The entity increases the portion of the profit that it allocates to the payment of dividends to a minimum of 40%
The Spanish banking results round shows that entities have been able to benefit from the favorable environment represented by the rise in interest rates for the sector. Banco Sabadell announced on Thursday that it had made a net profit of EUR 709 million between January and September, almost double the EUR 370 million in the same period of the previous year.
As reported by the entity to the National Securities Market Commission (CNMV), earnings would be 616 million without taking into account TSB’s contribution, compared to 288 million last year.
The British subsidiary has long overcome the technological integration problems it has endured in recent years and has now become one of the drivers of the group’s revenues. Especially in an environment where the Bank of England has led the way with the rest of the monetary institutions in withdrawing incentives and raising interest rates.
The entity thus far exceeds the targets set out one year in advance in its strategic plan, including in terms of profitability (measured in terms of RoTE), which stands at 8% over the period (compared to the 6% forecast for the year ). A situation that makes it possible to bring joy to shareholders.
Specifically, the board of directors has agreed to increase the ‘pay out’ (percentage of profits that go to dividend) this year to 40% compared to the previous 31%. Similarly, the payment of an interim dividend on the 2022 results of EUR 0.02 gross per share in cash, to be paid on December 30, is approved.
There have only been two years in which the bank made more money: 2006 and 2017, when the entity made a profit of around 800 million euros. And it is close to recovering those figures, thanks also to the improvement of its commercial activity and the good performance of the credit segment, with an increase of 6% in companies above 2,000 million euros and 7% in mortgages to 1,472 million euros euros.
Banking income, ie interest margin plus commission income, amounted to EUR 3,840 million, almost 6% more than last year. Meanwhile, costs were reduced by about 15% to 2,162 million because, despite the negative impact of inflation, the adjustment process of the entity in Spain also weighs on.
In an environment where there are fears of an increase in defaults in certain segments of the portfolio as a result of deteriorating macroeconomic conditions, Sabadell’s impaired assets amounted to 7,039 million euros at the end of September. Of that figure, 5,830 million are non-performing loans and 1,209 million are ring-fenced assets.
«The coverage of problem assets in which the total provisions are included is 52.3%, with the coverage of doubtful loans (so-called ‘stage 3′) with the total provisions of 55.1% and 38.9% for exploited assets’, they indicate from the entity .
For now, as in the rest of the industry, Sabadell has managed to keep the NPL ratio at bay, which is currently at 3.40% from 3.59% a year ago.
The CEO, César González-Bueno, has emphasized that “we are again showing good results this quarter. We are all giving the best of ourselves to continue developing our vocation for customer service, in line with the best tradition of Banco Sabadell.” Similarly, González-Bueno emphasized that “we closed the third quarter with intense commercial activity and met all our targets”.
For his part, Banco Sabadell’s chief financial officer, Leopoldo Alvear, confirmed that “our risk profile continues to improve year-on-year, the NPL ratio remains low and our solvency ratio stands at 12.52%, representing an improvement of 34 bps. in the first nine months of this year».
Source: La Verdad
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