The Sabadell it was in 2018 the exception (for evil) in the financial sector. Compared to the large entities that showed increases in their double-digit profits, the bank chaired by Josep Oliu had to settle for a net attributable profit of 328.1 million euros, 54.2% less than the previous year. The entity explains these poor results by the extraordinary costs of 637 million related to the serious problems of its British subsidiary TSB when they stopped operating their computer systems and customers were left without access to accounts. Oliu, however, is optimistic because he considers that these problems are part of the past. "It was a battle that cost us a lot of money, but in the end we won," he said on Friday in the presentation of results.
Oliu chose a diplomatic tone to address current issues. The president of Sabadell acknowledged the importance of the scandal that crosses the BBVA for having hired former commissioner José Manuel Villarejo to make alleged illegal eavesdropping. These cases, he admitted, always affect the rest of the bank. "BBVA is a great bank that has had a very good management during the crisis and before, I hope it solves this issue very soon," he simply added.
On the Budget for 2019 presented by the Government, Oliu took note of the doubts shown by the Bank of Spain and the Fiscal Authority (Airef) for an excessively optimistic forecast of income. But the top executive of Sabadell stressed that the accounts designed by the Minister of Finance, María Jesús Montero, are "fiscally responsible", since they do not deviate from the deficit targets agreed with Brussels. "At least on paper," he conceded.
Yes, it was more critical of the Government's plans to introduce a tax on financial transactions. "I am not very supportive of the Tobin tax, it has little importance from the point of view of collection, distorts the free functioning of the market and has administrative costs that can even exceed the collection itself," he said. Oliu also questioned the need for Spain to be the first EU country to introduce this tax. "I am skeptical of the benefits of this rate," he concluded.
As for the entity's results, Sabadell's revenues in 2018 show sharp declines, with a 12.7% drop in its gross margin. The results were poorly received by the market, which punished the actions of Sabadell. The bank affirms that it has rated 5,521 million real estate assets as delinquent foreclosures in the fourth quarter of 2018. The coverage of problematic assets is around 54%. The Sabadell brick management unit shows losses of 478 million, which is 50% less than the previous year.
Likewise, at the end of the year, the group's delinquency ratio was reduced to 4.22% (5.04% without TSB), and the capital ratio CET 1 fully loaded it stood at 11.3%.
The entity that Jaume Guardiola directs has highlighted that once the IT incidents of TSB have been overcome, they will turn to the business of SMEs and mortgages, since the new platform allows the mortgage agents to send requests in half the time compared to the processes prior to migration. They also emphasize that TSB closed the year 2018 with 140,000 new registrations in front of 80,000 exits.
The Sabadell highlighted the strength of its banking business, with a growth in group revenues of 2.9% during 2018. Operating expenses amounted to 2,920.4 million (239 million more than in 2017), costs not recurrent costs were 291.5 million, attributable mainly to the migration and postmigration of TSB, and recurrent costs amounted to 2,628.8, a slight increase of 0.3%.
During 2018, the bank recorded a 3.2% year-on-year growth in living credit, driven by the good performance of SMEs and large Spanish companies, as well as strong growth in Mexico. The credit for new production to companies increased by 7%, to 55,594 million, and the new mortgage loans improved by 72.2%, to 4,024 million.
The gross outstanding credit investment closed the year with a balance of 139,366 million and customer funds on the balance sheet stood at 137,343 million euros (104,859 million without considering TSB), with a year-on-year increase of 4.2%. The financial group finished the year with a total of 2,457 offices and 26,181 employees.
The board of directors has also approved the distribution of a complementary dividend in cash of 0.01 euros per share, in addition to the already distributed 0.02 euros per share; a total of 0.03 euros per share, which leaves a pay out (the share of the result that is distributed among the shareholders) of 50%.