Banco de Sabadell (SAB) investor relations material

Strategic transformation and business focus

• Recent sale of the UK business has refocused operations on Spain, enhancing domestic market attention and execution capabilities.

• Growth strategy targets high-value segments such as SMEs, private banking, and personal banking, while aiming to reduce costs in retail banking.

• Employee engagement reached record levels following the tender offer process, supporting strong execution.

• No current plans for M&A; focus remains on standalone value creation and relationship banking.

• Not pursuing acquisition of Singular Bank as it did not fit current strategy.

Financial performance and outlook

• Return on tangible equity stands at 14.5%, with guidance to reach 16% by 2027, supported by strong volume growth and positive NII trends.

• NII expected to grow above 1% this year, targeting €3.9 billion in 2027, driven by volume growth and gradual margin improvement.

• Loan growth is supported by Spain's robust economic performance, low indebtedness, and healthy unemployment trends.

• Fee income is projected to grow at mid-single digits, with strong asset management and CIB activity, and renewed partnerships enhancing product offerings.

• Merchant acquiring business remains a market leader with 20% share; no imminent changes expected.

Risk, asset quality, and capital management

• Cost of risk is stable at 40 basis points, with improving credit quality and a declining NPL ratio (2.5% last quarter).

• Asset mix is shifting towards consumer loans and SMEs, but overall risk profile remains stable.

• CET1 ratio is 13.1%, with a payout policy of 40–60% and excess capital distributed via share buybacks.

• Shareholder remuneration policy remains unchanged, balancing cash dividends and buybacks.