Banco de Sabadell (SAB) Goldman Sachs 28th Annual European Financials conference summary

Capital distribution and financial targets

• Committed to distributing €2.4 billion in capital over 2024 and 2025, based on a budget set in January and maintaining capital above 13% post-Basel IV, even after accounting for a 100 basis point countercyclical buffer.

• Confident in delivering on capital distribution due to historical budget over-delivery and a more favorable macro environment, particularly slower-than-expected interest rate declines.

• Q1 saw a 50% increase in net profit, supporting confidence in meeting or exceeding budget targets.

Profitability and return on tangible equity (ROTE)

• Expecting ROTE of 12% in 2024, with further improvement in 2025, driven by NII growth, cost reductions, and improved fee income.

• NII projected to grow 3% in 2024 and remain stable in 2025, with Spain and UK segments showing different trends.

• Continued reduction in cost of risk and marginal fee growth expected to support ROTE improvement.

Lending dynamics and growth strategy

• SME lending saw a 30% increase in medium and long-term loans in Q1, with growth driven by improved risk assessment and targeted client strategies.

• Mortgage production in Spain grew 20% quarter-on-quarter, with improved segmentation and conversion rates.

• Consumer lending new production up 6% quarter-on-quarter, expected to grow double digits in 2024; UK mortgage production up 14% in Q1.

• Shift observed from consumption-driven growth to investment-driven growth, with the bank positioned to capture new opportunities.