Banco de Sabadell (SAB) CMD 2025 summary

Strategic priorities and business transformation

• Focus on Spain post-TSB sale, targeting prudent, value-generating growth and moderate market share gains, especially in consumer and SME lending, while maintaining healthy risk and pricing discipline.

• Transformation in risk models, pricing, and digital capabilities has led to improved asset quality and customer experience, with significant reductions in cost of risk across all portfolios.

• Incentive structures and performance metrics now fully aligned with value creation, using real-time metrics and relative performance rankings to drive capital generation.

• Continued investment in IT and digitalization, with 60% of CapEx focused on growth and customer experience improvements, and technology investments completed to enable scalable growth on a single IT platform.

• High employee engagement and recruitment in data/IT roles support execution and innovation.

Financial guidance and shareholder returns

• Targeting 16% return on tangible equity (ROTE) and net profit above €1.6 billion by 2027, with a CET1 ratio of 13%.

• Net interest income (NII) expected at €3.9 billion in 2027, with mid-single-digit growth in loans, fees, and commissions, and cost growth capped at 3% CAGR or lower.

• Cost of risk guided at 40 basis points, supported by improved asset quality and conservative risk management.

• Cumulative shareholder remuneration of €6.3 billion planned for 2025–2027, including an extraordinary dividend from the TSB sale and ongoing distributions, representing over 40% of market cap.

• Dividend payout policy maintained at 60%, with all excess capital above 13% CET1 distributed, and share buybacks as a flexible tool; share count reduced by over 11% since July 2023.

Growth outlook and operational execution

• Loan and deposit volumes projected to grow at a 4% CAGR or mid-single digit rate, outperforming the Spanish banking system, with outperformance in consumer and SME segments.

• Market share in loans expected to rise modestly from 8% to 8.3% by 2027, ensuring critical mass without overextending risk.

• Fee growth driven by savings, investments, insurance, and payments, with insurance premiums growing at high teens and payments market share targeted to reach 25% by 2027.

• Digital customer acquisition accelerating, with new clients contributing 12% of gross margin and increasing engagement.

• No M&A included in the plan; growth and capital generation are fully organic, with potential for a Nexi payments partnership not factored into current targets.