One year after the restructuring of its top management, Banco Sabadell considers that it is fulfilling its new roadmap. After sacrificing the 2020 accounts to start the new stage almost from scratch in the midst of the pandemic and showing a strong profit one year later, the results for the first quarter of 2022 maintain that trend. It earned €213 million through March, an improvement of 192%. Its business improved, the reduction of expenses after two employment regulation files is noticeable and, despite the consequences that the war in Ukraine may have, the bank has continued to reduce provisions and allocations at a rate of 36%.
“We started the year improving all margins and continuing the improvement in cost reduction after the completion of the efficiency plan,” says the CEO of the banking group, César González-Bueno, in a statement, in which he assures “being in line ” with the waybill marked with its arrival. The bank considers that the capitalization ratios have improved substantially and considers that non-performing loans maintain “stable levels”, although the Bank of Spain has warned that the rise in energy prices jeopardizes the payment of 94,000 million credits. In its report sent to the CNMV, the entity admits that the consequences of the invasion of Ukraine “possibly have a structural nature, that they remain beyond the duration of the military conflict”
In the first three months of the year, the banking business, which includes the interest margin plus commissions, grew by 3.6% and reached 1,217 million euros, although the bank acknowledges that this volume represents a contraction of 3.5 % compared to the October-December period of last year, much more positive for the results due to the seasonality effect. Only net commissions grew by 5%.
The efficiency plan, which has led to the departure of bank employees, has made it possible to reduce costs by 5.6% during the quarter, which stood at 726 million. The Vallesan entity expects that this reduction will lead to a joint saving of 110 million euros in 2022.
Regarding TSB, the British subsidiary of Sabadell, its contribution was once again positive: 19 million euros compared to 2 million in the same period of 2021. The subsidiary has seen its net commissions grow by 9.7% year-on-year in the first quarter, while costs fell 7.9%. The results coincide with the appointment as CEO of TSB of Robin Bulloch, who last year had managed the entity on an interim basis.
The bank’s capitalization improved in the first quarter. The CET1 ratio fully-loaded it gained 27 basis points compared to the end of 2021 and stood at 12.45%. The liquidity coverage ratio reaches 235% within the group. Despite warnings from the regulator, the bank claims that the cost of credit risk has decreased. The bank’s troubled assets reach 7,508 million, of which 6,210 are doubtful loans and 1,299 million foreclosed assets. Asset coverage is 53%.
He knows in depth all the sides of the coin.
Banco Sabadell’s outstanding credit grew by 3.2% in the first quarter, to 154,672 million euros. This evolution is basically explained by the demand for mortgages, although consumer credit continues to grow strongly, standing at 371 million. Investment funds, for their part, grew by 6% in the year.
Customer funds on the balance sheet also increased (161,316 million, 4.9% more) compared to 2021, although time deposits have fallen by 17.2% because given the low interest rates, now on the rise, customers are choosing to leave those resources in their checking accounts.