Banco de Sabadell, S.A.

Sabadell reported recurring net profit of EUR 691 million in Q2, up 8.4% quarter-on-quarter. Recurring RoTE was 13.6%, and reported return on tangible equity was close to 15%. Performing loans grew 3% quarter-on-quarter and 5.5% year-on-year to EUR 125 billion; customer funds increased 1.8% quarter-on-quarter, and NII rose 3.4% quarter-on-quarter while fees increased 4%. Total provisions were EUR 152 million, including EUR 115 million of loan-loss provisions, and cost of risk was 40 basis points. One-offs were a positive net EUR 249 million in Q2, including a EUR 340 million gross capital gain on the TSB sale and EUR 37 million of remaining early-retirement costs. CET1 stood at 13.11%. For guidance, management said it remains on track for 2026 targets, including more than 1% NII growth, recurring cost growth below 3%, cost of risk around 40 basis points, and 14.5% RoTE this year; they reiterated 16% RoTE by 2027. They also said customer margin is expected to exceed 290 basis points by year-end and confirmed a new EUR 331 million buyback.

Marc Dulcet framed Sabadell as a simpler, Spain-focused bank with strong capital generation and room to create more value through technology and higher-value client segments. He said the immediate priority is delivering the existing 2025-2027 strategic plan, then building on AI, process rework, and a stronger focus on fee-based income and high-value customers. His tone was confident and constructive, emphasizing that the slowdown linked to the hostile tender offer is behind them and that commercial momentum has clearly returned.

Sergio Palavecino highlighted that Q2 marked an inflection in NII, driven by customer volume growth, day count effects, and noncustomer NII from the ECB deposit facility rate and excess liquidity after the TSB sale. He said the EUR 37 million of late early-retirement charges completed the Spain efficiency plan, with EUR 20 million of savings expected in H2 and EUR 40 million recurring from 2027, and he improved cost guidance to recurring cost growth below 3%. He also cited cost of risk at 40 basis points, CET1 at 13.11%, organic CET1 generation of 61 basis points before items, and said capital deployment remains active through buybacks and managed securitizations.

Analysts focused on Sabadell’s strategic direction, deposit pricing, fee growth, loan growth by segment, provisions, and capital returns. Management said the current strategic plan remains the priority through 2027, but they are already thinking about a future plan centered on AI, more efficient processes, and a greater mix of fee income from higher-value customers. On deposits, management said the higher online deposit cap is about acquiring the right customer profile rather than chasing balances, and they said the quarter’s lower deposit line was affected by repo activity rather than weaker customer deposits. On provisions, they said Q2 provisions were above Q1 because of scenario updates and that the first-half level better reflects the run rate; on fees, they reaffirmed mid-single-digit growth for the full year despite a softer first half.