Banco de Sabadell (SAB) Q1 2026 earnings summary

Executive summary

• Sale of TSB completed, unlocking over 400 bps of capital and enabling a €0.50/share extraordinary dividend at the end of May 2026, with ongoing share buybacks.

• Q1 2026 marked the bottom for core revenues, with sequential improvements expected throughout the year.

• Early retirement plan launched, incurring €90M one-off costs in 2026 but driving €40M annual gross savings and efficiency gains mainly in 2027.

• Guidance for 2026 confirmed, targeting 14.5% ROTE by year-end and 16% ROTE in 2027.

• Net profit for Q1 2026 was €284M, down 28.1% year-over-year, impacted by non-recurring costs and the TSB sale; including TSB, net profit was €347M.

Financial highlights

• Net interest income at €872M, down 3.5% YoY and 2.5% QoQ; fees at €315M, down 2.2% YoY and 5.1% QoQ.

• Core revenues at €1,187M, down 3.1% YoY; gross operating income at €1,195M, down 6.8% YoY.

• Recurrent costs at €569M, up 3.4% YoY; non-recurrent costs of €55M related to efficiency initiatives.

• Performing loans grew 5.6% year-on-year; customer funds up 5.9% year-on-year, with on-balance-sheet funds up 4.3% and off-balance-sheet up 10.4%.

• CET1 fully-loaded ratio at 13.18% post-dividend accrual and 13.2% post-TSB sale.

Outlook and guidance

• Core revenues and NII expected to increase quarter-on-quarter through 2026, with NII guidance of over 1% year-on-year growth and mid-single digit growth in 4Q26 vs 4Q25.

• Customer spread projected to improve, reaching above 290 bps by year-end.

• Fee income expected to recover, targeting low end of mid-single digit growth, supported by payment services and CIB.

• Recurring cost growth targeted at ~3% for year-end; total cost of risk on track at ~40 bps by year-end.

• Loan and deposit growth to remain balanced, aiming for mid-single digit loan growth.