BSPress

Banco Sabadell obtained Euros 231.9 million in net profit and improved all business margins in 2011

2012-01-26T08:22:18+01:00

After Euros 1,048.9 million in provisions, earnings were 39.0% lower than in 2010.

Active capital management led to a core capital ratio of 10.30% (compared with 8.20% at 2010 year-end).

Net interest income rose 5.4% and the margin before provisions by 8.3%, exceeding market consensus expectations.
Strong organic growth improved the market share in all areas, and the bank added 342,000 new customers in 2011 to reach a total of over 2.7 million.

Despite the adverse economic situation resulting from prolonged economic weakness and persistent instability in the financial markets, Banco Sabadell met its objectives in 2011 and obtained consolidated results in line with expectations, evidencing the stability of the ordinary business and the measures undertaken to continue strengthening the balance sheet.

In 2011, the Bank's 130th anniversary, it obtained net attributable profit of Euros 231.9 million (39.0% less year-on-year) after booking NPL and other provisions amounting to Euros 1,048.9 million (up 8.4% with respect to 2010).

Key factors in the year included dynamic management of assets and liabilities, very good top line performance, strong growth in business volumes, an increase in supplementary provisions using extraordinary revenues, and improved capital ratios as a result of active capital management. Banco Sabadell also took major steps to grow its business in Spain, starting with the adjudication of Banco CAM.

Balance sheet

At 31 December 2011, Banco Sabadell and its group's total assets exceeded Euros 100,000 million for the first time (Euros 100,437.4 million), an improvement of 3.4% year-on-year.

Gross loans to customers increased by 0.8% with respect to 2010, to Euros 73,635.3 million. Personal loans rose notably, by almost Euros 2,000 million year-on-year.

Although delinquency in Spain increased in 2011, Banco Sabadell ended the year with an NPL ratio of 5.95%, notably below Spain's financial sector average (over 7%). Coverage of doubtful assets was 48.49% (115.84% including mortgage collateral).

At 31 December 2011, customer funds on the balance sheet amounted to Euros 52,827.0 million, a year-on-year increase of +7.0%. The balance of time deposits increased by a notable 9.1% in the period, to Euros 32,819.8 million.

In 2011, Banco Sabadell increased new customer additions by a record 43%, in the case of private individuals (+286,560), and 40%, in the case of companies (+55,536). At year end, and in line with the objectives of its 2011-2013 CREA plan, the bank had expanded its product and services market share and had over 2.7 million customers.

Loans to customers and customer funds on the balance sheet provided a jaws ratio of Euros 3,876.9 million in 2011.

Assets in mutual funds and collective investment vehicles totalled Euros 8,024.2 million at 31 December 2011, a decline of 9.4% year-on-year, in line with general market performance.

Assets in pension funds totalled Euros 2,858.3 million. Insurance sales increased by 3.5% year-on-year, to Euros 5,926.4 million.

Total funds under management in 2011 amounted to Euros 96,062.0 million.

Banco Sabadell maintained its leading position in the sector in terms of quality of service and was again ranked as one of the best banks in Spain in 2011. A total of 95% of new customers stated that their experience with Banco Sabadell met or exceeded their expectations.

Margins and profits

Active, detailed management of the spreads on assets and liabilities in 2011 enabled the bank to obtain higher operating margins than in 2010 and even surpass market consensus expectations.

Net interest income amounted to Euros 1,537.3 million in 2011, i.e. 5.4% more than in 2010 (‑4.4% including Banco Guipuzcoano throughout 2010).

Income from equity-accounted affiliates amounted to Euros 37.7 million, including a significant contribution from insurance and pension affiliates (Euros 14.3 million) and the investee banks in Latin America (Banco del Bajío in Mexico and Centro Financiero BHD in the Dominican Republic), which overall contributed Euros 21.1 million.

Net fees and commissions amounted to Euros 573.6 million, an increase of 11.1% year-on-year (+3.1% including Banco Guipuzcoano throughout 2010). Of special note were revenues from credit cards (+9.3% y/y), securities transactions for customers (+59.8%), and arrangement of syndicated loans (+21.3%).

Revenues from financial transactions and exchange differences increased by 29.9%, to Euros 341.2 million. That includes Euros 87.1 million from the debt-for-equity swap in 1Q11 (issue and placement of Banco Sabadell shares to tender for preference shares and subordinated debt).

As a result, the gross margin amounted to Euros 2,506.7 million (+7.5%).

Operating expenses amounted to Euros 1,145.1 million in 2011, including Euros 38.1 million in non-recurrent expenses.

In terms of constant consolidation scope (i.e. including Banco Guipuzcoano throughout 2010 and excluding the impact of the integration of Lydian Private Bank in the second half of 2011 and the sale and leaseback transaction in April 2010), operating expenses declined by 3.7% year-on-year in 2011. The cost/income ratio, excluding non-recurrent expenses, was 45.75%.

As a result of growth in revenues and favourable cost trends, net income before provisions totalled Euros 1,230.7 million, an increase of 8.3% year-on-year.

Loan-loss provisions amounted to Euros 512.4 million, compared with Euros 383.9 million in 2010. Real estate and financial assets were written down by a total of Euros 536.6 million.

Net income attributed to the group amounted to Euros 231.9 million, compared with Euros 380.0 million in 2010.

The Tier 1 capital ratio was 9.94% at year-end, compared with 9.36% at the end of 2010. The core capital ratio was 9.01% (8.20% in 2010), and increases to 10.30% including the Euros 718 million of preference shares exchanged for ordinary shares.

Other key developments in 2011

Adjudication of Banco CAM

On 7 December, Banco CAM, S.A. was adjudicated to Banco Sabadell by competitive tender in the process of restructuring Caja de Ahorros del Mediterráneo (CAM) undertaken by the Fund for Orderly Bank Restructuring (FROB).

Banco Sabadell's bid was strategic since Banco CAM will be a significant complement to its existing franchise in Alicante, Murcia, Valencia and the Balearic Islands.

Banco Sabadell will acquire 100% of Banco CAM once it obtains authorisation from the EU competition authority; the process is currently under way. By virtue of the signed agreement, Spain's Deposit Guarantee Fund (FGD) will acquire 100% of Banco CAM by subscribing one or more capital increases, for a total amount of Euros 5,249 million, and the bank will then be transferred to Banco Sabadell for one euro.

An asset protection scheme has been established by which the FGD will assume 80% of the losses on the asset portfolio over a period of ten years, once the provisions for those assets have been absorbed.

The adjudication also includes a commitment to support Banco CAM's liquidity; accordingly, the FROB will guarantee its access to certain sources of funding currently available to it.

The structure of this deal will allow Banco Sabadell to integrate Banco CAM without impairment of its balance sheet.

Adjudication of Lydian Private Bank in Florida

On 19 August, Sabadell United Bank, a Banco Sabadell subsidiary in Miami, Florida, was designated as successful bidder for Lydian Private Bank, which was in administration at the time, in a process organised by the Federal Deposit Insurance Corporation (FDIC).

Lydian Private Bank contributed 3.6 billion dollars in business volume, boosting the Sabadell group's total in Florida by 51% to 10.7 billion dollars (3.4 billion in loans and 7.3 billion in funds). Lydian's six branches were added to Sabadell United Bank's 19. The deal enables Sabadell to strengthen its position in Florida as the state's seventh-largest bank in terms of deposits.

The acquisition of Lydian Private Bank further enhanced Sabadell's banking franchise in Florida. It is Sabadell's fourth acquisition in the region in just five years, following TransAtlantic Bank in 2007, BBVA's private banking business in 2008, and Mellon United National Bank in 2010.

Operational integration of Banco Guipuzcoano

Banco Sabadell group completed the integration of Banco Guipuzcoano in the second quarter of 2011. The process took less than five months, setting a new record for M&A integration in Spain. Banco Sabadell's experience and technology together with the similar culture shared by the two entities and the staff's positive attitude towards change were all fundamental in the operation's success. As a result, Banco Sabadell has strengthened its position in the Spanish banking sector and is able to pursue its strategy in the domestic market, particularly in the Basque Country and Navarra, where it is now the fourth-largest bank, operating under the new SabadellGuipuzcoano brand.

First Spanish bank to launch a mobile application for Android and Kindle Fire tablets

2012-01-19T13:43:43+01:00

Banco Sabadell is the first bank in Spain to adapt its mobile bank application to the new version of the Android operating system exclusively designed for tablets, as well as for the Amazon Kindle FIRE device, recently launched in the market.

This new version of BS Móvil includes all the operations currently available from this service (check accounts and cards, make transfers, buy securities, sign files, etc.), as well as the possibility of contacting the bank, 24 hours a day all year round; an option for locating branches and ATMs, as well as access to the Sabadell activity on the social networks (Twitter, Facebook, Youtube, etc.).

BS Móvil, a pioneering mobile banking service
With this new version of BS Móvil, the Sabadell further consolidates its position as the benchmark Spanish organisation in the mobile banking sector and it forms part of the strategy of multichannel access to the organisation’s services and products, within its Instant Banking programme.

Last year, Banco Sabadell was the first bank to offer an application of the characteristics of Instant Check, an innovative service for depositing cheques through the capture and sending of a photograph of the cheque from a mobile phone, which has managed over 10 million euros since its implementation in early 2011.

The bank was also a pioneer in the launch of applications for iPhone/iPad, BlackBerry and Windows Phone. Since its launch in January 2010, BS Móvil has experienced strong growth and now boasts over 150,000 active users.

This new adaptation for tablets responds to the important growth of mobile devices using Android, a platform that leads the ranking of mobile operating systems with the greatest growth.

Banco Sabadell strengthens its core capital through the redemption of preference shares

2012-01-03T10:52:53+01:00

Upon conclusion of the offer to redeem four issues of preference shares issued by Banco Sabadell group between 1999 and 2009, the acceptance rate was 93.80% of the maximum nominal amount.

The redemption offer, which commenced on 2 December and is part of Banco Sabadell's active capital management strategy, gave holders of the preference shares the opportunity to replace their positions in those instruments with Banco Sabadell shares.

This redemption also enables Banco Sabadell to further strengthen its capital, since the preference shares are computed as equity but are not included in the core capital ratio nor do they count as core capital or equity for the purposes of the European Banking Authority. In contrast, the ordinary shares count as core capital and are included in all of the aforementioned ratios and types of capital.

Following this transaction, Banco Sabadell's core capital would have increased by 145 basis points, to 10.55% (proforma) as of September 2011.

FROB allocates CAM to Banco Sabadell

2011-12-07T18:16:49+01:00

Banco CAM has been allocated to Banco Sabadell following a competitive tender organised by the FROB, Spain's Fund for Orderly Bank Restructuring. This outcome throws light into the future of Banco CAM since it is to be incorporated into the Banco Sabadell group.

Banco Sabadell's interest is strategic since Banco CAM is a significant complement to its existing franchise in Alicante, Murcia, Valencia and the Balearic Islands.

Banco CAM's balance sheet was cleaned-up and strengthened prior to the acquisition, which ensures it can be integrated without impairment for Banco Sabadell's balance sheet. Banco CAM also has additional liquidity guarantees to ensure normal operation over the coming years.

"With this transaction," said Chairman Josep Oliu, "Banco Sabadell has acquired a sound institution with no substantial additional risk to our franchise, due to the balance sheet clean-up, recapitalisation and liquidity provided by the Spanish deposit insurance scheme (FGD) and the FROB. This puts an end to a period of uncertainty and instability for Banco CAM and marks the beginning of a new era, sustained by the confidence of having a sound balance sheet and by its integration into the Sabadell group, a leading bank in the domestic market and one that has a solid base upon which to develop in the future."

Banco CAM provides an additional 5 million customers for Banco Sabadell. The Sabadell group's total assets will increase by 75%.

“The complexity and size of this acquisition is comparable to that of Banco Atlántico a few years ago”, said Josep Oliu. "Times have changed and Banco Sabadell's management is now better equipped to integrate this franchise and leverage its value. The transaction will provide peace of mind to CAM's customers, and also its employees, who will have to work hard but whose future is no longer shrouded in uncertainty. This is good news for all involved parties."

Integrating Banco CAM into the group is a new challenge for Sabadell's management team. The sound experience gathered in the previous acquisitions—Natwest, Herrero, Atlántico, Urquijo and Guipuzcoano—reassures that the process will be successful.

During the transaction, Banco Sabadell received financial advice from Nomura International and Deutsche Bank and legal advice from the Roca Junyent law firm.

Key figures

CAM is Spain's tenth-largest financial institution in terms of business volume and ranks third in Valencia and Murcia in terms of branch numbers. 24% of Banco CAM's branch offices are located in the city and province of Alicante.

As of 30 June 2011 (monetary amounts in million euro)	Banco Sabadell	CAM
Total assets	95,049	71,297
Gross customer loans	72,435	52,350
Customer deposits	50,057	30,010
Off-balance sheet assets	18,563	3,400
Own funds	6,317	541
Branches in Spain	1,340	939
in the Valencia region	116	398
in Murcia	22	153
Employees	10,610	6,432

* All figures exclude recapitalisation with funds from the FGD.

Banco Sabadell creates a new private banking division which will include Banco Urquijo and Sabadell Private Banking under a single business model

2011-11-24T13:16:19+01:00

Banco Sabadell has decided to reorient its private banking business and concentrate on customised services for customers by integrating Banco Urquijo's network with Sabadell's own private banking business to create a single division under the Sabadell Urquijo Banca Privada brand. With 20,000 customers and over 24 billion euro in total business volume, the new private banking division will be a leader in the segment in Spain. Ismael Picón, currently General Director of Banco Urquijo, will head this new division.

This strategic initiative seeks to enhance the group's commercial performance, reinforcing Banco Sabadell's position as a leader in advisory and management services for high net worth individuals in Spain, and leveraging the synergies generated by reducing structural complexity.

Ramón de la Riva, Deputy General Director of Banco Sabadell and Director of Markets and Private Banking: "The integration of Banco Urquijo and Sabadell's Private Banking business will enable us to unify and capitalise on our ability to sell services, develop new products and serve customers by improving our value proposition and increasing overall operating efficiency."

In the photograph, Ismael Picón.