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Banco Sabadell profits amounted to 579.8 million euro in the first nine months while net interest income continued to rise


23/10/2015
  • Group net profit increased by 59.4% in the first nine months (+48.5% excluding TSB)
     
  • Net interest income maintained the positive trend: 2,240.3 million euro (+35.8% year-on-year) following inclusion of TSB (+19.6% excluding TSB)
     
  • The Group's NPL ratio fell to 8.51%, from 9.01% at the end of June (excluding TSB: 10.38%, down from 10.98% in June) 

 

More information reported to the CNMV.

 

The Banco Sabadell group concluded the first nine months of 2015 with 579.8 million euro in net profit, 59.4% more than in the same period of 2014. The group has been consolidating TSB Banking Group in the UK ("TSB") since 30 June. Excluding TSB, net attributable profit stood at 540.2 million euro (+48.5% year-on-year).

The positive trend in net interest income was maintained in the third quarter in a context of low interest rates, while commission revenues performed well. Costs were stable in the first nine months, commercial performance continued to improve, and lending increased—particularly to companies.

Net interest income maintained the upward trend due to lower funding costs and strong revenue performance by the bank in a context of low interest rates. Group net interest income amounted to 2,240.3 million euro in the first nine months (+35.8% year-on-year). Excluding TSB, this item amounted to 1,973.1 million euro in the first nine months (+19.6% year-on-year), and to 674.1 million euro in the third quarter alone (+2.8% vs. the second quarter). Income from financial transactions amounted to 1,152.3 million euro in the first nine months.

 

 

Total provisions at the end of September amounted to 1,955.2 million euro, after allocating 206.1 million euro to this item in the third quarter. The pace of provisioning has slowed notably due to the volume provisioned in the first half of the year.

In contrast with normal seasonal performance in the third quarter, commission revenues continued to rise, driven mainly by asset management. This item amounted to 728.2 million euro at the end of September 2015 (+15.7% year-on-year).

At the end of September, customer funds on the balance sheet amounted to 129,957.2 million euro, a 33.5% increase in year-on-year terms (-0,3% respect to the preceding quarter). Off balance-sheet customer funds amounted to 35,715.9 million euro, an increase of 20.4% year-on-year and 0.9% with respect to the preceding quarter.

Gross loans and advances to customers (excluding non-performing assets) accounted for 66% of the group's total consolidated assets and amounted to 134,847 million euro as of 30 September 2015. This item increased by 32.5% in year-on-year terms (104,743 million euro excluding TSB, i.e. +2.9% year-on-year).

Lending to SMEs and new mortgage production accelerated, and all market shares improved. POS turnover increased, with the group's share reaching 16.90%, as did documentary credit (31.07%). New mortgage production advanced at a good pace in year-on-year terms: transactions +29.5% and volume +45.8%.

The NPL ratio continued to decline, reaching 8.51% at the end of September, from 9.01% three months earlier. Excluding TSB, the NPL ratio improved to 10.38% at the end of September, from 10.98% at the end of June. In line with the group's objectives, problematic assets were reduced by 839 million euro with respect to the end of June. The stock of problematic assets has been cut by 2,996 million euro in the last 12 months.

The NPL coverage ratio also improved, to 55.3% from 53.7% group-wide at the end of June (excluding TSB: 54.5%, from 52.8% at the end of June). As for capital, the Tier 1 ratio was 11.6% and the fully-loaded CET1 ratio was 11.4%, both amply above the regulatory requirements. The cost-to-income ratio improved to 47.50% excluding TSB (from 53.14% at the end of 2014).

The sale of real estate on the balance sheet maintained a rapid pace in the first nine months, while discounts continued to decline. In total, 7,654 units were sold in the first nine months of 2015 at a discount of 44% on gross value, down from 50% a year ago.

TSB results

In the third quarter of 2015, TSB reported management profit of 32.4 million pounds and franchise net interest income of 177.7 million pounds, a 2.1% increase over the preceding quarter. TSB maintains the positive trend and is fulfilling objectives. Franchise growth of 2 billion pounds expected for 2015, exceeds the previous target of 1.5 billion pounds.

TSB continues to improve underlying costs, which fell by 10.5% in the third quarter, while volumes (both mortgages and deposits) continue to rise.

The process of integrating it with Sabadell's technology platform is advancing on schedule. Over the next year, TSB will launch a series of digital services in the UK to leverage the capabilities of Sabadell's platform.

Other key developments in 3Q15

Inauguration of representative offices in Colombia and Peru
On 8 and 9 October, the bank's Chairman, Josep Oliu, inaugurated representative offices in Bogotá and Lima. With average growth of 4% since the beginning of the last decade, Colombia is now Latin America's fourth-largest economy and has more than doubled income per capita to approach the Latin American average. Meanwhile, Peru has averaged over 5% growth since the year 2000 and is one of Latin America's most dynamic economies, as evidenced by the significant improvement in its position in global competitiveness indexes.

Acquisition of 4.99% of Colombian bank GNB Sudameris
On 1 October, Banco Sabadell announced the acquisition of 8,238,084 shares representing 4.99% of the capital stock of GNB Sudameris bank for 50 million dollars. GNB Sudameris is majority owned by Gilex Holding B.V., a subsidiary of Starmites Corporation, S.a.r.l., which is owned by the Gilinski family. This acquisition was combined with a strategic commercial cooperation agreement with the goal of seizing mutual commercial opportunities offered by markets with strong growth potential, such as Colombia, Peru and Paraguay.

Completion of the TSB acquisition
On 21 August, Banco Sabadell completed the process of acquiring all of the shares of TSB Banking Group plc (TSB), with the result that it owns 100% of the UK banking group.

Bank licence in Mexico
On 8 August, Banco Sabadell obtained a banking licence in Mexico, one year after beginning to operate there as a lender through subsidiary Sabadell Capital, sociedad financiera de objeto múltiple (SOFOM). Sabadell Capital achieved its goal of lending 1 billion dollars (16.12 billion Mexican pesos) six months ahead of schedule.

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Banco de Sabadell, S.A. Avenida Óscar Esplá, 37, 03007 Alicante, registered with the Mercantile Register in Alicante, tome 4070, folio 1, page A-156980, Fiscal Identification Number (NIF) A08000143.
Financial institution under the supervision of the Bank of Spain and registered in the Special Administrative Register under number 0081
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