sabadell anticipates an interest margin of around 4.900 billion euros, down from 5.000 billion euros in 2024 or 3.600 billion euros excluding TSB, which the bank agreed to sell to Santander.
As part of its strategy outlined in July, Sabadell aims for an interest margin of 3.900 billion euros by 2027, excluding TSB – the same level achieved in 2024 without TSB’s contribution. The bank plans to finalize this operation in the first quarter of 2026.
Challenges and TSB’s Role
Analysts are closely monitoring whether Sabadell can sustain its growth rate without TSB, which accounted for 18.5% of the group’s net profit in the first nine months.
TSB Performance: TSB’s net profit remained unchanged in Q3, although credit income increased by 5%. Sabadell aims for a net profit of over 1.600 million euros and a return on tangible equity (RoTE) ratio of 16% by 2027, up from the 15% recorded at the end of September. This growth is expected to come from increased lending in Spain, where the economy is projected to grow above the eurozone average.
Key Questions and Answers
- Q: What caused the decline in Sabadell’s net profit? A: The decrease was primarily due to lower income from credit activities.
- Q: How much did Sabadell’s net profit fall in Q3 2024? A: Sabadell’s net profit fell 17.7% to 414 million euros compared to the same period in 2024.
- Q: What is Sabadell’s outlook for interest margins in 2025? A: Sabadell expects an interest margin of approximately 4.900 billion euros in 2025, down from 5.000 billion euros in 2024.
- Q: How does TSB factor into Sabadell’s strategic plans? A: TSB contributed significantly to Sabadell’s net profit, accounting for 18.5% of the group’s net profit in the first nine months. Sabadell aims to maintain growth without TSB’s contribution by 2027.
