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1. Company Snapshot

1.a. Company Description

Banco de Sabadell, S.A. provides banking products and services to personal, business, and private customers in Spain and internationally.The company offers retail banking products, such as current and savings accounts, personal loans, cards, and mortgages.It also provides financial products and services to large and medium enterprises, SMEs, shops and self-employed workers, private individuals, and professionals; and consumer finance, asset management, and bancassurance services.


In addition, the company offers corporate banking services, including financing services, transactional banking services, and other complex custom solutions in finance, treasury, and import/export, among others.Further, it provides insurance and pension products.As of December 31, 2021, the company operated 1,593 branches.


Banco de Sabadell, S.A. was founded in 1881 and is based in Alicante, Spain.

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1.b. Last Insights on SAB

Banco de Sabadell's recent performance has been impacted by a decline in net profit, with Q3 earnings dropping to 414 million euros from 503 million euros in the same period last year. Gross operating income decreased to 1.53 billion euros from 1.66 billion euros, primarily due to a drop in net interest income. The bank's failed takeover bid by BBVA and the subsequent decline in net interest income to 1.20 billion euros from 1.25 billion euros a year prior have also affected its performance. Additionally, Nexi no longer has a commitment to buy Sabadell's retailers' payments unit.

1.c. Company Highlights

2. Banco Sabadell Delivers Strong 9-Month Performance

Banco Sabadell's 9-month financial results show a robust performance, with a recurrent return on tangible equity of 14.1% and a core Tier 1 ratio of 13.7%. The bank's net interest income ex-TSB was €2.7 billion, positioning it well to achieve the full-year target of €3.6 billion. Earnings per share (EPS) came in at €0.34, significantly beating estimates of €0.07661. The bank's net interest margin is expected to stabilize, with the third quarter potentially being the bottom, and growth expected in 2026 driven by wholesale funding savings from the sale of TSB.

Publication Date: Nov -15

📋 Highlights
  • Return on Tangible Equity Boost:: Improved to 14.1% in Q3 2024, exceeding 2025 guidance and nearing the 16% target by 2027.
  • Capital Strength:: CET1 ratio rose to 13.74% (up 18 bps QoQ), with €3.7B in excess capital allocated for shareholder remuneration.
  • Shareholder Remuneration Plan:: Targets €6.45B from 2025–2027, including a €2.5B extraordinary dividend from TSB sale and €3.6B in dividends over the next 6 months.
  • Credit Quality Improvements:: Non-performing loans declined QoQ and YoY, with cost of risk at 37 bps, aligned with long-term targets.
  • Net Interest Income Growth:: NII reached €2.7B in 9M24, on track for €3.6B in 2025 and projected to rise to €3.9B by 2027.

Strategic Plan Progress

The bank's CEO, Cesar Gonzalez-Bueno, reviewed the bank's strategic plan launched in 2021, which focused on transforming businesses and driving financial turnaround. The new strategic plan announced in July 2025 focuses on growth and shareholder remuneration, with a target return on tangible equity of 16% by 2027. The bank is on track to meet its 2025 guidance, with a strong performance in commercial activity, and a significant improvement in return on tangible equity.

Valuation and Shareholder Remuneration

Banco Sabadell's valuation metrics are attractive, with a P/E ratio of 9.63 and a Price-to-Tangible Book Value (P/TBV) that can be derived from the given 'P/B Ratio' of 1.15, indicating a potential undervaluation. The bank's shareholder remuneration is projected at €1.45 billion for 2025, reflecting an improved outlook, and the tangible book value per share plus distributed dividends over the last 12 months grew by 17% year-on-year. The bank expects to distribute €3.6 billion in the next 6 months, equivalent to more than 20% of its current market cap.

Guidance and Outlook

The bank expects Net Interest Income (NII) to start growing during 2026 and reach €3.9 billion in 2027, with mid-single-digit growth in loans and customer funds. The cost of risk is guided at 40 basis points in 2027, and provisions are sustainable and in line with long-term expectations. The sale of TSB is expected to close early next year, with an extraordinary cash dividend of €2.5 billion.

Risk Metrics and Asset Quality

The bank's risk metrics remain robust, with a total cost of risk at 37 basis points. The company has seen a significant probability of default reduction, around 50% in the first 9 months of the year versus 2023 new lending. The Miami book shows no deterioration, maintaining high credit quality, and the loan yield currently in the ex-TSB perimeter is at 3.68%, with an average spread above 150 basis points, considered sustainable over time.

3. NewsRoom

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Banco Sabadell (BME:SAB): Exploring Valuation After Q3 Profit Beat and Questions on Revenue Diversification

Nov -15

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BBVA Rethinks $13B Turkey Bet as Insurance Deal Nears Expiry

Nov -13

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TSB earnings spike ahead of Santander takeover

Nov -13

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Banco de Sabadell Posts Lower Net Profit, But Sees Targets on Track

Nov -13

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Nexi says it no longer has commitment to buy Sabadell unit, but is open to new deal

Nov -05

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Nexi says it no longer has commitment to buy Sabadell unit, but is open to new deal

Nov -05

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Top European Dividend Stocks For November 2025

Nov -03

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Morgan Stanley Resumes Coverage of Banco Bilbao Vizcaya Argentaria (BBVA) With an Equal Weight Rating

Oct -24

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.47%)

6. Segments

Banking Business Spain

Expected Growth: 3.5%

Banco de Sabadell's 3.5% growth in Spain is driven by a strong domestic economy, increasing consumer confidence, and a growing demand for digital banking services. Additionally, the bank's strategic focus on cost reduction, investment in technology, and expansion into new markets have contributed to its growth. Furthermore, the bank's diversified revenue streams, including retail, corporate, and private banking, have also supported its growth momentum.

Banking Business United Kingdom

Expected Growth: 3.2%

The 3.2% growth of Banco de Sabadell's banking business in the UK is driven by a strong lending market, fueled by low interest rates and increasing consumer confidence. Additionally, the bank's digital transformation efforts and strategic partnerships have improved operational efficiency and expanded its customer base.

Banking Business Mexico

Expected Growth: 4.5%

Strong economic growth in Mexico, increasing demand for credit and financial services, strategic expansion into high-growth regions, and effective cost management. Additionally, Banco de Sabadell's digital transformation and investment in technology have improved operational efficiency, enhancing customer experience and driving business growth.

7. Detailed Products

Personal Banking

Banco de Sabadell offers a range of personal banking services, including current and savings accounts, credit cards, personal loans, and mortgages.

Business Banking

The bank provides business banking services, including business accounts, credit facilities, cash management, and trade finance solutions.

Private Banking

Banco de Sabadell offers private banking services, including wealth management, investment advice, and estate planning.

Corporate Banking

The bank provides corporate banking services, including cash management, trade finance, and risk management solutions.

Investment Banking

Banco de Sabadell offers investment banking services, including mergers and acquisitions, equity and debt capital markets, and restructuring advisory.

Asset Management

The bank provides asset management services, including mutual funds, pension plans, and discretionary portfolio management.

Insurance

Banco de Sabadell offers insurance products, including life insurance, non-life insurance, and pension plans.

8. Banco de Sabadell, S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Banco de Sabadell, S.A. operates in a highly competitive market, but the threat of substitutes is medium due to the complexity of banking services and the high switching costs for customers.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of concentration in the banking industry and the high level of competition, which reduces the negotiating power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the high level of competition in the market and the lack of concentration among suppliers, which reduces their negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the banking industry, including regulatory requirements and the need for significant capital investment.

Intensity Of Rivalry

The intensity of rivalry is high due to the high level of competition in the banking industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 76.72%
Debt Cost 8.88%
Equity Weight 23.28%
Equity Cost 8.88%
WACC 8.88%
Leverage 329.53%

11. Quality Control: Banco de Sabadell, S.A. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Mapfre

A-Score: 7.9/10

Value: 6.8

Growth: 6.6

Quality: 7.2

Yield: 8.1

Momentum: 10.0

Volatility: 8.7

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BAWAG

A-Score: 7.3/10

Value: 4.5

Growth: 7.2

Quality: 7.2

Yield: 8.8

Momentum: 9.5

Volatility: 6.3

1-Year Total Return ->

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VIG

A-Score: 7.2/10

Value: 6.4

Growth: 4.2

Quality: 6.2

Yield: 7.5

Momentum: 10.0

Volatility: 9.0

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ABN AMRO Bank

A-Score: 7.2/10

Value: 6.6

Growth: 5.3

Quality: 5.1

Yield: 9.4

Momentum: 9.5

Volatility: 7.0

1-Year Total Return ->

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Banco de Sabadell

A-Score: 6.7/10

Value: 6.6

Growth: 6.0

Quality: 5.5

Yield: 7.5

Momentum: 9.5

Volatility: 5.0

1-Year Total Return ->

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EFG

A-Score: 6.5/10

Value: 5.3

Growth: 3.3

Quality: 5.1

Yield: 7.5

Momentum: 9.5

Volatility: 8.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.25$

Current Price

3.25$

Potential

-0.00%

Expected Cash-Flows