Banco de Sabadell : Sabadell’s profit up to September amounted to €646.9 million, 11.6% more

28/10/2016

Banco Sabadell closed the first nine months of 2016 with anet profit attributedto the Group of €646.9 million, 11.6% more than in the same period in 2015.Net interest incomecontinued to perform well, with a 29.0% increase up to September, reaching €2,890.9 million. Excluding TSB, net interest income increased by 5.9% year-on-year and remained stable quarter-on-quarter.

The third quarter of 2016 has been characterised by the stability of results and, specifically, by the solidity of profit before tax, with a 41.5% increase to €320.1 million between July and September, thanks to the resilience of the Group's net interest income. Furthermore, the cost of term deposits and wholesale funding continues to decline.

The fully-loadedCommon Equity Tier 1(CET 1) ratio increased to 12.0% as of 30 September 2016.

Income from netfees and commissionsshowed an 8.9% increase year-on-year (1.8% excluding TSB) due to the positive performance of asset management. The positive quarterly performance of service fees was notable in this heading.

Reduction of €634.4 million in problematic assets

The strategy involving the accelerated sale of assets continues to be applied successfully, as shown by the reduction of €634.4 million inproblematic assetsduring the third quarter, including a reduction of €157.7 million inforeclosed assets, a record quarterly reduction. At the end of September, the balance of non-performing loans stood at €10,158.0 million, and the volume of problematic assets has been reduced to €19,265.1 million.Problematic assetsoverall have been reduced by €6,763 million since 2014, and by €3,084.7 million over the last twelve months.

The Group'sNPL ratiocontinues its downward trend, standing at 6.60% at the end of September; it has been reduced by half in less than three years, as in December 2013 it amounted to 13.6%. The NPL coverage ratio stood at 52.9% at the end of the first nine months of 2016.

Provisionsduring these nine months totalled €1,113.5 million, a 43.0% reduction compared with the same period last year, when they amounted to €1,955.2 million. In quarterly terms, provisions have declined considerably to €211.7 million at the end of the third quarter, compared with €466.9 million at the end of the second quarter.

At the end of the third quarter of 2016,net trading income (NTI)totalled €556.7 million (€502.1 million excluding TSB) and included, amongst others, €378.7 million from the sale of available-for-sale fixed-income financial assets.

Outstanding credit volumesincreased by 2.1% at the end of the third quarter of 2016, compared with the same period in the previous year, and ended September with a balance of €137,856.4 million. Totaloff-balance sheet customer fundsamounted to €39,711.1 million at the end of the third quarter of 2016, an 11.2% increase compared with the previous year (a 5.7% increase quarter-on-quarter), and on-balance sheet customer funds increased by 0.9% year-on-year.Equity in mutual fundsamounted to €22,220.4 million as of 30 September 2016, representing a 9.0% increase year-on-year (5.2% quarter-on-quarter).

Market sharescontinued to improve during the third quarter, strengthening the bank's position in the Spanish market. The increase in the market share of POS turnover was notable, increasing to 14,31%, compared to 13,31% in September 2015, as was the improvement in individuals' card turnover (7.59% vs. 7.11%), life insurance (5.41% vs. 5.10%), household deposits (6.05% vs. 5.60%) and mutual funds (6.07% vs. 5.86%). Furthermore, these increases are produced in parallel to the improvement in service quality, according to research by STIGA and EQUOS, where Banco Sabadell was rated at 7.66 compared to the sector average of 6.96.

Digital Transformation: the objectives have been achieved

Banco Sabadell has achieved the objectives that it set itself for its Digital Transformation process. Since 2013, online customers have increased by 15%, and mobile customers have soared, with a 145% increase. 86% of transactions performed by the bank's customers are carried out using remote channels, and 19% of available online products are sold through digital channels.

Digital Transformation also has an impact on the way managers operate. 3,500 tablets have been distributed throughout the branch network, to help managers bring our banking services and products to our customer's homes through mobile devices. In the last four weeks, the number of registered mobile Proteo users has quadrupled.

TSB: profit before tax (excluding one-offs) increased by 95.4%

TSB is successfully implementing its strategy.Profit before taxexcluding one-offs increased to £149.3 million in nine months, a 95.4% increase compared with the £76.4 million reported for the same period in 2015.

TSBlendinghas increased by 28.2% year-on-year, reaching £28,630.0 million, and the volume of deposits increased by 14.1% to £28,956.0 million, as a result of the increase in the market share and customer trust in TSB. 6.8% of customers who have changed bank accounts or who have opened a new account in the United Kingdom so far this year have chosen TSB.

The franchise'svolume of mortgage loansincreased by 23.7% during the year, reflecting a strong mortgage demand. Specifically, mortgage renewals increased by 18%, and in August TSB received a record number of requests. The market share of new current accounts stood at 6.8% YTD, far higher than the target of 6.0%.

Other key developments

Issuance of €1bn in covered bonds

Banco Sabadell has continued to optimise the cost of funding with its successful issuance of €1bn in 7-year covered bonds. The operation was priced at one of the lowest yields ever in the periphery.

Over 2,000 start-ups are Banco Sabadell customers

Banco Sabadell, a pioneer in the specialisation of branches and services for start-ups, has taken part in South Summit once again this year through BStartup, its support programme for entrepreneurs. In its two and a half year history, BStartup has become a reference programme for entrepreneurs, who have recognised the bank's efforts to better understand their business and funding models, creating specific branches and risk circuits. Since its creation, lending operations have been formalised for over 2,000 start-ups, totalling €68 million.

Extension of facilities in Casablanca

The Chairman of Banco Sabadell, Josep Oliu, visited Morocco at the beginning of September, where the entity's facilities in Casablanca had recently been extended. Oliu presented Banco Sabadell's expectations and projects in Morocco. Banco Sabadell has been present in Morocco since the end of 2009, and most of its activity focuses on the management of business relations between Morocco and Spain, working together with Spanish companies in this country. It should be noted that, over the last two years, Banco Sabadell has extended its management scope to Moroccan companies with a close relationship with Spain and which are ranked in the local TOP 500.

Sabadell Wallet integrates Bizum

Sabadell Wallet, the app for paying for purchases using your mobile, has integrated the Bizum system into its service to send and request money to and from contacts saved in the address book, from mobile to mobile, without needing to know the account numbers. Splitting bills, asking for a contribution or sharing expenses is now very simple, customers just need to select a contact and indicate the amount that they wish to send or request.