Banco Sabadell ended 2023 with a net profit of 1,332 million euros, rising 55.1% from 2022 as the interest margin expanded and provisions declined due to improved credit quality within the bank.
In a statement filed with the National Securities Market Commission (CNMV) on Thursday, the institution explained that these dynamics more than offset a drop in customer fee income and a higher tax bill.
The board approved a Complementary dividend of 0.03 euros per share and a buyback of 340 million shares, bringing total shareholder remuneration for the year to 666 million euros, up 55% from the prior year.
Banco Sabadell reported an increase in Rote profitability to 11.5% while CET1 capital stayed at 13.21%, levels the bank intends to hold in the current year.
The bank’s chief executive, César González-Bueno, called the results a consequence of the ongoing deep transformation. He noted that the bank’s solidity supported a substantial rise in shareholder rewards and expressed optimism about the organization’s future path.
Financial director Leopoldo Alvear highlighted the stronger profitability and a sturdier balance sheet, pointing to reduced non-performing assets and higher coverage as key drivers.
higher margin
The unit explained that banking activity revenue grew by 15.5% to 6,109 million euros year over year. The interest margin advanced by 24.3% to 4,723 million, while net commissions dipped by 7% to 1,386 million.
Recurrent costs rose 3.5% to 2,982 million euros, raising the bank’s efficiency ratio by 2.5 percentage points to 42.6%.
Customer margin rose by 46 basis points on an annual basis, reaching 2.99% by year end.
Banco Sabadell closed 2023 with a balance sheet total of 149,798 million euros, down 4.1% from the previous year.
More loans to companies
The bank noted varied trends across loan products and client segments, with consumer credit and business financing continuing to grow in both investment and circulation, while mortgage signatures declined by 34% to 3,764 million due to higher rates.
The US Federal Reserve maintains interest rates and rules out the possibility of starting a rate cut in March
New loan production to companies reached 11,716 million euros, up 7% from the prior year, and lines of credit expanded by 1% against 2022. Consumer lending in Spain rose 25% in 2023. Card billing increased by 7% and point-of-sale transactions grew 11% as card use expanded.
resources
Client resources under management, both on and off the balance sheet, remained essentially unchanged in 2023, ending the year at 201,449 million euros. Resources for investments and savings in Spain grew by 9.1 billion, reaching 56.6 billion euros. Off-balance sheet resources finished at 40,561 million with a 5.4% annual rise, while on-balance sheet resources fell 2% to 160,888 million.
Total assets stood at 235,173 million euros, reflecting a 6.4% year-on-year decline driven mainly by the 17,000 million return from TLTRO III.
balance quality
Balance sheet quality improved in liquidity and credit metrics. The bank ended with a loan-to-deposit ratio of 94%, a balanced retail funding structure, and a liquidity coverage ratio (LCR) of 228%.
Non-performing assets decreased by 223 million to 6,748 million; among these, doubtful loans totaled 5,777 million and seized assets 971 million.
The default rate was 3.52%, slightly higher than the 3.54% seen in the prior quarter but below 3.41% in the same period of 2022.
Coverage of non-performing assets stood at 55.6%, while coverage of doubtful loans rose to 58.3% and coverage of seized assets reached 39.6%.
As a result, the bank’s credit cost was 43 basis points and the total risk cost was 55 basis points.
TBS
TBS closed the year with a record individual net profit of 175 million pounds (205 million euros), up 70.9% year over year, contributing 195 million euros to the group.
The organization increased its recurring margin by 3.9% to 361 million pounds (422.8 million euros) and its interest margin by 4.1% to 1,022 million pounds (1,196.8 million euros).
The bank noted that TSB has begun an efficiency plan to cut costs and sharpen focus on its core activity in mortgage marketing, where it has historically excelled.