News

• The shareholders voted to approve a dividend of 0.05 euro gross per share, comprising a scrip dividend and a distribution of treasury stock.
• They also ratified the appointment of new directors Aurora Catá, José M. Lara García and David Vegara.
• Josep Oliu: "The year 2014 brought an increase in earnings while problem asset growth continued to slow and the loan-loss ratio improved steadily."

28 May 2015. The Ordinary General Meeting of Shareholders of Banco Sabadell, held today in Sabadell with xx% of capital in attendance (present and represented), approved performance and results in 2014, the bank's 133rd year in operation, and the proposal to distribute the 371.7 million euro of earnings reported in 2014.

Shareholders also approved a scrip dividend amounting to 0.04 euro per share, complemented by a distribution of treasury stock in the amount of 0.01 euro per share. In this way, gross shareholder remuneration amounted to 0.05 euro per share, which will be paid in June.

The meeting also ratified the appointment of Aurora Catá, José Manuel Lara Garcia and David Vegara as independent directors to fill the two existing vacancies and to replace Josep Permanyer, who has resigned after a career of 57 years, including 13 as a director of Banco Sabadell.

Chairman's address

Chairman Josep Oliu discussed performance in the last year, noting moderate growth by the world economy, the European Central Bank's actions to defend the euro, the implementation of Banking Union, and the positive impact of adjustments to macroeconomic imbalances. "The economic and financial climate in 2014," he said, "was more benign than in the preceding years. Financial markets' confidence in the euro and in the solvency of Europe's financial system has been broadly restored.”

The chairman noted that the bank had exceeded its 2013 results, in line with the general improvement in the economy, which continues to recover. "Earnings are developing in line with the three-year profitability goals we set early in 2014 when we presented the Triple plan 2014-2016," he said.

Josep Oliu noted that 2014 was the Bank's 133rd year of existence, one in which it successfully passed the asset quality review and stress test prior to joining the new European bank supervision system, and that it was the only Spanish bank that did not have to adjust its financial statements. He added that "following a number of acquisitions, the bank is actively managing capital, having raised new capital when needed, and has attained ratios that have proven to be sufficient for the demanding new requirements."

Regarding director appointments, the chairman noted that, because of their academic training, professional skills and experience in business, national government and European institutions, new directors Aurora Catá, José Manuel Lara Garcia and David Vegara will be an asset to the Board and its subcommittees.

He also discussed the bank's internationalization process: "our internationalization strategy was stepped up in 2015 when we made a bid for 100% of TSB Banking Group plc (TSB), the seventh-largest bank in the UK and one of the banks with the greatest growth potential in the UK market. This takeover bid is a watershed in the bank's history, opening the door to greater growth potential than is available in our home market."

Looking to this year and the immediate future, Josep Oliu stated that "earnings should continue to rise in 2015 and subsequent years despite the threats posed by market forces and efforts by the competition to attract customers and loan transactions in a context of surplus liquidity. The bank will respond to this threat with determination; in the next two years—as in 2014—Banco Sabadell's approach in the domestic market will be to seek higher yields."

The Chairman concluded by thanking all of the bank's professionals for their work, and discussed the new challenges that the bank faces. "After the challenges we have overcome during the crisis will come others, given the changing economic and political climate in which we live. There will be challenges from technology, low interest rates, financial regulation, and our competitors."

"In this context,” he concluded, "Banco Sabadell and its managers will respond in line with the core values of integrity and transparency that constitute the backbone of our corporate culture. That culture and our ethical principles are the foundations of our reputation, which has remained among the best in the Spanish financial system at a time when it was easy to generalise and blame all banks for the errors committed by some."

Remarks by the Managing Director

Jaime Guardiola, the Managing Director, focused his remarks on business performance and the main figures in the consolidated balance sheet and income statement. He noted that, during 2014, "the bank's approach was shaped by a more favourable domestic situation, with good economic performance. It was a year in which the Bank laid the foundations for a progressive return to normality in lending and there was an increase in the flow of credit to households and business."

Referring to the bank's 133rd year, the Managing Director said that "we focused on the road map we had established: the Triple plan 2014-2016. At the end of 2014, the outcome of the first year of the Triple plan was visible to the markets. The results helped strengthen market confidence in the bank's ambitious goals under the plan."

Jaime Guardiola discussed each of the three major objectives of the Triple plan: profitability, transformation of the commercial model, and internationalization. As for profitability, he noted the 21.2% year-on-year increase in banking income, which includes both net interest income and net fees and commissions. He said this substantial increase was due to "the reduction in the cost of customer deposits and wholesale funding, rigorous management of lending prices, and efforts to sell the range of products and services. Lending," he noted, "made a very modest contribution, although it is the main vector of our business growth and we can now see a turning point in this respect."

Regarding the transformation of the commercial model, he highlighted the good results with transforming the balance sheet and production model, which were reflected in positive performance by NPLs and expenses. "The banking business," he said, "is undergoing a sweeping digital transformation, which is visible in the steady flow of new tools and channels; as a pioneer in this area, Sabadell is keeping a close eye on developments and steadily providing its customers with new digital functionalities, while keeping the customer at the centre of the relationship to guarantee the best possible banking experience."

As regards internationalization, he noted Banco Sabadell's new operations in Mexico, growth by its platform in Florida, and superb performance by its international branches; overall, international operations accounted for 7.4% of the total loan book (excluding NPLs) at 2014 year-end, up from 5.1% in 2013, after adjusting for exchange rates. "That percentage," noted Jaime Guardiola, "is still low but is evidence of where we are going and of what we have achieved so far. The objective is greater geographical diversification to be in a better position to weather future changes in the economic cycle."