Banco Sabadell obtains a net imputed profit of 782.34 million euros.
24 January 2008
Excellent evolution of ordinary business: the net interest income increases by 20.0% and the operating margin is 30.1% higher than the previous year.
- The ratio of delinquent payments, of 0.47%, remains one of the lowest in the sector, with a doubtful risk and delinquent payments cover of 394.29%
- The consolidated profit and loss account includes extraordinary charges to the value of 130.66 million euros in prevision of the future evolution of the economic environment
In a generally strong climate influenced by the confidence crisis which, since the second semester of 2007, has affected the international financial markets, Banco Sabadell closed the year and its 126th fiscal year with a notable consolidated result which faithfully reflects its solid progression and solvency alter capitalizing on the acquisitions carried out.
"These excellent results – stated the President of the Bank, José Oliu-, obtained after some very complicated months for the whole sector, demonstrate the good health of our business model and the flexibility of the Bank to move freely both in favourable environments as well as in an environment with a high component of uncertainty and volatility such as the current climate.
"The international financial markets may take some months to recover the calm and the trust which has been lost, but, Banco Sabadell reacted with determination at the first signs of alarm, last august, an took the necessary measures to deal with the new situation of the markets without giving an efficient response to the financial needs of our clients, both private and company."
Evolution of the balance sheet
Once again, in 2007, Banco Sabadell maintained a favourable evolution, strengthening even more its position as a reference in the sector due to its solvency, risk quality and excellent service.
Investment: credit investment to clients increases by 13.6%
Gross client credit investment increased by 13.6% and presents a balance of 63,219.33 million euros, with relation to the close of the previous fiscal year.
In concordance with the positioning of Banco Sabadell in the market, the good performance of the specialized financing to companies stands out in this sector (leasing contracts, factoring and confirming), which, all together, has increased by 20%, compared to last year and reaches 6,176.51 million euros.
At the close of the fiscal year, the delinquent payment ratio on the total of investments is of 0.47%, remaining one of the best in the system. The payments carried out situate the index of doubtful risk cover and delinquent payments at 394.29%.
The lower growth in credit investment to clients explains that the net endowments to provisions for insolvency and other impairments is 13.9% lower in interannual terms.
Resources: term deposits increase by 71.4%
From the last month of August, the focus of the commercial activities of the Bank was aimed at attracting resources. This orientation and the campaigns carried out have demonstrated the efficiency and permitted a significant increase in the volume of client resources on the balance sheet, which grew by 10.7%, and where term deposits, which reached 15,634,69 millions of euros and increased by 71.4% during the last twelve months stood out..
Margins and profits
The consolidated annual profit and loss account presents a notable evolution in the different ordinary business margins, as a consequence both of the correct management of client differentials as well as the strict control of the recurring costs.
The annual net interest income reached 1,317.24 million euros and is 20.0% higher that that obtained in the previous fiscal year, as a result of the sustained growth of the average volume of investment and client resources and the rigorous assignation of prices.
Revenue from commissions increased by 14.5% interannually and those obtained from insurance activity maintained their progress and reached 78.40 million euros, 31.1% more than at the same date the previous year, with a large contribution from protection products, savings plans and life annuities.
The ordinary margin, once the results for financial operations were accounted, reached 2,196.40 million euros and is 21.2% higher than one year ago.
From one year to another, the different perimeter of consolidation derived from the full integration of the Banco Urquijo and the incorporation of TransAtlantic Bank, as well as the advance of the setting up of various efficiency programmes foreseen for 2008 in the new directive plan Óptima 09, situates the operating costs at 1,025.04 million euros, 12.1% more than the previous year.
With all of this, the consolidated operating margin registers an increase of 30.1% on that obtained the previous year.
In prevision of the evolution of the new economic environment, Banco Sabadell has taken advantage of this year of excellent banking results and of its affiliate BIDSA to destine 130.66 million euros to push ahead on a programme of restructuring and improvement of operative costs, registering extraordinary expenditure in personnel compensation, advancing amortizations and carrying out previsions beyond the minimum established by the regulations.
With this information, the profits before tax of Banco Sabadell and its group reached 989.84 million euros, 57.2% more than the previous year, and the net attributed profit totals 782.34 million euros.
In the interannual comparison, it must be considered that the result of the year 2006 (908.40 million euros) included the extraordinary profit of the disinvestment of the real estate company Landscape, and the accounted imputed net profit experimented a reduction of 13.9%. However, with respect to the comparable net profit of 569.31 million euros which was declared for 2006, excluding this operation the imputed net profit for 2007 was 37.4% higher.
Banco Sabadell bonds
On 31st December 2007, the quotation closed at 7.41 euros. The average of daily purchasing of Banco Sabadell (SAB) bonds during 2007 was 6.29 million, much higher than the average for 2006, which was situated at 4.37 million bonds.
Last October, a payment was made of the dividend of 0.13 euros per share, on the results of the 2007 fiscal year. This dividend is 36.8% higher than that liquidated for the same concept the previous year, in concordance with the good performance of the profit and loss account.
Other relevant facts of the 2007 fiscal year
From the ViC 07 to the Optima 09
Banco Sabadell closed 2007 having fulfilled its growth, profitability and efficiency objectives established in its triennial plan ViC 07. On 31st December, the profitability ratio ROE was at 20.4% (against an objective of 16.5%) and the efficiency ratio reached was of 42.6% (against an objective of 45%), permitting the introduction of cost programmes planned for 2008 which finally lifted the ration to 46.7%.
Information was also given on the new directive plan Optima 09, the mission of which is the optimization of the capacities and the operational model in such a way that, at the close of 2009, Banco Sabadell will be situated among the most efficient and profitable banks on the national market having consolidated its position as an outstanding financial company, a leader in those business areas where Banco Sabadell has recognized strengths and a solid leading position in quality of service.
Banco Urquijo: 29.8 million euros of consolidated result
During 2007, the new Banco Urquijo completely concluded its strategic redefinition process after its integration into the Banco Sabadell Group and it closed its first fiscal year with a clear focusing of its business in the private banking segment.. Its excellent service was applauded by the magazine Euromoney declaring it as the second best private Spanish bank. On 31st December, its contribution to the consolidated results, before taxes, was, 29.8 million euros.
Corporate operations
In 2007, Banco Sabadell purchased TransAtlantic Bank in Miami. This was a local investment, aiming to provide a new operative platform to add to the office that Banco Sabadell has had in Florida since 1993, aimed at the business of private and corporate banking of individuals and companies. This office and the position of Banco Sabadell have also been strengthened this year with the agreement for the purchase of the private banking business of BBVA in Miami, with which the total business volume managed by Banco Sabadell in Miami will stand at 3,000 million dollars.
On the other hand, during the fiscal year, Banco Sabadell has moved to control 100% of the risk capital company Aurica XXI and has carried out the sale to BNP Paribas of the affiliate Exelbank, from Banco Urquijo, specialized in the providing of custody and depository of bonds services to foreign and Spanish financial companies.
Expansion and channels: more network and better online services
Banco Sabadell has closed the year with a network of 1,249 offices, 45 more than that of the same date in 2006. Of the total network that operates under the name of SabadellAtlántico and Banco Herrero in Asturias and León, 66 offices are specialized in company banking, 17 in private banking (Banco Urquijo), 95 in attention to foreigners residents in coastal areas (Solbank) and 24 configure the international network.
The contracting and use of channels of online banking is maintaining its favourable evolution, in such a way that contracts for the Internet banking service (BS Online) are growing by 4.94% interannually and operations by 10.65%. Contracts for mobile phone services (BS Móvil) already exceed the figure of 190,000.
HP, Telefónica and IBM, new technological parteners
2007 has been very intense with regards alliances with suppliers of top level technologies. Similarly, Banco Sabadell has formalized agreements with Hewlett Packard, for the providing of outsourcing and development services and the introduction of technological initiatives of great strategic value; with Telefónica, for the comprehensive management of telecommunications and the development of new innovative initiatives such as Instant Banking, and with IBM, to head the incorporation of the technologies of the 2.0 network in the financial sector and consolidate in Spain a banking model based on technical excellence.
In 2007 Banco Sabadell has been the first Spanish financial company to use the BIDI codes in its commercial publicity and to provide in Spain a deed whose liquidation of taxes and registry inscription has been completely carried out by telematic means..
Leadership in quality of service to the client
One year more, the quality of service of Banco Sabadell and its group remains inalterable and at the head of Spanish banks, much higher than the average in the sector, according to the quarterly advance of the Stiga RCB analysis of objective Quality in commercial networks, corresponding to 2007, and data given by the Claimants Service of Banco de España in which Banco Sabadell figures as the financial company with the fewer number of claims presented.