The bank leaves behind the barely two million earned in 2020 driven by the contribution of its British subsidiary TSB
The entity anticipates in one year the profitability objective that was marked in the strategic plan presented in May
Radical change. Banco Sabadell multiplied its profits last year up to 530 million euros, after barely two million the previous year, marked by the pandemic. One of the elements that has allowed it to obtain these results has been the promotion of its British subsidiary, TSB, which contributed 118 million, 22.3% of the total, which contrasts radically with the losses of 220 million a year ago.
As a result of this evolution, the entity the profitability target has been advanced by one year of its strategic plan, presented last May. The bank, which broke off negotiations for a merger with BBVA more than a year ago, ended 2021 with a return of 5% and expects to achieve a return on tangible assets (ROTE) of 6% this year. TSB’s positive contribution has been noticeable in recent quarters. In fact, it is subject to a cutback plan that has increased its profitability.
Income from the banking business, which includes interest margin and net commissions, reached 4,893 million euros as of December 31, 3% more than the previous year, and the interest margin increased by 0.8%, up to the 3,425 million. Net commissions total 1,468 million, 8.7% more, as a result of the positive evolution of asset management commissions, as well as services. For its part, recurring costs amounted to 2,988 million euros, 2.3% less than in 2020 due to the improvement in the item of personnel expenses in Spain and general expenses in TSB.
The entity, which has turned 140 years old, has carried out a significant workforce adjustment in Spain this past year: in January it gave the green light for the departure of 1,817 employees through early retirement and voluntary redundancies, and in October an ERE was agreed with the unions for 1,605 workers. The efficiency plan launched by the bank will mean annual savings of 130 million euros in Spain: 85% of these savings -110 million- will materialize in 2022. Last December it announced the sale of the emblematic building it has in the Diagonal Avenue in Barcelona to Hines for around 90 million euros.
Through a statement, the CEO of Sabadell, César González-Bueno, who took over the reins of the bank in March last year, highlights that the entity has closed “a good year with a new team, governance, organizational structure and strategic plan”, and stresses that the digital transformation, the turn of TSB, the commercial push and the labor agreement have contributed to the improvement of the results. “We have anticipated the profitability objective of our plan by a year and we face the future of this great franchise with optimism,” he highlights.
For his part, the financial director, Leopold Alvear, points out that they have gained market share in Spain and the United Kingdom, increased credit investment and improved its solvency position. “The execution of the efficiency plans and the cost savings have had a positive impact on the accounts for the year and we will continue to see this in the results of the successive quarters,” Alvear advances.
Sabadell closed last year with an outstanding loan balance of 154,912 million euros and a 6.7% growth in investment in this segment. Mortgage production also maintains the positive trend in Spain and reached 1,369 million in the quarter, 5% more year-on-year. In the United Kingdom, the signing of new mortgages reached 2,169 million pounds in the quarter, 56% more than in the same period of 2020. In fact, TSB “closes the year with the best mortgage production data in its history “, remarks the group that presides over Josep Oliu.
At the end of 2021, the group’s on-balance sheet customer funds totaled 162,020 million euros, an increase of 7.5%, while sight account balances totaled 147,268 million (+13%) and non-foreign funds balance, 41,678 million (+9.5%). For their part, time deposits decreased by 28.8%, to 14,813 million.
According to the data provided by the entity, the delinquency ratio remains stable at 3.65%. Problematic assets total 7,565 million euros, of which 6,203 million are doubtful loans and 1,362 million foreclosed assets. The coverage of problematic assets stands at 53.1%. The fully-loaded CET1 capital ratio, the highest quality, stands at 12.18% and the liquidity ratio reaches 221% at group level.