Key points for investors:
- TSB sale completed: Final price GBP 2.9bn. Transaction generates >€300m capital gain and releases risk-weighted assets, unlocking more than 400bps of capital. An extraordinary cash dividend of €0.50/share will be paid on 29 May. Share buyback program is underway (€267m executed of €800m authorized).
- Guidance and targets maintained: Management reaffirms 2026 guidance and the medium-term ambition to deliver a 16% return on tangible equity (ROTE) in 2027. Recurring ROTE for Q1 stood at 14.1% (target 14.5% for year-end).
- Revenues and NII outlook: Core revenues likely hit a Q1 trough. Net interest income (NII) bottomed in Q1 and is expected to grow quarter-on-quarter (low single-digit q/q) and to finish 2026 up >1% y/y, with customer spread targeted above ~290bps by year-end. Non-customer NII (ALCO/wholesale) expected broadly stable.
- Costs and efficiency: An early retirement program is being implemented (one-off cost ~€90m in 2026; gross annual run-rate savings ~€40m, ~1/3 realized in 2026, full run-rate in 2027). Recurring costs fell q/q (excluding nonrecurring items); management expects cost evolution aligned with year-end targets.
- Balance sheet and growth: Performing loans grew 1.6% q/q (5.6% y/y). Customer funds ex-TSB stable q/q and +4.3% y/y; total customer funds +5.9% y/y. Loan growth is being managed with a risk-adjusted approach (notably market-share reduced in new mortgages when pricing is unattractive).
- Asset quality and provisions: NPL ratio improved to 2.55% (down 10bps q/q). Stage 3 coverage >70% (71% reported). Total cost of risk 38bps for the quarter (loan loss provisions 27bps). Management reviewed macro scenarios and booked ~€20m related provision from probability adjustments.
- Capital and liquidity: CET1 ~13.2% (ex-TSB perimeter). Pro forma CET1 effects of TSB sale and extraordinary dividend produce modest net CET1 impact with a path to ~13.45% fully loaded after further operational RWA release. Liquidity metrics strong: NSFR ~135%, LCR ~186%. Ratings stable with some upgrades/positive outlooks noted.
- Distribution policy: Committed to distribute €2.5bn of ordinary remuneration over the next two years (with timing skewed toward 2027); extraordinary €0.50/share to be paid end-May. Management confirms distributions are compatible with the capital plan.
- Key risks/considerations: Macro and volume uncertainty (particularly mortgage volumes) could affect future NII trajectory; one-off restructuring costs and timing of cost savings; deposit pass-through and loan volumes remain variables to monitor.
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