Banco de Sabadell (SAB) Q4 2024 earnings summary

Executive summary

• Record annual net profit of €1.8 billion in 2024, up 37.1% year-over-year, with RoTE at 14.9%, exceeding guidance and driven by strong net interest income and improved asset quality.

• Strong commercial momentum: performing loans up 4.7% year-over-year, customer funds up 7.1%, and notable growth in mortgages, consumer, and SME/corporate lending.

• Asset quality improved: NPAs down 16%, NPL ratio at 2.84% (lowest since 2009), and NPA coverage up to 59%.

• Shareholder remuneration for 2024-25 raised to €3.3 billion, including €1.1 billion cash dividend and €1 billion share buyback, with a 60% payout ratio.

• All full-year 2024 targets achieved or exceeded, with positive outlook for 2025.

Financial highlights

• Net interest income grew 6.3% year-over-year to €5,021 million, aided by higher loan yields and a one-off €36 million from arrears interest.

• Core results (NII + fees - recurrent costs) up 6% to €3.3 billion.

• Fees and commissions declined 2.1% year-over-year, but Q4 saw a 3.3% sequential increase and asset management fees grew due to success fees.

• Recurrent costs rose 2.7% year-over-year; cost-to-income (efficiency) ratio improved to 48.7%.

• Credit cost of risk at 26bps (or 29bps excluding provision releases); total cost of risk at 42bps (or 45bps excluding one-offs).

• CET1 ratio at 13% post-distribution, with 83bps capital generation in the year; total capital ratio at 17.6%.

Outlook and guidance

• 2025 guidance: NII to remain above €4.9 billion, total costs to grow ~1%, fees to grow low single digits, cost of risk to improve to ~40bps, and RoTE around 14%.

• TSB expects high single-digit NII growth, cost decline of 3%, and net profit to increase by mid-teens in 2025.

• Shareholder remuneration for 2025 expected at €1.2 billion, with a 60% payout ratio.