News

- Net interest income increased by 24.5%, the gross margin expanded by 20.7%, and profit before provisions was 33.3% higher than in 2013.  

- The sale of real estate on the balance sheet amounted to €2,744 million in 2014, i.e. 10.3% more than envisioned for the year in the Triple Plan.  

- For the first time since the crisis began, the volume of assets being reclassified as problematic declined, quarter on quarter, during the entire year.  

In 2014, the bank's 133rd year, Banco Sabadell obtained net attributable profit of €371.7 million, i.e. 50.0% more than in 2013. That figure, achieved after booking€2,499.7 million in provisions, exceeded both market consensus expectations by the market consensus and the first-year target in the Triple Plan.  

Consolidated data for the year reflects a sound balance sheet and confirms that Banco Sabadell is growing steadily, based on the consistent improvements in ordinary banking revenues and rigorous containment of operating costs.                      

After vindicating its strategy to consolidate and strengthen capital ratios in 2014, Banco Sabadell completed the first year of the Triple Plan well-positioned among the most solvent banks, with higher shares of priority market segments, better brand recognition, and aclear focus on meeting the triple challenge of increasing profitability, transforming the balance sheet and laying the foundation for internationalisation in 2014-2016.  

Balance sheet
At 31 December, the total assets of Banco Sabadell and its group amounted to €163,345.7 million.  

Although the recovery in demand for lending was especially evident in the fourth quarter of 2014, gross loans and advances to customers declined by 2.8% compared with 2013, to €121,140.8 million, mainly as a result of a lower volume of doubtful balances. Loans and advances to customers currently account for close to 75% of the group's total consolidated assets. Mortgage loans are the largest single component of gross lending, amounting to €54,260.2 million.  

New mortgage production increased by 69% year-on-year (€1,753 million). The number of loans increased by 55% in the same period. Net lending to companies expanded by 5.7% in the last three quarters of 2014.  

Excluding Banco CAM assets covered by the Asset Protection Scheme (APS), Banco Sabadell group had a 12.17% ratio of non-performing loans (NPLs) to total computable exposure, i.e. an improvement of 146 basis points in the last twelve months.  

For the first time since the crisis began, the volume of assets reclassified as problematic declined, quarter on quarter, during the entire year. The NPL coverage ratio was 50.3% at 31 December 2014.  
The sale of real estate on the balance sheet throughSolvia amounted to €2,744 million in 2014, i.e. 10.3% more than envisioned for the year in the Triple Plan.                      

Reserves for loan and real estate exposure amounted to 13.1% at 2014 year-end, one of the highest coverage levels in the Spanish banking sector.  

Customer funds expanded by 4.1% year-on-year to €124,839 million, of which €94,460.7 million corresponds to funds on the balance sheet. Demand accounts increased by 17.4% year-on-year, to €43,275.0 million.  

In line with the decline in interest rates and savers' search for investments paying higher yields, term deposits declined by 12.2% compared with 2013, to €53,395.9 million.  

Off-balance sheet customer funds amounted to €30,378.8 million, a 19.7% increase year-on-year.  

Funds under management in mutual funds and investment companies increased by 42.5%to€15,705.6 million, while customer assets under management expanded by 51.4% to €2,918.1 million.

In 2015, Banco Sabadell was one of the Spanish banks with the fastest growth in funds under management in mutual funds andinvestment companies, with a market share of 5.1% (4.1% in 2013).  

At the end of 2014, total funds under management amounted to €152,185.4 million, 2.1% more than at the end of 2013.  

During 2014, the bank had added 349,682 new private customers and 95,927 companies. The use of digital channels by customers also increased notably in 2014. The number of customers who actively used either the website or mobile devices for their regular transactions with the bank expanded by 15% year-on-year, to 1.9 million. At year-end, 42% of customers were accessing the bank via mobile devices.

During the year, the bank was recognised as the best Spanish company in terms of PST and e-commerce services. In 2014, Banco Sabadell was the most highly rated bank by its customers, according to an objective quality survey of bank branch networks, and it continued to increase its lead over the industry average in terms of the service quality score (7.42 points vs. 6.48 points).  

Income and profit performance
The consolidated income statement for 2014 reflects the favourable performance of ordinary banking revenues and the positive impact of lower funding costs and of consolidating the businesses acquired in 2013.  

Due to active management of customer spreads, net interest income increased steadily during the year to €2,259.7 million, an increase of 24.5% compared with 2013.  

Dividends received and results from equity-accounted affiliates together amounted to by €8.7 million.  

The branch network's focus on cross-sales of products and services and greater sales of managed investment products boosted net fees and commissions to €860.9 million at year-end, an increase of 13.3% year-on-year.  

In particular, within revenues from services for customers, commissions for cards and securities trading increased by 10.7% and 43.7%, respectively, while revenues from the administration and management of mutualand pension funds and insurance sales expanded by 54.1% overall.  

Income from financial transactions totalled €1,763.6 million. Revenues due to exchange differences amounted to €99.6 million, an increase of 46.7% in the last 12 months due to growth in volume. Banco Sabadell contributed a total of €158.4 million to the Deposit Guarantee Fundin 2014.                  

As a result, gross income for the year increased by 20.7% compared with 2013, to €4,800.5 million.  

Operating expenses totalled €1,773.3 million in 2014, a decline of 4.4% year-on-year in like-for-like terms (excluding extraordinary expenses and including BMN-Penedès, Lloyds and Banco Gallego in 2013).   Net profit before provisions amounted to €2,749.1 million in 2014, 33.3% more than in 2013.  

The sharp increase in gross income and rigorous containment of operating costs notably increased efficiency (by 644 basis points), providing a cost/income ratio of 53.14% at 2014 year-end, compared with 59.58% at 2013 year-end, following four consecutive quarters of improvements.  

Provisions for NPLs and other impairments (primarily real estate and financial assets) amounted to €2,499.7 million.  

Capital gains on asset disposals amounted to €236.9 million, including mainly €162 million in capital gains from the sale of the debt collection business to Lindorff and an extraordinary revenue of €80 million from the signature of a reinsurance agreement with SCOR Global Life for Mediterráneo Vida's individual death benefit portfolio.  

Excluding provisions and including capital gains, profit before tax totalled €486.4 million in 2014, up 41.7% year-on-year.  

After deducting €109.7 million in income tax and accounting for non-controlling interests, Banco Sabadell obtained net attributable income of €371.7 million in 2014, a 50.0% increase over 2013. Net attributable income amounted to €247.8 million in 2013; however, if IFRIC 21 (Levies) had been applied in that year, net attributable income would have amounted to €145.9 million.    

At the end of 2014, Banco Sabadell was among the most solvent banks, with a core capital (core equity Tier 1) ratio of 11.7%, or 11.5% in accordance with Basel III "fully loaded", which is envisioned for 2018. The BIS ratio was 12.8%.  

Other key developments in 4Q14

Banco Sabadell passed the ECB comprehensive assessment with flying colours
One of the main events in the fourth quarter of 2014 was the conclusion of the comprehensive assessment conducted by the European Central Bank (ECB) in the framework of the Single Supervisory Mechanism, which examined the 128 largest banks in the euro area in cooperation with the national authorities and in close collaboration with the European Banking Authority (EBA), as a step prior to Banking Union. The analysis concluded that the values of Banco Sabadell's assets, collateral and reserves are appropriate and that Banco Sabadell would not require additional capital in any of the theoretical scenarios considered. Banco Sabadell is the only Spanish bank whose initial capital ratio was not adjusted as a result of the Asset Quality Review. Only 15 banks in all of Europe are in this position.  

Sareb adjudicated the management of 42,900 assets to Solvia
During the fourth quarter, Sareb adjudicated to Solvia the management of a portfolio of 42,900 assets, mostly real estate, valued at €7,000 million. The properties are concentrated in the regions of Catalonia, Valencia, Andalusia, and Madrid and its region. The servicing agreement entered into force in January 2015 and has a term of 7 years. In particular, Sareb valued Solvia's experience in migrating portfolios of real estate, which ensures optimal planning and execution of the migration of Sareb's assets.  

Sale of the debt management and recovery unit
Also in the fourth quarter of 2014, Banco Sabadell signed an agreement to sell its debt collection business to Lindorff España, S.L.U. plus an agreement for the provision of debt collection services with an initial term of 10 years. The sale price was set at €162 million.