Banco de Sabadell S A : 3Q23 Results Presentation

3Q23

results

October 26, 2023

index

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2

3

4

3Q23 highlights

Financial results

Balance sheet

Closing remarks

3Q23 highlights

3Q23 key messages

NII keeps improving +6% QoQ

NIM +14bps QoQ

Group net profit of €1,028M in 9M23

£152M at TSB

	Asset quality remains
	stable
RoTE	Total cost of risk
55bps

11.6%

CET1 FL

13.13% Interim cash dividend

of €3cts/share

+50% YoY to be paid in December

4

Higher interest rate environment impacts loan demand while customer funds remain stable in the year

Performing loans across geographies

€M

	Sep-23	QoQ	YoY
Spain
95,831	-2.0%	-4.1%
UK (TSB)	41,793	-1.7%	-2.5%
Constant FX	-1.0%	-4.5%
Other	14,003	+3.6%	+0.0%
international
+2.2%	+3.8%
Constant FX
Total	151,627	-1.4%	-3.3%
Constant FX	-1.4%	-3.5%

Total customer funds

€M

	Sep-23	QoQ	YoY
On-balance sheet
161,973	-0.5%	-0.8%
Constant FX		-0.4%	-1.2%
Off-balance sheet	39,342	-0.9%	+3.4%
Total	201,315	-0.6%	0.0%
Constant FX	-0.5%	-0.3%

Commercial gap over gross loans increased by €1bn in the quarter driving loan to deposit ratio to 94.6%

Note: Excludes accrual adjustments.	5

The radical transformation undertaken in Retail Banking has advanced at a fast pace

May 2021

Strategic priorities set

for Retail Banking

Today

Results of the transformation

are already visible

Workforce reduction Branch reduction

Cost reduction

Personal and expert support

• Mortgages
• Insurance
• Savings & investments

Full digitisation

• Current accounts
• Unsecured lending
• Cards

c.-20%

Sep-20 vs Sep-23

Mortgage origination through specialised relationship managers

Digital

customer acquisition

Consumer loan sales via digital & remote channels

-30%

Sep-20 vs Sep-23

0% 48%

9M21 9M23

0% 55%

9M21 9M23

42% 75%

9M21 9M23

• We have significantly reduced our cost base…
• …while improving our capabilities as a traditional bank…
• …and building up direct banking capabilities

Our next step is to become the main bank for more customers

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We are ready to boost our growth in Retail Banking in a profitable way

We launched our digital account in the second quarter	We have revamped our digital account to continue
of 2022 with successful results so far	attracting new customers and become their main bank

• The digital account has been a remarkable lever to increase customer acquisition while reaching new segments and territories

Customers acquisition by age

Customers acquisition by geography

• Current account only for new customers

• 2% AER

• Interest earned on balances

72%	53%
28%	47%
Acquisition via	Acquisition via
branch	digital
18-35 years old	>35 years old

Territories where digital acquisition has overtaken branch acquisition

of up to €20k

• 3% cash back on utility bills

• No limited period

Value proposition enhanced to increase the

• We have attracted deposits from digital customers without impacting deposit beta

Cost of customer funds in Spain (%)

August 2023 YTD

0.38 Sabadell

0.39 Sector

engaged customers we attract

With a limited impact on our deposit beta

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Different market trends in mortgages and consumer loans. New lending in Business Banking increasing in the year

Mortgages					Consumer loans
Quarterly new lending in Spain (in €M)				Quarterly new lending in Spain (in €M)
1,472
	1,095	890	-40%			532	559
		Var. YoY -29%	439
			-19%	9M23/9M22
			Var. QoQ
3Q22	2Q23	3Q23			3Q22	2Q23	3Q23

+27%

Var. YoY	+27%

+5% 9M23/9M22 Var. QoQ

Loans and credit facilities - Business Banking

Quarterly new lending in Spain (in €M)

	3,801		+26%
2,056		2,585	+8%
	Var. YoY
			-32%	9M23/9M22
			Var. QoQ
3Q22	2Q23	3Q23

1 Working capital includes trade discounting, factoring, reverse factoring, forfaiting and import/export finance.

Working capital1 - Business Banking

Quarterly new lending in Spain (in €M)

7,925 8,176 7,566

-5%

Var. YoY +3%

-7% 9M23/9M22 Var. QoQ

3Q22

2Q23

3Q23

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Good momentum in payment services continues. Increase of savings & investment products

Cards

Quarterly turnover in Spain (in €M)

5,826 5,803

3Q222Q23

# transactions 165M

171M

6,148

3Q23

179M

Retailer payment services (PoS)

Quarterly turnover in Spain (in €M)

		13,604	13,247	14,799
+6%
Var. YoY	+7%
+6%
9M23/9M22
Var. QoQ
		3Q22	2Q23	3Q23
+8% Var. YoY	# transactions 394M	406M	439M

+9%

Var. YoY	+12%

+12% 9M23/9M22 Var. QoQ

+11% Var. YoY

Savings & investment products
Customer funds in Spain (in €bn)
		47.4			+€3.6bn
Sep22		+€2.1bn
			+€7.1bn		+€1.4bn
Jun23	52.9
			Var. YoY
Sep23	54.5		Term	Structured
				Off-balance1
				deposits and retail
				deposits
	On-balance(term-deposits, structured deposits and commercial paper)		issuances

Off-balance (mutual funds, pension funds, savings insurance and managed accounts)	9
	1 Off-balance includes mutual funds, pension funds, savings insurance and managed accounts

Volumes declined in the quarter in Spain and grew in other international geographies

Performing loans by segment, ex-TSB

€bn

	Sep-23	QoQ	YoY
Mortgages
38.3	-0.8%	-1.9%
Consumer loans	3.8	+4.1%	+14.3%
SMEs & Corporates	41.5	-2.1%	-3.8%
Public sector	8.7	-3.3%	-15.0%
Other lending	3.6	-14.9%	-14.8%

	Sep-23	QoQ	YoY
Mexico	4.7	+7.7%	+9.8%
Constant FX	X.X%	+6.4%	+11.7%
Miami	5.7	+3.2%	-6.8%
Constant FX	X.X%	+0.6%	+1.3%
Foreign branches	3.6	-0.7%	-0.3%
Constant FX
X.X%	-0.4%	-1.3%
Total international	14.0	+3.6%	-0.0%
Constant FX	X.X%	+2.2%	+3.8%

Total Spain	95.8	-2.0%	-4.1%

Note: Excludes accrual adjustments.

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