This article first appeared on GuruFocus .
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Revenue:Core revenues in line with expectations; NII at EUR3.6 billion.
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Performing Loans:Increased by 5.4% year on year.
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Customer Funds:Grew by 6.4% year on year.
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Asset Quality:Total cost of risk declined by 16 basis points to 37 basis points; NPAs decreased by 17% year on year.
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NPA Coverage Ratio:Improved to 64%, up 2 percentage points from last year.
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Shareholder Remuneration:EUR1.5 billion, including EUR700 million in cash dividends and EUR800 million in share buyback.
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Return on Tangible Equity:14.3%.
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Core Tier 1 Ratio:13.1% after deducting excess capital for distribution.
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Net Profit:EUR1.8 billion, a 3% decline year on year; adjusted net profit increased by 3.4% year on year.
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Loan Book Growth:Increased by EUR6 billion ex-TSB.
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Customer Acquisition:Significantly higher in December 2025 compared to December 2024.
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TSB Net Profit:GBP260 million for the full year, a 25% increase.
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TSB Return on Tangible Equity:13.5%.
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Cost of Risk:37 basis points for 2025, better than the 40 basis points guidance.
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Credit Ratings:Upgraded by Standard & Poor's to A- with a positive outlook.
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Capital Generation:196 basis points of capital generated in 2025.
Release Date: February 06, 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 ) reported a net profit of EUR 1.8 billion for 2025, aligning with year-end targets.
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The bank's asset quality improved, with non-performing assets decreasing by 17% year on year and a coverage ratio increase to 64%.
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Shareholder remuneration for 2025 was EUR 1.5 billion, including EUR 700 million in cash dividends and an EUR 800 million share buyback program.
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Return on tangible equity stood at 14.3%, and the core Tier 1 ratio was 13.1%, indicating strong capital generation.
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The bank's strategic plan targets for 2026 and 2027 are ambitious yet achievable, with a focus on execution and future growth opportunities, particularly in digitalization and AI.
Negative Points
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CEO Cesar Gonzalez-Bueno announced his resignation, which could lead to transitional challenges as Marc Armengol takes over.
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New mortgage origination in Spain decreased by 3% year on year, and the bank has been reducing its market share in new mortgage lending.
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Provisions at TSB increased by around 50% year on year, impacting the overall cost of risk.
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The bank's business was less dynamic than expected following the tender offer period, although commercial momentum has since been regained.
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The cost of risk is expected to remain at around 40 basis points in 2026, which could be seen as conservative given the current positive asset quality dynamics.
Q & A Highlights
Q: Why did Banco de Sabadell's growth slow in the fourth quarter, and what are the plans to recover growth? A: Sergio Palavecino Tome, CFO, explained that the slowdown was due to strong growth in the previous year's fourth quarter. Despite this, customer funds grew by over 6%, with significant growth in off-balance sheet products. The bank has regained commercial momentum, and December showed strong performance, indicating a positive outlook for volume growth.
Q: Can you provide details on the interest rate hedges and their impact on 2026 and 2027? A: Sergio Palavecino Tome, CFO, stated that the hedges on fixed-rate mortgages, which pay fixed and receive Euribor 6, have been impacted by declining Euribor 6 rates. However, this impact is expected to stabilize as Euribor 6 has flattened, and no further negative impact is anticipated under current rate levels.
Q: What are the expectations for loan book growth across different segments? A: Sergio Palavecino Tome, CFO, indicated that consumer loans are expected to grow at double digits, while SME and corporate loans are projected to accelerate to mid-single digits. Mortgage growth is expected to moderate to between 3% and 4%, contributing to an overall loan book growth of 6%.
Q: How does Banco de Sabadell plan to manage costs and ensure technological investment? A: Sergio Palavecino Tome, CFO, mentioned that the bank expects a 3% cost growth in 2026, with salaries growing at inflation rates, flat general costs due to efficiency initiatives, and increased amortization from IT investments. The bank is committed to investing in technology to support business growth.
Q: What is the impact of neobanks and fintechs on the deposit cost environment in Spain? A: Cesar Gonzalez-Bueno, CEO, acknowledged the impact of neobanks, noting that they excel in account acquisition but face challenges in cross-selling. Banco de Sabadell's digital account strategy has been successful in acquiring new clients, and the bank plans to reduce the interest rate on digital deposits to 1% to manage costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
