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Investing.com -- Spanish lender Banco Sabadell reported second-quarter 2025 results Thursday, showing stable core revenues and improved capital position despite a slight decline in net interest margin.
The bank announced an ordinary first-half dividend of €0.07 per share, which will be paid on August 29th. Sabadell also completed its previously suspended buyback related to fiscal year 2023 results (€247 million, or €0.04 per share) in May and had executed approximately 80% of the €755 million FY24 program as of July 18th.
Sabadell’s group net interest income was in line with consensus at €1,209 million, down 1% quarter-over-quarter. The group’s net interest margin decreased to 1.97%, down 5 basis points from 2.02% in the first quarter. The customer spread narrowed to 2.98% from 3.05% in Q1, driven by an 11 basis point decrease in customer loan yield to 4.06% and a 4 basis point decrease in cost of deposits.
Performing gross loans increased 1.6% quarter-over-quarter, exceeding analyst expectations of approximately 0.4% growth. Net fees and commissions came in 1% above consensus at €346 million, up 2% from the previous quarter and 5% year-over-year.
The bank’s gross operating income was 1% below consensus at €1,589 million, affected by lower than expected trading income, though core revenues were broadly in line with expectations.
Total (EPA:TTEF) reported costs were 2% below consensus at €769 million with no material extraordinary expenses. Compared to the same period last year, total costs decreased by 2% in euro terms.
Asset quality improved with total provisions and impairments 30% below consensus at €162 million. The quarterly cost of risk decreased to approximately 26 basis points, compared to 35 basis points in Q1 and 43 basis points in Q2 2024. The group’s non-performing loan ratio improved to 2.47% from 2.67% in the previous quarter.
Sabadell’s fully-loaded CET1 capital ratio strengthened to 13.56%, up approximately 25 basis points quarter-over-quarter and 56 basis points above management’s target of 13%. The tangible book value per share increased 3% to €2.43.
On the funding side, group total deposits decreased by 0.3% quarter-over-quarter, against analyst expectations of approximately 3.1% growth. The loan-to-deposit ratio stood at 95.9%, up from 94.3% in the first quarter, while the liquidity coverage ratio was 176%, down from 197% in Q1.
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