Banco De Sabadell Sa Stock Earnings Reports

Key points for investors: 1) Transaction and capital return: The sale of TSB is complete at a final sale price of GBP 2.9bn. Management will pay an extraordinary cash dividend of EUR 0.50/share on 29 May and continues an EUR 800m buyback (EUR 267m executed to date). The TSB disposal unlocks >400 bps of capital but the extraordinary dividend largely offsets this, leaving pro forma CET1 around ~13.1% (fully loaded ~13.45% after further RWA release). 2) Earnings / guidance: Q1 marks the trough for core revenues (NII bottomed) and management expects quarter-on-quarter improvement through 2026. The bank maintains NII guidance of >1% y/y growth for 2026 and reiterated its full-year profitability targets (recurring ROTE 14.1% in Q1, 14.5% year target; commitment to deliver 16% ROTE in 2027). 3) Balance sheet & business momentum: Performing loans and customer funds grew mid-single digits y/y (total loans +5.6% y/y; performing loans +1.6% q/q). Mortgage new lending was intentionally reduced (front-book yields compressed); corporate/SME and international lending showed better momentum. Customer funds ex-TSB broadly stable q/q and +4.3% y/y; cost of customer funds ex-TSB 78 bps (59 bps in Spain). 4) Costs and efficiency: An early retirement program is being implemented with ~EUR 90m one-off charge in 2026 (EUR 55m already booked in Q1) and gross annual savings of ~EUR 40m (≈1/3 in 2026, full run-rate in 2027). Recurring costs behaved well; underlying recurring costs down q/q when excluding one-offs. 5) Asset quality & provisions: Asset quality continues to improve (NPL ratio 2.55%, Stage 3 coverage >70%, total NPAs ~0.7% of assets). Total cost of risk for Q1 was 38 bps (loan credit cost 27 bps); EUR 94m of loan-loss provisions were booked in the quarter. Management updated IFRS 9 scenario probabilities (moved 5% from upside to downside) and took a ~EUR 20m provisioning effect. 6) Liquidity & funding: Liquidity metrics strong (NSFR 135%, LCR 186%). Moody’s upgraded deposit rating and other ratings stable. Given the TSB sale, MREL funding needs for 2026 are lower, allowing reduced DCM issuance. 7) Capital distribution plan: Management reiterated a commitment to distribute EUR 2.5bn of ordinary remuneration over the next two years (with more weight expected in 2027). Overall tone: management frames Q1 as the bottom for revenues, confirms guidance, advances efficiency actions, returns capital to shareholders, and highlights improved asset quality and a simpler Spain-focused strategic profile post-TSB.