Sabadell Achieves Record Profit and Increases Dividend Awaiting Takeover Bid

Banco Sabadell earned 791 million euros between January and June this year, a record figure for this period and 40.3% higher than last year's earnings due to business growth and lower provisions, as communicated by the Alicante-based entity to the National Securities Market Commission (CNMV). The bank leads the Ibex 35 gains at Tuesday's opening, advancing by 1.45%, which brought its share price to 2.026 euros per share following this announcement.

The net interest margin grew by 9.8%, reaching 2.493 million euros, driven by an increase in the customer margin (3.18%), while commissions stood at 674 million euros, a decrease of 3.3%. Banking business revenues (net interest margin plus net commissions) reached 3.168 million euros between January and June 2024, a 6.8% increase year-on-year and 1.6% above the previous quarter.

The entity has explained, through a statement, that the profit increase is due to the strong business growth rate—especially in SME and corporate financing—and mortgages, as well as the constant improvement in credit risk profile, "which has allowed for an improvement in asset quality and a reduction in provisions."

Meanwhile, total costs amounted to 1.515 million euros up to June, representing a year-on-year increase of 2.5%. Given the increase in banking business revenues and cost containment, the recurring margin (net interest margin plus commissions minus costs) grew by 11% year-on-year, reaching 1.652 million euros, and the efficiency ratio improved by 3.8 percentage points to 48.3%.

The entity's CEO, César González-Bueno, highlighted that "Banco Sabadell's strategy is yielding results." "Looking ahead, we are convinced that we have a bright future with greater value creation as we continue executing our strategy independently," González-Bueno pointed out amid BBVA's takeover bid for Sabadell.

The CFO, Leopoldo Alvear, added that "the evolution of recent quarters allows us to anticipate further increases in profitability and earnings in the coming years."

Thus, the various payments planned over these two years will total 0.53 euros per share, equivalent to 27% of the entity's market capitalization.

The first payment will be made next October and will consist of an interim cash dividend of 0.08 euros per share, amounting to a total disbursement of 429 million euros, which is a 33% increase over the sum of the two dividends paid in the previous fiscal year.

These announcements come amid BBVA's hostile takeover bid for Banco Sabadell after the Catalan entity's board of directors rejected BBVA's merger offer presented in May.

In this regard, European Central Bank (ECB) Vice President Luis de Guindos assured in an interview with Europa Press that the institution's pronouncement on BBVA's public takeover bid (OPA) for Sabadell "will not be delayed much."

BBVA requested authorization from the ECB to launch the OPA on June 4th, which is one of the necessary steps for the National Securities Market Commission (CNMV) to approve the offer.

"We have around two months from when the communication was made to the ECB, so it will not be delayed much. It will be based on solvency and prudential criteria and will be communicated to the entity," Luis de Guindos indicated during the interview.