Banco de Sabadell, S.A.

Reported Q2 recurring net profit was EUR 691 million, up 8.4% quarter-on-quarter. Net interest income increased 3.4% quarter-on-quarter and fees rose 4%; total provisions were EUR 152 million; recurring costs were broadly stable ex one-offs; recurring RoTE was 13.6% and reported RoTE was close to 15%. Performing loans increased 3% quarter-on-quarter and 5.5% year-on-year to EUR 125 billion, while customer funds increased 1.8% quarter-on-quarter. One-offs were a positive net impact of EUR 249 million in Q2, including a EUR 340 million gross capital gain from the TSB sale and EUR 37 million of remaining early-retirement costs. CET1 stood at 13.11%, the loan-to-deposit ratio was 93%, NSFR was 131% and LCR was 188%. Guidance: management reaffirmed a 14.5% RoTE target for 2026 and 16% for 2027; it expects NII to grow more than 1% in 2026, fees to grow in the mid-single-digit range, recurring cost growth below 3%, and cost of risk around 40 basis points.

Marc Dulcet framed Sabadell as a simpler, Spain-focused bank after the TSB sale, with a strong foundation in technology and capital generation. He said his top priority is delivering the existing 2025-2027 plan, while also building toward a more fee-driven model by investing in AI, internal process redesign, and higher-value customer segments. His tone was reassuring and committed, repeatedly saying the bank is on track to meet targets and that profitability should improve in the second half.

Sergio Palavecino emphasized that Q2 core earnings improved as expected, with NII up 3.4% quarter-on-quarter, fees up 4%, recurring costs broadly flat ex one-offs, and cost of risk at 40 basis points. He said the TSB sale created a EUR 340 million gross capital gain and that one-offs had a EUR 249 million positive net impact in Q2. He also said the early-retirement plan should generate EUR 20 million of savings in H2, recurring cost growth is now expected below 3%, CET1 was 13.11%, and the quarter still generated 20 basis points of capital after a 60% payout accrual.

Analysts focused on the strategy under the new CEO, deposit pricing, fee growth, loan growth by segment, provisions, AT1 costs, and future capital returns. Management said it will stick to the current strategic plan through 2027, then present a new plan later, and that the push into AI and higher-value customers should make the P&L more fee-based over time. On deposits, management said it is not chasing balances at any price and that the quarter’s loan-to-deposit move from 92% to 93% was expected; on provisions, they said the first-half level looks like the recurring run-rate and that the full-year cost of risk should remain around 40 basis points.