Sabadell says there are no plans to sell TSB for the time being as the third quarter beats forecast
- Net profit more than doubled to EUR 149 million in the third quarter
- British unit TSB posts net income of £ 47m in the third quarter
- Sabadell is aiming for cost savings of 130 million euros in Spain
- Bank says it is meeting year-end strategic plan targets
MADRID, Oct 28 (Reuters) – Spanish Banco Sabadell (SABE.MC) has no plans to sell TSB for the time being after recently declining an unsolicited offer from Co-op Bank, the UK entity said Thursday Helped The Group Hit Third Place – Quarterly Surplus Forecasts.
Sabadell more than doubled its net income for the quarter to 149 million euros ($ 173 million) from the same period last year, thanks in part to an increase in loan income driven by new mortgage loans in Spain.
Analysts polled by Reuters expected a net profit of 115 million euros. However, the result in the third quarter of 2019 before the pandemic was below the 251 million euros.
Sabadell’s £ 1.7 billion ($ 2.3 billion) acquisition of TSB in 2015 backfired as IT disruptions drove costs up in 2018. The company has frozen its plans to sell TSB for now until it completely turns its business around.
“We are not considering a corporate transaction in the near future,” Cesar Gonzalez-Bueno, Sabadell’s chief executive officer, told analysts on Thursday. Continue reading
On a stand-alone basis, TSB posted net income of £ 47 million for the quarter compared to a loss of £ 76 million for the same period last year, driven by higher loan volumes and lower financing costs.
Gonzalez-Bueno expected a surge in lending to further boost TSB’s lending through 2022 after net interest income (income from loans minus deposit costs) rose 20.7% year over year for the quarter.
Sabadell’s shares rose 0.7% compared to a 0.2% decline in Spain’s blue chip index (.IBEX) as brokerage firms like Barclays welcomed good results but insisted that costs were higher than expected failed.
Given the extremely low interest rates, European banks are under pressure to cut costs, either alone or through ties.
In the quarter, Sabadell posted a charge of 331 million measurements.
Around 85% of these savings would be achieved in 2022 and the rest in 2023.
Sabadell also said it is on track to meet its overall year-end strategic headline targets, which include low single-digit growth in net interest income.
In the third quarter, net interest income rose by 4.3% to EUR 877 million compared to the same quarter of the previous year and was thus above the average analyst forecast of EUR 856 million.
($ 1 = 0.7277 pounds)
($ 1 = 0.8630 euros)
Reporting by Jesús Aguado; additional reporting by Emma Pinedo editing by Inti Landauro and Mark Potter
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