The CEO of Banco Sabadell, César González-Bueno, recalled in his speech at the Goldman Sachs Banking Conference in Madrid today that Banco Sabadell plans to return €2.4 billion to shareholders over financial years 2024 and 2025, this is equivalent to 0.45 euros per share.
On 6 May, Banco Sabadell informed the CNMV: “As part of its firm commitment to shareholder value creation and backed by the entity’s business plan and solid capital generation, the Board reiterates its commitment to distribute to shareholders, on a recurring basis, any excess capital above 13% of the pro forma Basel IV CET1 ratio. The excess capital to be generated in 2024 and 2025, together with recurring dividends for this period based on a satisfactory fulfilment of the current business plan, is estimated to be €2.4 billion. Part of this may be subject to supervisory approval.”
As stated by César González-Bueno, the target price that analysts assign to Banco Sabadell shares has increased by 25% since the first quarter 2024 presentation of results. Likewise, these prospects are supported by the improvement of the credit risk rating granted by Fitch Ratings and by the incorporation into the MSCI World Index.
Focussed on profitable growth
CFO of Banco Sabadell, Leopoldo Alvear, commented that as announced at the company’s 1Q2024 results. the return of tangible equity (ROTE) of Banco Sabadell was 12,2%, in line with the annual goal. The entity estimates that 2025 will be even better, thanks to various key effects:
- Good net interest income performance: An optimal evolution of the interest margin in Spain is expected for 2024, with a significant additional contribution from TSB from 2025 thanks to its structural coverage.
- Cost containment thanks to a rigorous management.
- Cost of risk reduction: The improvement of recent years will continue thanks to the multiple initiatives implemented in risk management in both new lending and recovery.
- Improved profitability at TSB: Profitability will further improve from 2025 onwards due to the good performance of net interest income and the ongoing cost reduction programme.
In addition, the positive outlook for the macroeconomic environment in Spain will help improve profitability. Proof of this is the good performance of the share price of banks focused on domestic business during 2024.
As stated by CEO, César González-Bueno, “at Banco Sabadell, our commitment to shareholder value generation remains a priority, as demonstrated by the commitment to distribute €2.4 billion to shareholders”.
Strategic priorities
Banco Sabadell has established clear strategic priorities for each of its businesses.
- Business Banking is focussed on delivering growth and CoR optimisation.
- Retail Banking is prioritising the expansion of customer base through digital capture and growth in mortgage volumes, while consumption shows great dynamics on last quarters.
- Corporate Banking, Banco Sabadell is centred on volume growth, focusing on profitability on invested capital.
Finally, with respect to TSB, it is managing an ambitious plan to reduce costs to continue improving its efficiency ratio. Since 2020, TSB’s cost to income ratio has made significant improvements.
Banco Sabadell is commited to its strategy to deliver value for its shareholders and all stakeholders, as it continues to grow profitably.
