Banco de Sabadell (SAB) Q3 2024 earnings summary

Executive summary

• Achieved record quarterly net profit of EUR 503 million in Q3 2024, with nine-month net profit at EUR 1.3 billion, up 25.9% year-on-year, and ROTE at 13.2% for the last 12 months.

• Strong commercial activity, with performing loans up 2% year-on-year and 3% year-to-date, and asset quality improving as NPL ratio fell to 3.14%.

• Core results grew 6.1% year-on-year, driven by higher net interest income despite a decline in net fees and commissions.

• Interim cash dividend of EUR 0.08 per share distributed, with a 60% pay-out ratio set for 2024.

• Asset quality continues to improve, with NPA coverage ratio at 58% and stage 3 coverage ratio at 60.8%.

Financial highlights

• Net interest income grew 6.7% year-on-year to EUR 3,746 million, but declined 0.7% quarter-on-quarter.

• Fees and commissions remained stable quarter-on-quarter (+0.2%), but fell 3.6% year-on-year.

• Total recurrent costs increased 2.5% year-on-year, in line with guidance.

• Total cost of risk improved to 44 basis points, with guidance further reduced to 45 basis points for 2024 and 2025.

• CET1 fully loaded ratio rose to 13.8%, up 32 basis points quarter-on-quarter.

Outlook and guidance

• NII growth target of mid-single digits for 2024 reaffirmed, with potential to exceed.

• Fees expected to decline around 3% for the year.

• Recurrent cost growth guided at 2.5% for 2024.

• Return on tangible equity expected above 13% in 2025, implying net profit of around EUR 1.6 billion.

• Shareholder remuneration floor set at EUR 2.9 billion for 2024-2025, with a 60% pay-out ratio and potential for upward revision.