Sabadell Reduces Profit By 22.1% But Recovers Profits In British Subsidiary

The Banc Sabadell obtained in the first quarter of this year net profit of 73 million euros, representing 22.1% less than a year ago. But, in any case, the return of its British subsidiary, TSB , to the profits and the positive contribution to the group (two million euros), after three years of losses, stands out .

These quarterly accounts are the first since César González-Bueno took over the reins of the bank as CEO, replacing Jaume Guardiola and stand out for “an excellent result of the commercial activity” , as well as for the containment of costs and the increase of credit investment , “attending to the needs of companies and families “, as stated in a note sent to the National Securities Market Commission (CNMV).

In turn, Leopoldo Alvear , also incorporated with González-Bueno as financial manager, underlines the improvement “in the risk profile” and places it in line with the rest of the sector, thanks to the “actions carried out in the fourth quarter. At the same time, it expects” an improvement in results in Spain thanks to the expected good evolution of revenue lines and the positive impact of cost savings from the second quarter “.

In fact, the entity closed last year with a net result of just two million euros, with a decrease of 99%, after making provisions for 2,275 million to “clean up . ” Sabadell will present its new strategic plan on May 28 . It will be the roadmap for the new CEO, which was launched with a reorganization with a more agile structure and resorting to internal promotion .

Investment funds
Revenues from the banking business in the first quarter of this year, which include net interest income and commissions , reached 1,175 million between January and March, 4.8% less than a year ago due to the lower incidence of the pandemic in the comparison period (the state of alarm and the total confinement only covers 15 days of March 2020).

Net interest income, 833 million, fell 5.8% year-on-year, although it was 2.4% in the quarter. Net commissions, 342 million, decreased 2.2% due to the sale of Sabadell Asset Management , although those corresponding to investment funds and demand accounts increased 2.5%.

Total costs fell 1.2%, to 769 million due to the improvement of those related to personnel. The entity carried out the reduction of 1,817 jobs in the fourth quarter of last year. In a quarterly comparison, the total cost cut is 28.4%, thanks to the workforce adjustment, which represents a cost saving of 141 million.

Mortgage production
The bank highlights the increase in gross live loan investment to 150,334 million, which represents a year-on-year increase of 5.9% and 3.4% in the quarter. In addition to the increase in loans to companies, SMEs and the self-employed , mortgage production stands out, with an increase of 35%, ” with the best month of March in production in the history of Sabadell” .

As of March 31, 8,847 million had been arranged in ICO financing for companies and the self-employed and the outstanding balance of credit defaults stood at 2,218 million. The bank underlines the ” progressive acceleration of the digitization of customers in Spain”. In this sense, 45% of loan sales were ‘online’ and 94% of the main service operations.

According to data from the entity, problem assets at the end of March reached a balance of 7,507 million, of which 6,127 million were doubtful and 1,373 million were awarded. The coverage of problem assets stands at 52.8% and that of foreclosed assets, at 37%. The group’s NPL ratio was 3.7% during the period.

The British subsidiary TSB, which the bank has ruled out selling for now , has obtained a net profit of 10 million, which will contribute a positive two million to the group, after improving efficiency and reducing staff by 353 people and closing 70 offices in the first quarter .

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