The Banco Sabadell Group has presented solid results for the first quarter of 2025, with a net profit of 489 million euros, which is a spectacular increase of 58,6% compared to the same period last year. This remarkable performance has boosted the entity's profitability, with a RoTE rises to 15%, marking an increase of 276 basis points year-on-year (14,1% recurring).
In addition to the significant improvement in its income statement, Banco Sabadell has strengthened its financial position, reaching a capital ratio of 13,31%During the quarter, the bank generated 29 basis points of capital, exceeding market expectations, and accumulating a year-over-year increase of 103 basis points.
The entity attributes these positive results to a increase in business volumes, driven by robust commercial activity, a improvement in asset quality which has allowed a reduction in provisions, as well as the constant growth of its British subsidiary TSB, supported by its interest rate hedging strategy.
The CEO of Banco Sabadell, Cesar Gonzalez-BuenoHe expressed optimism at the start of the year, highlighting that "we continue to deliver positive messages: We have a clear business model, which is working at an ever-increasing speed and which gives us a great capacity to generate capital for our shareholders."
In an announcement underscoring confidence in the bank's strength, González-Bueno added: “In the first quarter, we generated more capital than we had announced, allowing us to raise our shareholder return estimate once again. We estimate that for 2024 and 2025, the sum of dividends and share buybacks will total €3.400 billion.” The CEO also highlighted “the involvement and commitment of all teams” as key factors in the strength of the bank's independent project and the “rigorous execution of all our commitments.”
For his part, the financial director, Sergio PalavecinoHe highlighted the "strong quarter of activity" and the "very positive evolution of capital," which remains "sustainably above 13%." Palavecino also emphasized the "great financial strength" reflected in the bank's accounts and robust balance sheet, the increase in loan volume and customer deposits, sustainable profitability, and an improvement in the cost of risk "to levels more positive than the market expected."
César González-Bueno: “We have generated more capital than we had announced. We estimate that the sum of dividends and share buybacks in 2024 and 2025 will total €3.400 billion.”
Stable Income and Controlled Costs
Banking business revenues, which include net interest income and net fees, remained relatively stable in the first quarter of 2025, reaching €1.560 billion, a slight decrease of 0,7% year-on-year. Net interest income stood at €1.216 billion (-1,3%), while net fees grew by 1,3%, reaching €344 million.
Total costs remained in line with expectations, registering a slight year-over-year increase of 0,9% to €758 million. As a result, the recurring margin stood at €801 million (-2,3%), and the Group's efficiency ratio improved by 1,4 percentage points year-over-year, closing at 46,2%.
A key factor in the profit improvement was the significant 29,2% reduction in total provisions, which stood at €148 million at the end of March. This decrease is mainly attributed to the improvement in the entity's risk profile. The cost of credit risk decreased by 22 basis points year-on-year to 0,18%, and the total cost of risk decreased by 16 basis points to 0,35%, both below market expectations.
The bank also recorded €31 million in banking tax, which represents a quarter of the total estimated for the 2025 fiscal year.
Increase in Credit Activity and Customer Resources
In terms of commercial activity, Banco Sabadell experienced a 5,0% year-on-year growth in outstanding credit, reaching €158.308 billion. This increase was observed both in Spain, with a significant increase in corporate lending and the mortgage portfolio, and in international business.
On Spanish marketNew corporate lending grew 1% to €4.510 billion, while mortgage lending soared 81% year-on-year, reaching €1.645 billion. Consumer lending also showed significant strength, increasing 26% to €698 million.
This positive trend was also reflected in card activity, with a 6% increase in revenue to €6.060 billion, and in point-of-sale (POS) terminals, whose revenue grew 5% to €13.043 billion.
On the liabilities side, on-balance sheet customer funds increased by 4,5% year-on-year, reaching €168.751 billion. Demand account balances grew by 2,9% to €138.173 billion, and term deposits experienced a significant increase of 14,4% to €30.431 billion.
The customer resources Off-balance sheet assets also showed strong growth of 12,9% year-on-year, reaching €47.591 billion, driven primarily by the positive performance of investment fund subscriptions. In total, on- and off-balance sheet client funds amounted to €216.342 billion, 6,3% more than the previous year. The Group's total assets stood at €249.186 billion, an increase of 5,5%.
Greater Solvency and Shareholder Return
Solid results have allowed Banco Sabadell to continue strengthening its capital positionThe fully-loaded CET1 ratio stood at 13,31%, after generating 29 basis points in the quarter and 103 basis points year-over-year. The company plans to distribute all capital exceeding 13% CET1.
The phase-in Total Capital ratio stands at a robust 17,95%, well above regulatory requirements, with an MDA buffer of 441 basis points. The entity also enjoys a solid liquidity position, with a ratio of loan to deposit of 94,3% and an LCR (Liquidity Coverage Ratio) of 197%, backed by €63.148 billion in liquid assets.
Thanks to higher than expected capital generation, Banco Sabadell will increase its shareholder remuneration by 100 million euros this year.The total planned distribution from 2025 earnings will amount to €1.300 billion, including cash dividends and share buybacks, bringing the total compensation for 2024 and 2025 to €3.400 billion. The cash payment per share will be at least equal to that of the previous year.
Banco Sabadell has executed 21% of its share buyback programs planned for this year to date, totaling €1.002 billion. Following the completion of the first phase of the program, a new buyback program worth €755 million will be launched, with the aim of reducing share capital and improving shareholder returns.
Continuous Improvement of Balance Sheet Quality
Banco Sabadell's balance sheet quality continues to improve, with a reduction in non-performing assets of €286 million in the quarter (-5,0%) and a 19% year-on-year decrease. At the end of March, non-performing assets stood at €5.394 billion, of which €4.583 billion correspond to non-performing loans and €811 million to foreclosed assets.
As a result, the NPL ratio fell to 2,67%, marking its second consecutive quarter below 3%. This figure improves on the 2,84% of the previous quarter and the 3,46% of March 2024. Coverage of non-performing assets also saw strong progress, rising to 59,3%.
TSB Strengthens its Contribution to the Group
Banco Sabadell's British subsidiary, TSB, also presented positive results, with a standalone net profit of £74 million at the end of March 2025, representing a 96,1% year-on-year increase. This improvement is due to the strong performance of commercial activity, cost control, and the positive impact of interest rate hedging. TSB's contribution to the Banco Sabadell Group in the first quarter was €94 million.
TSB's net interest income grew 9,4% year-on-year to £261 million, while fees and commissions fell 28% to £18 million. Total costs decreased 7,3% year-on-year to £179 million. TSB's trading activity also showed strength, with a 15% increase in mortgage applications and a 12% rise in new mortgage loans issued, reaching £1.508 billion.
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