3q results - banco sabadell...1q11 2q11 3q11 4q11 1q12 2q12 3q12 135.7 152.6 135.7 149.5 133.5 155.3...

Banco Sabadell3Q Results

October 25th, 2012

Disclaimer

Banco Sabadell cautions that this presentation may contain forward looking statements with respect to the business. financial condition. results of operations. strategy. plans and objectives of the BancoSabadell Group. While these forward looking statements represent our judgement and future expectations concerning the development of our business. a certain number of risks. uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include. but are not limited to. (1) general market. Macroeconomic. governmental. political and regulatory trends. (2) movements in local and international securities markets. currency exchange rate. and interest rates. (3) competitive pressures. (4) technical developments. (5) changes in the financial position or credit worthiness of our customers. obligors and counterparts. These risk factors could adversely affect our business and financial performance published in our past and future filings and reports. including those with the Spanish Securities and Exchange Commission (Comisión Nacional del Mercado de Valores).

Banco Sabadell is not nor can it be held responsible for the usage. valuations. opinions. expectations or decisions which might be adopted by third parties following the publication of this information.

Financial information by business areas is presented according to GAAP as well as internal BancoSabadell group´s criteria as a result of which each division reflects the true nature of its business. These criteria do not follow any particular regulation and can include forecasts and subjective valuations which could represent substantial differences should another methodology be applied.

The distribution of this presentation in certain jurisdictions may be restricted by law. Recipients of this presentation should inform themselves about and observe such restrictions.

These slides do not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe to any securities nor shall they or any one of them form the basis of or be relied on in connection with any contract or commitment whatsoever.

1. Quarterly highlights

2. 3Q12 Results

3. Risk and capital management

4. Integration of Banco CAM

5. Managing Real Estate assets

6. Conclusions

Index

3

1. Quarterly highlights

4

Quarterly highlights

Maintaining steady pace of income generation

Continued strengthening of market shares

Improvement of the commercial gap

The integration process of Banco CAM is running ahead of forecast

Banco Sabadell confirms its position as Spain’s fourth largest private financial entity having successfully passed the recent stress test by Oliver Wyman

5

2. 3Q12 Results

6

September 2012 Results

*Sep. 11 Sep. 12 % var 12/11

Net Interest Income 1,153.2 1,380.7 19.7%Equity Method & Dividends 49.5 2.0 -96.0%Commissions 424.1 453.4 6.9%Trading Income & Forex 233.6 408.4 74.8%Other Operating Results 5.0 -90.7 --Gross Operating Income 1,865.4 2,153.8 15.5%Personnel Costs -554.6 -709.4 27.9%Administrative Costs -292.4 -361.1 23.5%Depreciations -93.7 -112.8 20.4%Pre-provisions Income 924.6 970.4 5.0%Total Provisions & Impairments -767.3 -2,170.5 --Gains on sale of assets 3.6 29.1 --Badwill 0.0 933.3 --Taxes and others 46.4 328.2 --

Attributable Net Profit 207.4 90.6 -56.3%

* Includes four months of Banco CAM.Euros in million 7

Net interest income continues to grow …

Net interest income evolution(Euros in million)

Net interest income 9M12:+19.7% YoY+3.7% YoY, excl. Banco CAM

*

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

385.4 388.6 384.1 407.3447.0

526.4

379.1

* Banco CAM contribution 3Q12: €142.9M

8

… driven by active price management …

Credit portfolio spreads, Banco Sabadell stand alone(Basis points)

Product Sep-11 Jun-12 Sep-12 Var QoQ Var YoY Sep-11 Jun-12 Sep-12 Var QoQ Var YoY

Credits 296 384 417 +33 +121 244 298 334 +36 +90Loans 266 356 394 +37 +128 201 219 227 +8 +26Mortgages to individuals 130 159 176 +18 +46 80 85 87 +2 +7Leasing 194 242 249 +7 +55 116 129 132 +3 +16Renting 459 595 643 +48 +184 302 368 396 +29 +94Commercial loans 290 407 473 +66 +183 320 430 482 +53 +162Confirming 223 293 333 +40 +110 220 293 317 +24 +97Forfaiting 267 582 631 +49 +364 240 532 592 +60 +352Total loans 242 335 372 +37 +130 163 188 196 +9 +33

Front book spreads Back book spreads

Total volume of re-priced assets in the quarter: €10.1 bn*

* New granted transactions with price change. Excluding Banco CAM9

… maintaining the cost of customers funds largely unchanged …

Customer loan yield and Cost of customer funds(In percentage)

5.93% 6.06% 6.28% 6.29%

5.56%

4.93%

4.21%3.79%

3.53% 3.49% 3.50% 3.65% 3.86% 3.99% 4.12% 4.22% 4.28% 4.16% 4.05%

3.13% 3.22%3.47% 3.48%

2.83%2.21%

1.70% 1.48% 1.36% 1.44% 1.59%1.85% 1.97% 2.00% 2.06% 2.11% 2.12% 2.00% 2.03%

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Customer loan yield Cost of customer funds

10

… and improving margins in the core banking businessMargin evolution(In percentage)

Note: APS, Asset Protection Scheme. AMD, Asset Management Division ,

2.80%2.84%2.81%2.81%2.73%2.72%

2.52%

2.31%2.17%

2.05% 1.99%2.06%2.11%2.16%2.16%2.02%

1.91% 1.89%1.80%

2.33%2.46%

2,38%

2.60%


Customer spread Customer spread excl. APS Customer spread excl. AMD

1.42%

1.28%

1.80% 1.83% 1.79%1.85%

1.98%2.06%

1.95%1.86%

1.78% 1.81%

1.65%1.47%

1.60%1.62% 1.60% 1.56%1.61% 1.66%

1.84%1.75%

2.12%


Net interest margin Net interest margin excl. APS Net interest margin excl. AMD

11

Commissions levels are stable

Commissions evolution(Euros in million)

Commission income 9M12:+6.9% YoY

-0.8% YoY, excl. Banco CAM and excl. impact from fixed income issues

30.9 31.7 27.9 29.1 24.8

45.8 45.4 46.4 49.0 48.2

59.1 63.5 61.4 57.4

8.5

25.226.1

55.847.5

73.883.6

59.9

12.114.0

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

135.7

152.6

135.7149.5

133.5

155.3

* Banco CAM contribution 3Q12: €27.5M

*164.6

Asset Mgmt1 ServicesLendingCommissions from fixed income issues

1 Including mutual funds commissions and pension funds and non-life insurance brokerage 12

Personnel expenses remain flat …

Personnel expenses evolution(Euros in million)

179.0 176.0 179.6 179.0 182.2 181.6 180.9

39,9

111,2

13.1 4.22.8 9.0 5.8

5.8

2.0

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Personnel expenses 9M12:+27.9% YoY(excl. Banco CAM, +0.7%)

Recurrent personnel expenses9M12: +30,2% YoY(excl. Banco CAM, +1.9%)

192.1178.7 183.8 188.0 188.0

Personnel expenses 9M12 Like-for-like*:

+0.3% YoY

227.2

RecurrentBanco SabadellStand alone

Non-recurrentBanco CAM

294.2

13* Including Lydian Bank in 2011 and excluding non-recurrent expenses. Excluding Banco CAM in 2012

… as well as general expenses on a like-for-like comparison …

General expenses evolution(Euros in million)

92.3 92.5 101.4 107.293.8 94.4

105.3

18,7

46.6

2.9

6.2 0.4

1.9

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

General expenses 9M12:+23.5% YoY(excl. Banco CAM: +1.2%)

Recurrent general expenses 9M12:+25.5% YoY(excl. Banco CAM: +2.7%)

98.592.5

101.4110.1

94.2

General expenses 9M12Like-for-like*:

+0.6% YoY

115.1

RecurrentBanco SabadellStand alone

Non-recurrentBanco CAM

151.9

14* Including Lydian Bank in 2011 and excluding non-recurrent expenses. Excluding Banco CAM in 2012

… with the execution of synergies on track …

Employee redundancy filing agreement reached with trade unions at Banco CAM in order to reduce the number of employees by 1,250

480 additional redundancies in subsidiaries

500 additional redundancies

2013e cost synergies have been brought forward as the integration process is running ahead of forecast

Banco CAM synergies 2012e 2013e 2014e 2015eCost synergies 10 211 247 247Income synergies 7 46 72 84Total synergies 17 257 319 331% of achievement (first estimate) 6% 70% 100% 100%

% of achievement (new estimate) 5% 78% 96% 100%Net of taxes. Euros in million.

15

49.7%47.0% 47.3%47.6%

40.8%

45.7% 45.9%

49.7%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 BS 3QBS+CAM

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

… at the same time as network optimisation continues …

10,777

1,467

BS cost to income ratio ex non-recurrent items 3Q12: 45.0%

10,721

1,467

10,610

1,379

10,699

1,387

SUB Acquisition B.Guipuzcoano

Acquisition

Lydian P. Bank

Acquisition

9,839 9,746

9,701

1,221 1,223 1,2221,383

10,675 10,550

1,382

2,202

16,754

Banco CAM Acquisition

16,413

2,204

Employee and branch evolution(In number)

Cost income evolution(in %)

Branches Employees

16

… increasing the number of planned branch closuresBanco CAM Branch closure plan

411456

Pro-forma number of branches

Current plan2Initial plan

2,280 +45

Target number of branches

1,869

1

Planned branch

closures

• 2011 1033

• 2012 3224

• 2013 31

Branch Closures

17

1) Pro-forma domestic network dated 30.06.2011 (CAM) and 30.09.2011 (BS). ActivoBank branches (2) and international network not included2) Aligned with the European Commission’s requirements3) Additionally, 4 branches from Banco Sabadell were closed4) 300 CAM, 22 net closures from Sabadell

Growing the customer base …

Remarkable success in gaining new customers

With two market-leading products paving the way

Cuenta Expansión:139,381 new accounts

Cuenta Expansión Negocios: 62,052 new accounts

Sep. 11 Sep. 12 % Var.

Individuals 207,818 247,448 19.1%

Companies 41,947 55,652 32.7%

Note: Banco Sabadell stand alone

Evolution of total number of customers

3Q11 3Q12 % Var. 3Q12 % Var.Total 2,626,191 2,919,172 11.2% 5,502,304 109.5%

Banco Sabadell stand alone

Banco Sabadell & Banco CAM

** Total number of customers prior to the application of Banco Sabadell criteria 18

… gaining market share both in individuals …

Credit card volumeHousehold term deposits

2,13%Aug. 11

Aug. 12

+188 bps (+22 bps excl. Banco

3.20%Jun. 11

Jun. 12


2.13%

CAM)CAM)

4.01% 6.27%

Payroll accounts Transactionality1

2.32%Aug. 11

Aug. 12


4.57%Sep. 11

Sep. 12


6.43%

CAM) CAM)

4.94%

Contribution Banco CAM1 Including cheques, transfers, SEPA transfers, receivables and promissory notes. Banco CAM numbers exclude SEPA transfers

19

… as well as in companies …

Volume at BS card PoSSight deposits companies

7.08%Aug. 11

Aug. 12 10.33%

+312 bps (+92 bps excl. Banco CAM)

7.21%Jun. 11

Jun. 12


Corporate credit Export documentary credit

10.80%

21.48%Sep. 11

Sep. 12

5.60%Aug. 11

Aug. 12 8.68%


23.37%


Contribution Banco CAM

20

Improvement of commercial gap continues …

-2,000-1,000

01,0002,0003,0004,0005,0006,000


9M12: €6,420 M

Customer funds and loans evolution (Euros in million)

Change in commercial gap (Euros in million)

Sep-11 Jun-12 Sep-12% Var.

YoYOn-balance sheet customer funds 51,332 75,571 75,058 46.2%Other on-balance sheet term funds1 32,879 48,122 47,774 45.3%Sight deposits 18,453 27,449 27,284 47.9%

Off-balance sheet funds 17,867 20,478 20,868 16.8%Mutual funds 8,216 8,533 8,561 4.2%Pension funds 2,705 3,184 3,576 32.2%Third party insurance products 5,770 7,742 7,699 33.4%

Total funds 69,199 96,049 95,926 38.6%Gross loans to customers ex repos and adjustments 72,470 123,435 119,368 64.7%Gross loans to customers ex repos and adjustments ex APS 107,115 102,844 41.9%

1 Other on-balance sheet term funds include term deposits and other funds placed in the retail network: preference shares, mandatory convertible bonds, senior debt, commercial paper and other. Excludes repos. Note: In 2012, changes in commercial funding cap include adjustments for capital increase.2012 numbers numbers include Banco CAM

21

… maintaining a balanced funding structure …

Group wholesale breakdownGroup funding structure

Repos5.9%

Retail issues4.6%Prefs

0.2%

Wholesale funding24.1%

ICO financing5.3%

Deposits60.0%

Covered bonds61.3%

Senior debt4.1%

Prefs + Subordinated

3.9%

ECP2.2%

Securitisation19.6%

GGB9.0%

22

… after having absorbed maturities of more than €10bn in 2012

Group wholsale funding maturities (Euros in million)

3,950

5,281

1,217 1,068

3,6654,040

2,8153,145 3,066

581796

2,473

0

1,000

2,000

3,000

4,000

5,000

6,000

1Q2012 2Q2012 3Q2012 4Q2012 2013 2014 2015 2016 2017 2018 2019 >2020

Maturity by product type (Euros in million)Outst. Amount 4Q12 2013 2014 >2014

Covered bonds (CH) 16,891 418 3,135 2,943 10,395Senior debt 662 0 380 0 282GGB 2,493 400 0 1,027 1,066Preference and Subordinated 1,096 0 0 0 1,096Covered bonds (CT) 150 0 150 0 0Other mid- and long-term financial instruments 357 250 0 70 37TOTAL 21,649 1,068 3,665 4,040 12,876

23

3. Risk and capital management

24

NPL ratio is maintained well below the Spanish average

Evolution of NPL ratio vs. sector average (in percentage)

0%

2%

4%

6%

8%

10%

12%

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 1Q122Q123Q12

Aggregate sector average BS NPL ratio

***

Banco CAM integration

*Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12

BS NPL ratio 4.09% 4.38% 4.72% 5.01% 5.46% 5.55% 5.72% 5.95% 6.02% 7.82% 8.46%

System NPL ratio 5.33% 5.35% 5.49% 5.81% 6.19% 6.69% 7.16% 7.61% 8.37% 9.65% 10.51%

GAP BS vs system (bp) 124 97 77 80 73 114 144 166 235 183 205

* BS + Banco CAM excl. APS. Banco Sabadell Stand alone NPL ratio 3Q12: 6.78%** Refers to August 2012 data.Source: Banco de España

25

Credit exposure and NPLs by segment

Group exposure and NPL ratios by segment, excl. APS

Real Estate development and/or construction purposes 9,610 1,294 2,581 26.87%Construction purposes non-related to real estate dev. 1,241 28 88 4.28%Large corporates 26,892 526 2,157 6.92%SME and small retailers and self-employed 18,579 168 1,555 7.98%

Individuals wit 1st mortgage guarantee assets 36,662 125 2,446 6.67%Individuals other 4,405 15 348 5.63%Other gross loans to customers 1 5,455

Total gross loans 102,844 8.46%

Total

Sep-12

NPL ratio*NPLSubst.

* Including off-balance sheet items1 Including public entities, other assets, deferral adjustments and repos.Euros in million

26

Contained level of gross NPL entries

NPL entries and recoveries evolution (Euros in million)

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Gross entries 1,092 1,260 1,166 1,123 1,048 1,102 1,016

Recoveries -708 -698 -781 -834 -856 -650 -565

Write-offs -335 -213 -240 -30 -93 -228 -184

Subtotal 49 349 145 259 99 224 267

Non performing real estate assets in process of repossession 265 -265

Net change in NPLs Banco CAM excl. APS 3,945 169

Quarterly change on NPLs excl. APS 314 83 145 259 99 4,169 436

27

Maintaining a coverage level of 15.7% of total exposure

Provisions by exposure Euros in million

Gross amount Provisions Coverage

NPLs 18,854 6,128 33%Substandard 4,158 636 15%Acquired and repossessed RE assets 11,081 5,362 48%Generic, badwill and coverage related to APS 8,351Potentially problematic exposure 34,093 20,477 60%

Global coverage ratio 18,854 15,115 80%

Sep-12

15.7% coverage of total exposure

€20,477M of total provisions / €130,452M of total credit exposure and real estate assets

28

Sabadell’s position confirmed in recent stress test

Oliver Wyman stress test results

Base scenarioExpected loss

(€M)Expected loss(% exposure) Excess capital (€M) Excess capital (€M)

Santander 34,069 16.0% 25,297 19,181BBVA 31,297 15.3% 11,183 10,945Caixabank 32,733 13.4% 5,720 9,421Kutxabank 7,389 12.7% 2,188 3,132Sabadell 25,347 20.6% 915 3,321Bankinter 3,315 7.8% 399 393Unicaja+ CEISS 9,603 18.7% 128 1,300

Adverse scenario

*

*

Banco Sabadell in “Group 0” together with Santander, BBVA, Caixabank, Kutxabank,

Bankinter and Unicaja+CEISS

Source: Oliver Wyman2929

Strong core capital level following the consolidation of Banco CAM

Core capital evolutionIn %

Capital actions in 2012 totals €3.1bn

9.3%10.3% 10.2% 10.1%

Jun. 11 Dec. 11 Jun. 12 Sep. 12

Banco Sabadell preference shares exchange in January

€785M

Rights issue in March

€903M

Banco CAM preference share exchange for ordinary shares in June/July

€1,404M

1 2

1 Ratio pro-forma including Banco Sabadell preference share exchange carried out between December 14, 2011 and January 3, 2012.2 Ratio pro-forma including Banco CAM preference share exchange for ordinary shares. 30

4. Banco CAM integration

31

The integration process is running ahead of forecast …

Total initiatives: 2,784

Forecast

Achieved

SeptemberMay

+ 104 Initiatives(+6%)

2,054

1,949

Initi

ativ

es

74% of the initiatives in the global integration plan have already been achieved, +6% above forecast

32

… and the commercial integration has already taken place

C. Valenciana and Murcian Region

Banco CAM branding

policy

… and the new brand and image is being implemented …

BS zone directorCommercial responsibility for all B. CAM branches

Directly manages those branches not included in B. CAM branch grouping

Director of B.CAM branchesManages all B.CAM branches in zone

Reports to BS zone director

New corporate image buildings

Other actions

BS regional division

BS branches

BS branches

B.CAMbranchesB.CAM

branches

B.CAM branch

groupings

B.CAM branch

groupings

B.CAMbranchesB.CAM

branches

BS zone divisions

33

The transaction represents a substantial increase in market share ...

6.3%

4.1%

BS BS+CAM

5.7%

3.8%

BS BS+CAM

Loan market share in Spain1

(%)Sight deposit market share in Spain2 (%)

1 Net customer credit. 2 Includes household and non financial companiesMarket shares as of August 2012 34

… with capacity to improve commission income …Net fee & commissions over ATA (in %)

Net commissions/number of customers (€/customer)

0.54%

0.19%

CAM BS

229

54

CAM BS

Life & Pension AuM over total customer funds (in %)

Mutual funds AuM over total customer funds (in %)

9.6%

1.8%

CAM BS

9.4%11.7%

CAM BS35As of June 2012

… and significant cross selling potential

Companies. Customer funds overtotal loans (CAM = 100)1

Individuals. Product penetration comparison (CAM = 100)

100

100

100

100

139

115

115

Householdinsurance /Mortgages

Life insurance

Payrollaccounts

Cards

372

100

100

100

100

100

171

491

365

235

397

Developers

Corporates(>150M)

Largecompanies (6-

150M)

SMEs (1.2-6M)

Self-employedand smallretailers

Banco CAM (Index = 100)Banco Sabadell

Potential to improve productivity and cross-selling by adopting BS operation model

36Source: Banco Sabadell, Banco CAM and internal records for the transaction

5. Managing Real Estate assets

37

Increasing property sales …

Sales evolution (in units and value)

Value (M€)Units

708

433

2011 2012

+64%3,805

1,929

2011 2012

+97%

(January-September)

Sales achieved YTD: €708M*FY 2012 sales target for the group: €1,193M*

38* Pre-provision cost (Including BS and Banco CAM from January 2012)

… applying discounts of c. 50% …

Discounts applied to house sales(Transaction price vs. gross value of asset)

45%42%

47%

18%

33%

44%

36%

16%18%

20%

20%

22%

39%

26%28%

22%

26% 25%22%

26% 26%

31%

35% 33%36%

28%

3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

BancoCAM

BancoSabadell

39

… and implementing active commercial campaigns

40

6. Conclusions

41

Conclusions

Banco Sabadell has consolidated its position as Spain’s fourth largest private financial entity

Recent stress test confirms solvency of Banco Sabadell

The core capital level stands at a solid 10.1%, following successful capital raisings of €3.1bn in 2012

The Sabadell CAM commercial integration has already taken place and the new brand has been launched

Maintaining steady pace of income generation in an environment of increasing provisions and higher NPLs

42

43The bank of the best companies. And yours

3q results - banco sabadell...1q11 2q11 3q11 4q11 1q12 2q12 3q12 135.7 152.6 135.7 149.5 133.5 155.3...

Documents