banco sabadell · 2q11 results euros in million * * jun 10 include capital gains of € 250 million...
TRANSCRIPT
Banco Sabadell2Q11 Results
July 21st, 2011
2
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 Banco Sabadell 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 Banco Sabadell 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.
3
Index
1. Quarterly highlights
2. 2Q11 Results
3. Commercial activity, balance sheet and liquidity
4. Risk management
5. Real estate portfolio
4
1. Quarterly highlights
5
Quarterly highlights
Net interest income evolution according to expectations
Focus on cost containment
Satisfactory commercial activity delivering on CREA plan
Comfortable liquidity position
Strong capital position confirmed by recent stress test
6
2. 2Q11 Results
7
2Q11 Results
Euros in million
*
* Jun 10 include capital gains of € 250 million related to a Sale & Leaseback transaction
Jun. 10 Jun. 11 % var 11/10
Net Interest Income 765.2 764.6 -0.1%Equity Method & Dividends 47.8 39.2 -18.1%Commissions 253.3 288.4 13.9%Trading Income & Forex 175.7 188.4 7.2%Other Operating Results 5.4 3.2 -40.8%Gross Operating Income 1,247.4 1,283.6 2.9%Personnel Costs -326.0 -370.9 13.8%Administrative Costs -163.4 -191.0 16.9%Depreciations -78.7 -62.6 -20.4%Pre-provisions Income 679.3 659.1 -3.0%
Total Provisions & Impairments -693.8 -545.5 -21.4%Gains on sale of assets 292.1 2.6 -99.1%Profit before taxes 277.7 116.2 -58.1%Taxes and others -44.0 48.1 --Attributable Net Profit 233.6 164.3 -29.7%
8
Core Tier 1 capital ratio 3,240RWA 56,503
Mitigating measures
Countercyclical provisions 344 + 61 bps
Extraordinary gains obtained in 2Q11 130 + 23 bps
Mandatory convertible subordinated bonds 818 + 145 bps
Total mitigating measures 1,292RWA 56,503
Core Tier 1 capital ratio 4,532RWA 56,503 8.0%
5.7%
Strong capital position confirmed in recent stress test
10.80 11.08
6.01
9.37
0.61
1.161.14
3.64 2.49
1.721.33
7.666.678.20
9.27
0.541.44
1.21
1.700.66
2007 2008 2009 2010 1Q11 2Q11
Core Capital Lower Tier I Tier II
9.7810.87
11.8410.47
Stress test result in the adverse scenario December 2012Euros in million and in %
8.0%
5.7%
Capital ratios evolutionIn %
9
Net interest income is improving ...
Net interest income 1H11:-0.1 % YoY
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
374.1 391.1361.2
332.8379.1
Net interest income 1H11 Like-for-like*: -10.2% YoY
385.4
* Including BG in 2010
Net interest income evolutionEuros in million
10
… according to expectations …
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%
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Net interest margin
2.72% 2.52% 2.31% 2.17% 2.05% 1.91%
5.93% 6.06% 5.56%4.93%
4.21%3.79% 3.53% 3.49% 3.50% 3.65% 3.86% 3.99%
3.13% 3.22% 3.47% 3.48%
1.99%1.89%1.80%
2.80% 2.84% 2.81% 2.81% 2.73%
6.29%6.28%
2.00%1.97%
2.83%
2.21%1.70% 1.48% 1.36% 1.44% 1.59%
1.85%
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Customer spread Customer loan yield Cost of customer funds
Margin evolutionIn %
11
… driven by active price management
Total volume of repriced assets in the quarter: € 13.3 bn*Positive impact in the stock spread due to our balance sheet flexibility* New granted transactions with price change
Product Jun-10 Jun-11 Var YoY Jun-10 Jun-11 Var YoY
Credits 233 264 +31 174 223 +49Loans 156 247 +91 156 194 +38Mortgages to individuals 81 116 +35 74 78 +4Leasing 161 206 +45 97 113 +16Commercial loans 242 290 +48 267 309 +42Confirming 184 225 +41 168 237 +69Forfaiting 263 225 -38 183 215 +32
Total loans 168 230 +62 134 157 +23
Deposits 182 116 -66 149 157 +8
Front book spreads Back book spreads
12
Commission income driven by customer activity
31.2 30.7 28.1 32.8 30.9 31.7
54.2 51.8 53.160.8 59.1
75.6
43.8 41.6 42.4
45.9 45.8
45.4
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Asset mgmt1 Services Lending
Commission income 1H11:+13.9 % YoY
Commission 1H11 like-for-like*:+4.6% YoY
129.3 124.0 123.7139.5 135.7
152.6
* Including BG in 20101 Including mutual funds commissions and pension funds and non-life insurance brokerage
Commissions evolutionEuros in million
13
Slight reduction in personnel expenses like-for-like …
159.9 162.2 162.5 172.6 179.0 176.0
1.0 2.9 3.215.5 13.1 2.8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Recurrent Non-recurrent
Personnel expenses 1H11:+13.8% YoY
Personnel expenses 1H11 Like-for-like*:
Recurring personnel expenses 1H11: +10.2% YoY
-0.3% YoY
160.9 165.1 165.7188.1 192.1 178.7
* Including BG in 2010
Personnel expenses evolutionEuros in million
Like-for-like cost containment (-0.3% YoY)* Excluding BG and non-recurrent expenses
14
… and contained general expenses excluding restructuring charges
Recurrent Sale&Leaseback
General expenses 1H11:+16.9% YoY
General expenses 1H11 Like-for-like*:
Recurring general expenses 1H11:+13.1% YoY
-0.1% YoY
Non-recurrent
Like-for-like cost containment (-0.1% YoY)
76.0
87.591.9
101.0 98.5
76.082.4 84.3
93.484.4 84.6
5.17.6 7.9
7.6
7.96.2
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
92.5
General expenses evolutionEuros in million
* Excluding BG, Sale & Leaseback transaction and restructuring charges
15
42.1% 42.3% 43.6%46.2%
49.7%47.0%
Mar. 10 Jun. 10 Sep. 10 Dec. 10 Mar. 11 Jun. 11
1,229 1,230 1,223 1,214 1,221 1,223 1,222 1,221 1,221
9,668 9,615 9,5599,466
9,8399,746 9,701
9,624 9,599
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
10,777
1
1,467
2 Efficiency ratio excluding non-recurrent items* Jun. 11: 45.1%
Branches Employees Without B.GUI
10,721
1,467
10,610
1,378
We continue to optimise the network …Employee and branches evolutionIn number
Cost income evolution*In %
* It excludes gains from debt-for-equity transaction and other repurchase transactions in 2010
11Q10 Acquisition of Sabadell United Bank2 4Q10 Acquisition of Banco Guipuzcoano
16
… and we have made additional efforts in provisions
Provisions and write-downs evolution and breakdownEuros in million
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Specific 228.0 212.2 186.1 124.7 142.2 143.4Extraordinary charge 0.0 90.0 46.0 66.0 186.2 0.0Implementation of regulation in loans (3/20 0.0 0.0 -120.0 0.0 0.0 0.0Substandard -54.2 -31.2 -61.9 -30.3 -32.8 -52.2Metrovacesa 0.0 0.0 0.0 76.1 0.0 0.0Real estate assets 46.0 209.8 160.9 49.9 30.0 62.4BCP 0.0 38.5 0.0 16.2 1.2 34.7Goodwill and others 8.9 5.3 12.2 4.2 0.8 9.3
Subtotal 228.6 524.6 223.3 306.8 327.6 197.6
Generic -61.2 1.7 -103.2 -152.6 2.5 17.9
Total provisions and impairments 167.4 526.3 120.1 154.2 330.1 215.5
17
3. Commercial activity, balance sheet and liquidity
18
Jun-10 Jun-11 % Var.
Individuals 96,828 147,152 +52%
Companies 22,661 30,888 +36%
Cuenta Expansión:38,918 new accounts
Cuenta Expansión Negocios: 22,867 new accounts
Now reaching 2.5m customers, in line with CREA
We continue to gather excellent results in customer acquisition …
Remarkable success in customer gathering
With two market-leading products paving the way in 2Q11
19
… on track to meet the targetsof CREA …
Monthly new individual customers Monthly new company customers
0
5,000
10,000
15,000
20,000
25,000
30,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 2011
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 2011
Target 2011: 290,000 new customers
Target 2011: 50,000 new customers
20
… achieving market share gains bothin individuals …
Sight deposits
3.89%
4.39%
May. 10
May. 11
+50 bps
2.06%
2.52%
Jun. 10
Jun. 11
Payrolls
+46 bps
Credit card invoicing (quarterly)
2.99%
2.66%Mar. 10
Mar. 11
+33 bps
3.09%
3.50%
May. 10
May. 11
+41 bps
1 Including cheques, transfers, SEPA transfers, receivables and promissory notes
Transactionality1
21
… as well as companies …
3.13%
4.09%
Jun. 10
Jun. 11
+96 bps
Commercial lending
23.50%
23.52%
Jun. 10
Jun. 11
+2 bps
6.73%
10.90%
May. 10
May. 11
+417 bps
7.58%
9.11%
May. 11
May. 11
+153 bps
Brokerage volume2 ICO loans (public subsidy loans)
Export documentary credit
2 Buy-sell amounts
22
7.367.307.327.217.547.29
6.78 6.95 6.77 6.61 6.19 6.11
2006 2007 2008 2009 2010 Jun-11Banco Sabadell group Market
0 5 10 15 20
BankinterSan Cons Finance
Caixa GaliciaDeutsche Bank
Banco GuipuzcoanoCajasurBanesto
Barclays BankCajasol
CCMUnicaja
Caja DueroBanco PastorCaja España
Banco ValenciaCGACanarias
CajasturBBVA
CAMIbercaja
Banco SantanderBanco Popular
Caja MadridLa Caixa
Caixa CatalunyaBBK
BancajaBanco Sabadell
2009 2008 *
Most valued by the customersClaims ratio amongst sizable institutions by Bank of Spain *
Renewal of the Global Award of European Excellence
Source: Bank of Spain, Service Quality Annual Reports 2009 and 2008.*Number of claims by volume of activity (average of deposit and credit volumes) and refers to the number of claims passed on by the Bank of Spain to be contented by each entity. Only refers to larger institutions.
Four consecutive years (2007-2010) increasing the gap vs. the system
Leaders in quality of service
Source: STIGA, “RCB Objective Quality in Retail Banking Networks” Quarterly report preview, 2Q11
23
Holding up volumes in a difficult environment …
Customer funds evolution
1 Including BG in 20102 Excluding repos, including preference shares and mandatory convertible bond placed in the retail network
Euros in million
Jun-10 Dec-10 Jun-11% Var.
YoY% Var. YoY proforma1
On-balance sheet customer funds2 41,212 49,374 51,055 23.9% 10.7%Fix-term deposits 24,191 30,092 31,456 30.0% 15.7%Sight deposits 16,021 18,285 18,600 16.1% 3.8%
Off-balance sheet funds 17,908 18,834 18,563 3.7% -2.1%Mutual funds 8,532 8,853 8,613 0.9% -6.8%Pension funds 2,777 3,016 2,903 4.6% -6.6%Third party insurance products 5,434 5,727 5,691 4.7% 4.4%
Gross loans to customers ex repos 65,356 73,058 72,309 10.6% -0.8%
24
-2,000
-1,000
0
1,000
2,000
3,000
4,000
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Jul 11
10,000
15,000
20,000
25,000
30,000
35,000
1Q09 2Q09 3Q094Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q110
2,500
5,000
7,500
10,000
Wholesale funding
Sight deposits
Time deposits
Mutual funds (rhs)
YTD 2011: € 3,919 m
205%
142%
179%170%
148%
2007 2008 2009 2010 2Q11
… continuing to improve the commercial gap quarter after quarter …Change in the commercial funding gapEuros in million
Customer funds evolutionEuros in million
Loan to deposit ratio*In %
* Excluding repos
25No recourse to ECB
*
* Including € 8,851 million in liquid assets and € 2,821 million in structural liquidity
In a demanding environment we continue to command comfortable liquidity levels
Euros in million
Liquidity position 1Q11 13,017
Commercial gap BS change -417Real estate portfolio change -543Issues maturity -354New issues 200Net short term issues change -244Increase of available ECB eligible assets -162Other 175
Liquidity position 2Q11 11,672
26
Deposits 67.33%
Customer repos 4.28%
Client commercial paper 0.06%
Preference shares 1.28%
Wholesale 27.05%
Securitisations 9.09%
Preference shares 0.23%
ECP10.98%
Subordinated debt 4.07%
Senior debt 16.96%
Covered bonds 58.66%
CH issuing capacity 3,372CT issuing capacity 1,300State backed guarantees available 5,601
BS has a balanced funding structure …Funding structureIn %
Breakdown of wholesale fundingIn %
Covered bonds and guaranteed debtissuance buffer Euros in million
27
2,8802,307
1,442
2,739
56%
78%
75%
121%89%
2Q10 3Q10 4Q10 1Q11 2Q11Outstanding amount commercial paper +ECP (excl. BG)% renewal
2.653
1,60
938 0
1,60
01,
366
900
1,35
245
01,
280
1,50
00 0
1,00
00 0
200
01,
500
0 01,
875
774
0 50
300
200
0 0 13 170
100
1.50
0
0
500
1,000
1,500
2,000
Bonds and covered bondsSenior debtGovernment-guaranteed issuesSubordinated and preference sharesOther mid and long term instruments
BS BG BS BGBS BGBS BG2011 2012 2013 >2013
1,8001,047 400
1,7391,699
400
230
2,780 7,52050 25
600
94392
125
2011 2012 2013 2014 2015 2016 2017 2018Matured
… and a comfortable maturity calendar
Wholesale funding maturity calendar Including Banco Guipuzcoano. Euros in million
Maturity by product type Euros in million
Short term funding Euros in million and percentage
28
4. Risk management
29
Mar-11
Total Normal Substandard NPLs NPL ratio*
NPL ratio*
Real Estate development and/or construction purposes 10,195 6,319 1,685 2,191 21.50% 19.98%Construction purposes non-related to real estate dev. 783 752 0 31 2.26% 2.69%Large corporates 22,153 21,094 488 572 2.15% 2.24%SME and small retailers and self-employed 18,907 17,702 304 901 4.52% 4.04%Individuals wit 1st mortgage guarantee assets 16,322 15,770 1 551 3.38% 3.20%
Of whichPurchase of 1st residence 13,320 12,932 1 388 2.91% 2.73%Other real guarantees assets 3,002 2,839 0 164 5.46% 5.20%
Individuals with other guarnatees 400 398 0 2 0.40% 1.26%Individuals other 1,752 1,655 0 97 5.13% 5.88%Subtotal gross loans to customers 70,512 5.55% 5.46%Other gross loans to customers 1 1,923Total gross loans 72,435 5.55% 5.46%
Jun-11
Credit exposure and NPLsaccording to purpose
*Including off-balance sheet items1 Includingcaption 4: public entities; caption 8:other assets and deferral adjustments
30
40%
50%
60%
70%
80%
90%
100%
Entity
1Enti
ty 2
Entity
3Sab
adell
Entity
4Enti
ty 5
Entity
6Enti
ty 7
Entity
8Enti
ty 9
Entity
10Enti
ty 11
Entity
12Enti
ty 13
Entity
14Enti
ty 15
Entity
16Enti
ty 17
Entity
18Enti
ty 19
Entity
20Enti
ty 21
LTV < 80% LTV > 80%
Residential mortgage LTV rankings
Residential mortgage LTV breakdownIn %
BS has one of the lowest risk profiles in the sector
Source: Companies’ transparency effort exercises
31
Coverage levels consistent with ourexpected loss rates
Coverage including mortgage guarantees is 114%
Coverage levels by type Euros in million and %
Amount Fund Coverage
NPLs 4,472 1,197 27%Substandard 2,556 399 16%Acquired and repossessed RE assets 3,601 1,032 29%Write-offs 1,239 1,239 100%Generic 418Potentially problematic exposure 11,868 4,284 36%
Global coverage ratio 4,472 2,014 45%
32
NPL entries and recoveries evolution
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Gross entries 1,021 904 1,033 979 1,092 1,260Recoveries 579 592 617 728 708 698Write-offs -183 -93 -201 -31 -335 -213Subtotal 258 219 214 220 49 349Non performing real estate assets in process of repossession 265 -265Quarterly change on NPLs 258 219 214 220 314 83
Initial impact of Banco Guipuzcoano incorporation 450
Euros in million
33
138.3414.3
92.7 178.5 245.0
637.0498.0
-89.7 -96.1 -67.0 -94.0-29.8-12.3
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Real estate assets represent 2.7% of loans vs. 4.8% for the sector* *Net real estate assets over total net customer loans. Sector percentage shown an average for alll the entities. Source: Banco Sabadell
Remarkable effort in provisioning for on-balance sheet real estate assets
Real estate assetsevolution of coverage levelsEuros in million
Real estate assets. Quarterly additions Euros in million
Repossessions Banco Guipuzcoano
Sales
1Q11 2Q11
Gross portfolio 3,058 3,601
Total fund 964 1,032
Net portfolio 2,094 2,569
Coverage 32% 29%
34
5. Real estate companymanagement
35
Finished property
Land under development Land Total %
1st residence 922 966 537 2,424 67%
2nd residence 168 123 37 328 9%Industrial 151 36 143 330 9%Commercial 117 204 45 366 10%Hotels 80 35 13 128 4%Other 22 2 1 25 1%
Gross portfolio 1,459 1,366 776 3,601 100%Provisions 320 443 269 1,032 29%
Net portfolio 1,139 923 507 2,569
67% of the portfolio is first residence
Real estate portfolio breakdownEuros in million
36
38%
16%
4%
10%
14%
Catalonia 38%
Madrid 16%
Valencia 14%
Andalusia 10%
Balearic islands 4%
82%
Barcelona andmetropolitan area
32%
Over half of our real estate assets are in Catalonia and MadridDistribution of real estate assetsIn %
37
58% of the portfolio has a time tomarket of less than 2 years
Euros in million
Gross portfolio Prov.
Net portfolio
% mobi-lised
Portfolio by time to market 3,601 1,032 2,569
Time to market: short term 2,099 605 1,494Direct sales 984 269 715 7%Rental properties 274 54 220 59%Joint efforts with developers 381 123 258 67%Investments/SPVs 280 101 179 16%Government Subsidised housing 180 58 122 41%
Time to market: 2-4 years 811 211 600
Time to market: >4 years 691 216 475
Already mobilised assets: € 603 million (29%)
38
2009 2010 1Q11 2Q11
Sales price 42 174 48 71
Pre-provision cost1 55 228 67 95Discount to pre-provision costs 23% 24% 27% 25%Provisions built up 12% 23% 29% 23%% of sales price not covered by provisions 11% 1% -1% 2%
Real estate assets are sold at prices in line with current book value
Real estate asset sales evolutionEuros in million and %
Sales target for 2011: € 400 million2
1 Including acquisition, development, and any transaction costs related to the sale of the asset2 Pre-provision cost
39