Extraordinary items and the drop in interest rates penalized Banc Sabadell in the first quarter of the year, with profits falling by 29.1%, down to 347 million euros. In the results for the January-March period, TSB continued to contribute dividends to the bank, and it will not be until the second quarter that the extraordinary profit (capital gain) of 300 million from the sale of that British subsidiary to Santander will be recorded.
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In a statement sent today to the National Securities Market Commission (CNMV), Sabadell reported that the profit decline “is explained by the already anticipated behavior of the net interest margin in the first quarter, lower commissions, and non-recurring costs from the new early retirement plan.” That voluntary redundancy program had a cost of 55 million while the expected savings are 40 million from next year onwards. There are also another 14 million in extraordinary costs due to the pound coverage linked to the sale of TSB.
The bank’s CEO, César González-Bueno, who will be replaced on Wednesday by Marc Armengol, highlighted in a statement that “we maintain our profitability forecasts for this fiscal year and for the end of the strategic plan, and the commitment to shareholder remuneration.”
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The net interest margin, which measures the most basic banking activity of charging for lending money and paying for deposits, fell by 3.5% in the quarter. For the whole year, the bank trusts to reverse the situation and increase the net interest margin by 1% annually.
The mortgage balance increases by 4.1% year-on-year
Regarding lending activity, the bank increased the mortgage balance by 4.1%. Meanwhile, consumer credit rose to 5.5 billion, up 14.8%. Despite the uncertain scenario, the bank improved its delinquency rate. It closed the quarter at 2.55% compared to 2.65% a year ago.
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