Banco de Sabadell (SAB) investor relations material

Strategic review of the BBVA tender offer

• Board unanimously rejected the BBVA offer, citing undervaluation and greater standalone value potential, especially through capital distribution and a safer Spanish-focused profile.

• Highlighted €3.8 billion in distributions within nine months, nearly 40% of market cap over three years, and a front-loaded payout structure reducing risk.

• Questioned BBVA's synergy estimates, noting regulatory hurdles, social opposition, and the risk of overestimated cost savings and EPS accretion.

• Adjusted BBVA's EPS accretion claims, showing that after accounting for dividends and consensus estimates, the deal would be dilutive.

• Emphasized complexity and tax implications of the offer structure, especially if BBVA acquires between 30% and 50%, potentially requiring a second, higher-priced tender.

Financial performance and guidance

• Upgraded guidance to a return on tangible equity above 14.5% for 2024, targeting 16% by 2027 (ex-TSB), with net income expected near €1.7 billion.

• Revenue growth, cost control, and improved cost of risk are key drivers; cost of risk improvement is already realized and cost growth is below guidance.

• NII expected to remain stable through 2027, with fee income growing mid-single digits and loan growth outpacing the market at around 5%.

• Transformation has shifted focus from high-risk, high-NII to sustainable capital generation and improved risk metrics.

Shareholder remuneration and capital strategy

• Committed to distributing capital above a 13% CET1 ratio, with a 60% payout ratio and €6.3 billion in shareholder returns over three years.

• Share buybacks will continue as long as market value lags, supported by strong capital generation and successful securitizations.

• Asset growth is projected at 5%, with a focus on maintaining risk discipline and improving EPS through buybacks.