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The Ordinary General Meeting of Shareholders of Banco Sabadell was held today in Alicante. The shareholders have given a majority vote in favour of the management and results of the institution’s 137th year. They have also consented to the proposed distribution of the net profit of 328.0 million euros obtained as at the end of the year.
The Meeting has also agreed to distribute a gross dividend per share, charged to 2018 results, of 0.03 euros per share in cash, of which 0.02 euros were paid as an interim dividend on December 28th and 0.01 euros will be paid on a supplementary basis on April 5th. As a result, total shareholder remuneration in 2018 represents a 51% payout and a total shareholder return of 3%.
Shareholders also approved the appointment of David Vegara as the new executive director and Chief Risk Officer of the Group, who will be reporting directly to the Board Risk Committee, as well as the re-appointment to the office of directors of Josep Oliu, Javier Echenique, Aurora Catá, José Ramón Martínez and the appointment of María José García Beato as executive director.
Chairman’s speech
In his speech, Chairman Oliu took a look at the macroeconomic developments of the last financial year and the main actions taken by the bank during 2018. “The year,” he highlighted, “has been characterised by the solid growth of our core banking revenue, as well as by the culmination of our balance sheet de-risking and the completion of TSB’s IT migration, two fundamental projects to consolidate the bank’s future”.
In relation to the general scenario during the year, Josep Oliu explained that the economic and financial environment has been characterised by political, legal and regulatory uncertainty that has had a significant impact on financial activity. “In 2018, the global economy maintained relatively high growth rates, but political events,” he said, “have had an increasing impact on global financial markets during the year, in a context in which global funding conditions have tightened and financial markets have experienced increasing volatility”.
Regarding the Spanish banking industry, the Chairman emphasised the progress made in reducing non-performing loans, as well as the resilience that Spanish banks have demonstrated following the stress tests conducted by the European Banking Authority, “although,” he noted, “profitability continues to be the main challenge”. Oliu went on to add that in 2018 “Spanish financial institutions have been affected by a more complex and less predictable regulatory framework and an increasing sensation of legal uncertainty deriving from certain legal rulings, such as the potential retroactive effect of stamp duty and the possible revision of the mortgage loans index, or IRPH as it is known in Spain, by the Court of Justice of the European Union”.
Reflecting on the business year ended in 2018, he highlighted the year-on-year growth of the banking business (+2.9%) and performing loans (+3.2%), the sales of non-performing asset portfolios for a total of 13 billion euros, the sale of 80% of the share capital of Solvia and the IT migration of TSB, the Group’s subsidiary in the United Kingdom. In relation to the latter, Josep Oliu said that this project “has, without a doubt, characterised the year, as it has marked the end of a long and complex technological and investment process that began in 2015 and has allowed TSB to be equipped with a new technology platform, which will enable it to grow its business and increase its efficiency”.
The Chairman also took a detailed look at the various items included in the meeting agenda, and ended his speech indicating that the focus over the next few years will continue to be on maintaining a strong level of capital through the generation of profits and, where applicable, strategic alliances with benchmark partners that will allow capital to be optimised. “The fundamentals of Banco Sabadell,” he concluded, “remain solid and the future of the bank is centred on value creation. We will develop the business in our three main geographies, Spain, the United Kingdom and Mexico, and our entire organisation and strategic approaches are geared towards the improvement of efficiency and the achievement of a cost of risk that is in line with the business model, in order to achieve profitability levels which are above the cost of capital.”
The CEO’s speech
The Chief Executive Officer, Jaime Guardiola, focused his speech on providing an in-depth review of the company’s management and the development of the business, and on explaining the key figures achieved in the year. He summarised the year’s activity and achievements in five aspects: TSB's IT migration, the clean-up of practically all of the non-performing assets, the high generation of core revenue, thanks to outstanding commercial activity, the definitive leap in the digital transformation and the leadership in customer service.
Guardiola indicated that in 2018, excluding the extraordinary impacts of TSB’s IT migration and the institutional sales of non-performing assets, net profit in the year increased by 9.6% to 783 million euros. “Despite their negative effect,” he said, “both of these milestones are extremely important given their strategic implications and because they will make a key contribution to improving profitability going forward”.
During his speech, Guardiola highlighted that, in the current environment, marked by lower-for-longer interest rates, the bank, thanks to its outstanding business performance, has the capacity to generate income on a recurring basis, as a result of which, for yet another year, the net interest income as a percentage of average total assets in Spain is the highest among the main financial institutions in the country. The CEO also emphasised that, at the end of 2018, 33% of Spanish companies were customers of Banco Sabadell, although this percentage rises to 52% in the case of SMEs and 69% among large enterprises. “The intensive business activity carried out,” he indicated, “has also raised the main market shares among individuals. For example, the market share of lending has increased to 5.49%, while the market share of credit card turnover stands at 7.79%”.
Speaking about TSB’s new platform, Jaime Guardiola declared that it “will provide a number of benefits, as it facilitates the creation of new products, speeds up the time of market, is ready to be adapted to the open banking model and allows for easier upgrades. Ultimately, it will enable us to take a leap in terms of efficiency and offer an improved customer experience.” In relation to customer experience, he also explained that “in 2018, Banco Sabadell has once again been ranked top in terms of customer experience by Spanish companies, with an NPS of 34% for large enterprises and 16% for SMEs. In the individuals segment, the bank is ranked second in personal banking and third in retail banking”.
Jaime Guardiola ended his speech with a general overview of the progress that the bank has made in its digital transformation, concluding that “we are focused on the implementation of our strategic business plan. Our primary objective is to increase our profitability by growing our business, and to improve the efficiency of the markets in which we operate. At the same time, we will continue to adhere to three fundamental pillars to ensure the long-term sustainability of our business: honouring our brand promise, continuing to focus on our digital transformation and capturing the best talent to achieve our business objectives”.
