Banco de Sabadell (SAB) Q1 2026 earnings summary

Executive summary

• Completed the sale of TSB, unlocking over 400 bps of capital, generating over €300M in capital gains, and enabling a €0.50/share extraordinary dividend to be paid May 29, 2026.

• Q1 2026 marked the bottom for core revenues, with sequential improvements expected throughout 2026.

• Early retirement plan launched, incurring €90M one-off costs in 2026, with full efficiency gains expected in 2027 and partial realization in 2026.

• Committed to delivering a 16% Return on Tangible Equity by 2027 and targeting 14.5% ROTE for 2026.

• Net profit for Q1 2026 was €284M, down 28.1% year-over-year, impacted by non-recurring costs and a sterling hedge related to the TSB sale; including TSB, net profit was €347M.

Financial highlights

• Net interest income was €872M, down 3.5% year-over-year and 2.5% quarter-on-quarter; fees at €315M, down 2.2% year-over-year and 5.1% quarter-on-quarter.

• Core revenues at €1,187M, down 3.1% year-over-year; gross operating income at €1,195M, down 6.8% year-over-year.

• Performing loans grew 5.6% year-over-year, with growth across mortgages (+4.1%), consumer loans (+14.8%), and SMEs/corporates (+2.1%).

• Customer funds increased 5.9% year-over-year; on-balance-sheet funds up 4.3% year-over-year; off-balance-sheet funds up over 10%.

• CET1 fully-loaded ratio at 13.18% post-dividend accrual, expected to rise to 13.45% after TSB sale and further RWA releases.

Outlook and guidance

• Core revenues and NII expected to improve quarter-on-quarter through 2026, with NII guidance of over 1% year-on-year growth and mid-single digit growth in Q4 2026 vs Q4 2025.

• Fee income projected to recover, targeting low to mid-single digit growth for 2026, supported by increased activity in payment services and CIB.

• Cost savings from early retirement plan to materialize mainly in 2027, providing a buffer for future cost targets.

• Loan and deposit growth expected to remain in the mid-single digit range, with stable loan-to-deposit ratio.

• Committed to €2.5 billion in ordinary shareholder remuneration over 2026-2027.