Sabadell Bank has earned 328.1 million euros in 2018, 54.2% less than in 2017, conditioned by the problems of the technological migration of its British subsidiary TSB and having also assumed extraordinary costs to complete the cleanup of its balance. In a communication to the CNMV, the bank chaired by Josep Oliu has specified this Friday that both factors accounted for extraordinary impacts worth 637.1 millions euros.
Without these atypical, the group's net profit would have grown by 9.6% in 2018, reaching 783.3 million euros, says the Catalan bank, which also clarifies that, leaving TSB aside, Sabadell would have earned 568 million of euros in 2018. The interest margin, which reflects the evolution of the typical banking business, rose by 0.3% in 2018, to 3,675.2 million euros.
Although the net commissions have increased by 9.5% to 1,335.3 million, the gross margin, which measures the relationship between income and financial costs, has fallen by 10%, to stand at 5,010.2 million, affected by factors such as the lower results of financial operations (-59.4%) or by the lower contribution of dividends for participations (-79.5%).
On the other hand, operating expenses have increased by 8.9% to 2,920.4 millions and non-recurring costs have increased fivefold, to 291.5 million, mainly due to the problems of technological migration of TSB.
Likewise, in 2018, Sabadell allocated a total of 1,320.4 million euros to provisions for insolvencies and other impairments, and generated capital gains on sales of assets by 2.5 million, compared to 432.7 million obtained through this route in 2017, a set of conditions that explain that last year its profit was reduced by 54.2% compared to 2017, when it won 717 million.
The complex adaptation of TSB
Once the technological migration of TSB has been overcome, Sabadell has considered that its British subsidiary faces a «New stage» in which its technological platform will allow «to improve the customer experience and develop the SME business».
In a communiqué, Sabadell pointed out that «TSB closed the 2018 financial year with 140,000 new registrations in front of 80,000 exits, which consolidates the franchise once the incidents of migration have been overcome ».
Cleaning the balance
The Sabadell has taken advantage of 2018 to complete the cleanup of your balance of toxic assets from the bursting of the real estate bubble, by shedding institutional portfolios for a volume of 5,800 million and having agreed to the sale of 80% of Solvia to Lindorff, a company belonging to the Swedish group Intrum.
In this sense, the group ended 2018 with a default rate of 4.22%, almost one point less than in 2017, and improved its doubtful coverage to 54.1% and its efficiency ratio to 58.29%.
Regarding the magnitudes of the group, total assets increased by 0.4% to 222,322 million; Gross living lending was up 1.3% to 139,366 million, customer funds on balance sheets rose 4%, although off-balance sheet loans fell by 2.8%.
In this line, the bank has ensured that the gross credit grew in 2018 for the first time since the beginning of the crisis and that the live rebounded 3.2% year-on-year, driven by the good performance of SMEs and large companies in Spain and the good performance of the business in Mexico. Last year Banco Sabadell, which employs 26,181 people and has 2,457 branches, attracted 436,455 new clients, 342,138 of them private and the remaining 93,802 of companies.
Regarding its capital position, the fully-loaded CET1 ratio, that is, the one calculated taking into account whether all the regulator's requirements were already in force, stands at 11.3% at the end of 2018.