Banco De Sabadell Sa Stock Earnings Reports

Sabadell reported a Q2 2026 quarter that management frames as the start of a sustained recovery and the re-acceleration of commercial momentum following the sale of TSB. Key operating trends: performing loans grew 3% quarter-on-quarter (5.5% y/y) to EUR 125bn with broad-based strength across mortgages, consumer, SMEs/corporates and international franchises; on-balance sheet customer funds rose ~1% Q/Q (4.7% YTD) while off-balance-sheet funds gained strongly. Net interest income (NII) and fees returned to growth (NII +3.4% Q/Q; fees +4% Q/Q), and recurring net profit increased to EUR 691m (recurring RoTE 13.6%). Asset quality and provisioning remain stable: cost of risk ~40bps (credit cost of risk 31bps), NPL ratio continued to fall and coverage is ~70%. One-offs: sale of TSB produced a gross capital gain of EUR 340m (net +EUR 249m one-offs in Q2); early-retirement program added EUR 37m of nonrecurring charges in Q2 (EUR 92m H1 total) with expected recurring savings of EUR 40m from 2027 (EUR 20m in H2 2026). Capital and shareholder return: CET1 13.11% (61bps organic CET1 generation in quarter after AT1 coupons); EUR 0.50 extraordinary cash dividend paid in May; EUR 800m buyback completed and a new EUR 331m buyback announced. Liquidity and solvency metrics are robust (L/D ~93%, NSFR 131%, LCR 188%). Management reaffirmed 2026 guidance (NII growth >1% in 2026) and targets: 14.5% RoTE in 2026 and 16% by 2027. Costs: recurring cost growth guidance improved to below 3% (widening jaws anticipated). Key investor considerations: 1) clear capital-return bias (dividends + buybacks) supported by TSB sale; 2) evidence of revenue inflection driven by commercial activity rather than rate sensitivity alone; 3) improving efficiency profile after one-offs; 4) stable asset quality but provisions to be monitored given mix shift (stronger consumer growth); 5) competition for deposits and seasonal effects may influence deposit mix/costs. Management said they will continue to invest in technology/AI and target higher-value customer segments while remaining disciplined on pricing and returns.