This article first appeared on GuruFocus .
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Net Interest Income (NII):Increased by 3.4% quarter-on-quarter.
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Fees:Grew by 4% quarter-on-quarter.
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Recurrent Net Profit:Reached EUR691 million, an increase of 8.4% quarter-on-quarter.
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Performing Loans:Grew by 3% quarter-on-quarter and 5.5% year-on-year, reaching EUR125 billion.
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Customer Funds:Increased by 1.8% quarter-on-quarter.
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One-off Costs:EUR37 million booked this quarter, totaling EUR92 million for the first half of the year.
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Share Buyback Program:New EUR331 million share buyback announced.
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Return on Tangible Equity:Recurrent profitability at 13.6%, with reported return close to 15%.
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Cost of Risk:Stood at 40 basis points, in line with guidance.
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Liquidity Coverage Ratio:188%, above regulatory requirements.
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CET1 Ratio:Stood at 13.11%.
Release Date: July 24, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Banco de Sabadell SA ( BNDSF ) has regained commercial momentum, with performing loans growing by 3% quarter-on-quarter and customer funds increasing by 1.8%.
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The bank's net interest income (NII) grew by 3.4% quarter-on-quarter, and fees increased by 4%, indicating strong revenue growth.
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The sale of TSB generated more than 400 basis points of capital, allowing Banco de Sabadell SA ( BNDSF ) to pay an extraordinary cash dividend of $0.50 per share.
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Banco de Sabadell SA ( BNDSF ) completed its EUR800 million share buyback program and announced a new EUR331 million share buyback, demonstrating a commitment to shareholder returns.
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The bank's asset quality continues to improve, with a declining non-performing loan (NPL) ratio and a stable cost of risk at around 40 basis points.
Negative Points
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Banco de Sabadell SA ( BNDSF ) recorded EUR37 million of one-off costs from an early retirement program, impacting short-term financial results.
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Despite strong loan growth, the bank's deposit growth is lagging, which could pressure the loan-to-deposit ratio.
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The bank's recurrent costs increased by 4.9% year-on-year, driven by higher depreciation and amortization.
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There is ongoing pressure on service fees due to competition and structural changes in the market.
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The bank's cost of risk remains stable at 40 basis points, but there is limited room for further decline despite a healthy economic backdrop.
Q & A Highlights
Q: Can you comment on your strategic priorities and any plans for a new strategic plan? Also, why have you changed your online deposit offering? A: My top priority is to deliver on our current strategic plan, aiming for a 14.5% return on tangible equity. We see opportunities in leveraging AI to enhance customer relationships and internal processes. We aim to compete in high-value customer segments, which will shift our income structure towards more fee-based revenue. Regarding deposits, our online campaigns aim to attract loyal customers rather than just funds, and our cost of funds remains stable at 78 basis points. - Marc Armengol Dulcet, CEO
Q: Are you more optimistic about fee growth, and what is your outlook for loan book growth in the corporate segment? A: We are optimistic about fee growth due to strong commercial momentum, expecting mid-single-digit growth. For loan book growth, we see strong quarter-on-quarter performance in mortgages and consumer loans, with SMEs and corporates also showing robust growth. We are comfortable with our guidance. - Marc Armengol Dulcet, CEO
Q: Can you explain the higher provisions in Q2 despite declining NPLs? A: The provisions in Q2 reflect updated scenarios and should be seen as part of a normal run rate. The cost of risk is expected to remain around 40 basis points for the year, consistent with our guidance. - Sergio Palavecino Tome, CFO
Q: What are your plans for the insurance joint venture after it expires next year, and how do you see the mix of remunerated deposits evolving? A: We are evaluating options for the insurance joint venture, balancing service quality and cost. Regarding deposits, the mix has remained stable, and we focus on acquiring transactional customers to enhance loyalty. - Marc Armengol Dulcet, CEO
Q: Could you clarify your capital distribution policy and M&A strategy? A: Our policy is to distribute 40% to 60% of profits, with excess capital over a 13% ratio also distributed. We plan three payments annually. On M&A, while scale is important, current conditions do not favor consolidation, and we focus on standalone plans. - Marc Armengol Dulcet, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
