News

• Gross loans and advances increased for the first time in four years, whilst the NPL ratio fell to 6.8%, the lowest level since the beginning of 2012.
• Fully loaded CET1 stood at 11.8%.
• TSB’s plans are still progressing as expected, and the launch of business banking activities in Mexico has been very positive.

Banco Sabadell group ended the first half of 2016 with a 20.7% increase in attributable net profit, totalling €425.3 million. During the first six months of the year, net interest income amounted to €1,942.5 million, a 49.5% increase year-on-year.

The second quarter of 2016 has been characterised by the resilience of revenues, in terms of both net interest income and income from fees and commissions, and by the increase in gross loans and advances for the first time since 2012. Expenses have been contained and business activity has continued to improve.

The phase-in Common Equity Tier 1 (CET 1) ratio stood at 11.9% as of 30 June 2016, and the fully loaded CET1 ratio stood at 11.8%.                                                          

Net fees and commissions recorded both a year-on-year and a quarter-on-quarter increase due to the positive performance of business activity overall. Income from fees and commissions increased by +15.3% year-on-year (+5.3% quarter-on-quarter). The growth in income from fees and commissions associated with mutual funds, pension funds, insurance products and asset management is particularly noteworthy, as together they increased by 30.4% in comparison to 2Q15.

The NPL ratio has declined, reaching its lowest level since early 2012

The group’s NPL ratio has continued to decline and is already at its lowest level since the beginning of 2012, thanks to the steady reduction in problem assets during the second quarter. Over the last three months, problem assets have been reduced by 67 basis points. Over the last 12 months, they have been reduced by 218 basis points, reaching 6.83% at group level. The NPL coverage ratio stands at 54.08% at the end of 2Q16.

Non-performing loans declined by €1,039.3 million quarter-on-quarter, and at the end of the second quarter of 2016 the balance of doubtful exposures amounted to €10,634.8 million. Problem assets declined by €967.9 million quarter-on-quarter, and the balance of problem assets at the end of 2Q16 amounted to €19,889.5 million. The volume of problem assets has been reduced by €3,289.5 million over the last twelve months.

Provisions during the first half of the year totalled €901.8 million, a 48.4% decline compared to the same period last year, when they amounted to €1,749.1 million.

At the end of the second quarter of 2016, gains/(losses) on financial transactions mounted to €502.8 million (€447.9 million excluding TSB) and include, amongst others, €355.2 million in gains on the sale of available-for-sale fixed-income financial assets and €109.5 million from the purchase of 100% of shares in Visa Europe by Visa Inc.

Gross loans and advances increased for the first time in four years

Outstanding credit volumes increased by 3.2% at the end of 2Q16, compared with the same period during the previous year. Compared to the previous quarter, they increased by 0.8%. This increase was also the result of a prudent pricing strategy.

Gross loans and receivables, excluding repos, doubtful assets and accrual adjustments, ended the second quarter of 2016 with a balance of €139,343.3 million.

Off-balance sheet customer funds totalled €37,555.1 million at the end of 2Q16, a 6.1% increase compared with the previous year. This item increased by 1.2% quarter-on-quarter. Equity in mutual funds amounted to €21,130.7 million as of 30 June 2016, representing a 4.5% increase year-on-year.

Market shares continued to improve during the second quarter. The increase in the market share of credit cards of more than 7.3% and the 5.3% increase in life insurance policies are particularly noteworthy.

Internationalisation: TSB and Mexico

TSB’s performance continues to surpass the targets set out in its strategic plan, and its results during the first half of the year are a testament to the strength of its balance sheet and show an increase in deposits. Operating profit before tax (excluding extraordinary tax) has more than doubled year-on-year, amounting to £107.7 million, representing a 144.8% increase compared with the first half of 2015.

Recently, TSB was voted “most recommended British bank” by an independent study by the market research company BDRC, whilst its integration and migration plan continues to unfold as planned.

The bank obtained its banking licence in Mexico last year, began to operate as a financial institution on 4 January 2016. In just six months, the bank has already placed itself in the Top7 in terms of granting loans and advances to companies in the country and has significantly exceeded the growth forecast of its volumes.

In six months it has captured over 100 Business Banking customers, granting over 1.5 billion Mexican pesos (USD 96 million) in Business Banking loans, and over MXN 22 billion (USD 1,336 million) in Corporate Banking loans. Banco Sabadell aspires to be a key player in the Mexican market, and has ambitious plans for expansion and future growth.