Banco de Sabadell, S.A. (BNDSF) Q1 2025 Earnings Call Transcript

2025-05-10 11:46:46 ET

Banco de Sabadell, S.A. (BNDSF)

Q1 2025 Earnings Conference Call

May 8, 2025 3:00 AM ET

Company Participants

Lluc Sas – Investor Relations

César González-Bueno – Chief Executive Officer

Sergio Palavecino – Chief Financial Officer

Conference Call Participants

Francisco Riquel – Alantra

Cecilia Romero – Barclays

Ignacio Ulargui Lopez – BNP Paribas

Maksym Mishyn – JB Capital

Carlos Peixoto – CaixaBank BPI

Britta Schmidt – Autonomous Research

Pablo de la Torre – RBC Capital Markets

Ignacio Cerezo – UBS

Fernando Gil de Santivañes – Intesa Sanpaolo

Presentation

Lluc Sas

Good morning all, and welcome to the Sabadell Results Presentation for the First Quarter 2025. Today, we are joined by our CEO, César González-Bueno; and our CFO, Sergio Palavecino. The presentation will take the same structure as previous quarters. Our CEO will begin by outlining the key developments of the quarter, followed by a discussion on the most significant topics. Next, our CFO will cover financial results and balance sheet developments before our CEO concludes with some closing remarks.

Finally, we will open the floor for a live Q&A session. I will now hand over to César González-Bueno to kick off our presentation.

César González-Bueno

Thank you, Lluc. Good morning, everyone. I will start going through the key elements of this quarter in Slide 4. Firstly, the strong momentum in commercial activity continues. Performing loans grew by 5% and customer funds increased by more than 6% on the year.

Secondly, asset quality remains strong. The NPL ratio fell to a new low of 2.67%, which is 79 basis points less than in the previous year. This translates into a substantial reduction of the cost of risk. At the end of the first quarter, the group's total cost of risk stands at 35 basis points.

Thirdly, NII declined by 1.3% year-on-year due to lower interest rates and derisking carried out. It remains resilient in a lower interest rate environment. Fourthly, on the 31st of March, we started the first of our two share buyback programs, which together amounted to €1 billion. As of 2nd of May, we have already repurchased €213 million, representing 21% of the €1 billion announced and 86 million shares. Once we conclude the first program of €247 million, we will redeem the corresponding shares without waiting for the end of the second program, which amounts to €755 million.

Last but not least, our common equity Tier 1 fully loaded ratio reached 13.3% with 29 basis points of capital generation in the quarter. This proves the strength of our capital business model, which focuses on capital return. We can generate significant amount of capital while funding our loan book growth. And remember, this is after accruing a 60% payout for our shareholders. The return on tangible equity stood at 14.1% on a recurring basis. This is excluding the positive one-offs booked last year and including the equivalent amount of the bank tax for the last 12 months. We are well on track to meet our year-end target....

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