News

• The Chairman identified the integration of TSB, the start-up of a bank in Mexico and the institution’s commercial transformation as the main milestones in 2015
• Jaime Guardiola, Managing Director, identified increased profits and strict price control as some of the objectives for 2016 and has announced an increase in credit

Over 600 people gathered in Barcelona yesterday, Tuesday 15^th December, to attend the annual directors meeting of Banco Sabadell. The event included a presentation of the bank’s results and achievements in 2015 as well as its business prospects for 2016. Josep Oliu, Chairman of Banco Sabadell, explained that "Revenue management has been excellent during 2015, not only due to net interest income and fees, but also because of trading income". He also added that "net income has been growing in line with expectations, with very significant improvements in the reduction of NPAs: €3 billion this year". At the same time, Mr Oliu highlighted that the acquisition of the British bank TSB, improvements made in digital technology and transformations both commercially and in the operating model, as well as the start of business development in Latin America have all been important milestones in 2015.

He also added that "this has undoubtedly been a very good year for us, but obviously there are still challenges ahead that we need to overcome and ways in which we can improve", with key objectives set with a view to reducing the NPL ratio, achieving a ROE of 10% as set out in the TRIPLE plan and achieving a cost/income ratio of 40%. The Chairman of Banco Sabadell explained that a significant part of the institution’s activity is centred on the international stage, which already accounts for 29% of its credit (24% in the United Kingdom and 5% in the United States and Mexico), with the other 71% located in Spain. "This is therefore well above the target indicated in the TRIPLE plan of having 10% of credit outside of Spain. This has been possible thanks to the acquisition of TSB," he said.

It should be noted that, for the first time, the management of the British bank was represented in the Group’s directors meeting. Paul Pester, CEO for TSB, formed part of a panel led by Jaime Guardiola, together with Carlos Ventura, General Manager and Commercial Banking Director, and Fernando Pérez-Hickman, General Manager and the America and Global Corporate Banking Director.

As to the challenges facing the bank, Josep Oliu stated that "although the growth of the global economy in 2016 is expected to be lower than in 2015, we are operating in economies which are experiencing more stable economic growth, such as the United Kingdom, the United States and Mexico." He also advised that "the fact that we are going to be dealing with a curve of very low interest rates, which will put pressure on the net interest income, is going to be very challenging". He hopes to maintain Banco Sabadell’s current levels, as "at the moment we are practically the leading Spanish bank in terms of net interest income levels", he said.

Mr Oliu also spoke about some of the challenges facing the Spanish financial system, specifically the decline in income, improvements in profitability and solvency, reduction of NPLs, digital transformations and new regulatory challenges. "We cannot have ROE levels that negatively affect the value for shareholders", he stressed. Finally, when talking of the future of the sector, he stated that "the definitive structure of the Spanish financial system has not yet been finalised; in fact, the nucleus of the banks that we see today will not be the same. We haven’t reached the end of the process yet".

The challenge of transformation

Mr Jaime Guardiola, Managing Director, focused his speech on the transformation that the institution is undergoing, both in terms of commercial transformation and in terms of its production model and balance sheet, in line with the objectives set out in the TRIPLE plan. "We have to become more productive and efficient," he declared. Mr Guardiola addressed the directors present at the meeting, saying "we are a bank that is used to change, we have constantly changed and redesigned our institution throughout its history and that is the key to our survival. Nevertheless," he added, "the change that we are undergoing today is more complex, we are starting to handle enormous amounts of our customers’ information and we are using management tools that need to help us to increase our productivity as much as possible".

The managing director for Banco Sabadell talked about the implementation in 2016 of new models of active management and hub branches as examples of this commercial transformation, explaining that "the purpose of all this is to ensure that the bank continues to be a leader in customer experience". In fact, the aim is for Banco Sabadell to become the leading institution across all segments by 2018, "at the moment we are leaders in SMEs and companies" – said Mr Guardiola – "and we have to become leaders in retail and personal banking".

In terms of the forecasts for next year, he hopes to continue working towards an improvement in revenues, the strict supervision of expenses and a progressive reduction in provisions and fewer revenues from financial operations. As for credit, the bank’s targets are to achieve increases of approximately 3% in Spain, 12% in the United States and 9% in the United Kingdom. These positive credit forecasts are in contrast with very low interest rates, therefore "the management of prices is going to be of vital importance".

The managing director for Banco Sabadell was optimistic regarding the growth behaviour in specific segments throughout 2015, which included significant increases in mortgages, auto credit, consumer loans, business banking, global corporate banking and real estate financing. "The bank has the highest income from customers in the sector, with significant levels of trading funds, revenue from cards and with an increasing POS presence in shops, and also with products such as the Expansión Account, which is the best salary account in the market", he concluded.