Sabadell Bank It will present an annual profit of 393 million euros this Thursday, according to market consensus estimates, while in the third quarter of the year profits amounted to 370 million.
The fall occurs when experts estimate that Banco Sabadell will charge in last year’s accounts the provision of 296 million euros to finance the ERE of at least 1,380 workers announced in October.
The benefit would rise to 545 million euros if the consensus excluded this impact from its estimates.
Earnings would still be lower than the 768 million euros earned in 2019, while in 2020 it earned 2 million after provisioning 2,275 million to clean up the balance and deal with the coronavirus.
Capital gains from renting and Andorra
Experts believe that cost reduction program started in 2021 with the departure of 1,800 workers It will already be noted in the accounts of the fourth quarter of the year.
The consensus estimates profits of 4.6 million euros for the period from October to December because of the extraordinary.
The sale of the car rental business to ADL Automotive for 59 million euros and that of the Andorran subsidiary for Morabanc for 68 million will help benefits. Capital gains of 10 million are expected from the last operation.
Banco Sabadell will use the sale of a fixed income portfolio worth 3,700 million to finance the workforce adjustment.
The formula of going to the result of financial operations (ROF) to finance the exit was also used in the previous ERE with the use of 4,000 million euros of debt.
The strategy will have a direct impact on the interest margin, which would close 2021 at 3,430.5 million euros and less than the 3,399 million in 2020 and the 3,622 million in 2019.
The “fully loaded” CET 1 capital ratio would end the year at 12.25 percent, according to expert projections, in line with the 12.6 percent of the previous year and the 12.4 percent of 2019.
TSB as engine for Banco Sabadell
The market will pay special attention to the figures released by its British subsidiary, TSB. The bank became a major engine for Banco Sabadell accounts during the first nine months of 2021.
The efforts to make TSB profitable bore fruit at the end of September 2021 with a profit of 82 million euros, which represented 22.1 percent of all the group’s net profit.
Analysts expect that profits go higher once the CEO’s strategy is implemented of Banco Sabadell, César González-Bueno.
The first step is a cost reduction plan with the closure of 70 branches of the subsidiary this year, but without layoffs, since the 150 affected will be able to relocate within the TSB itself.
Savings of 130 million per year
The reason for the closure is that 90 percent of the transactions of TSB clients are made over the Internet and for operations such as mortgages, 90 percent are by videoconferences, put forward the British subsidiary.
The boost that TSB is providing to Banco Sabadell is the best argument to defend González-Bueno’s decision to reject the offers that have come or will come from the entity, although one of them was for 1,180 million euros.
González-Bueno hopes that the subsidiary will be a great lever forAchieving the target of 670 million euros in profit in 2023, in addition to continuing to implement the adjustment plan to accelerate the fulfillment of the goals.
Once the conditions of the ERE have been closed with the unions, Banco Sabadell expects that the efficiency plan in Spain, along with other cost control measures, translate into 130 million euros of savings per year.
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