Banco Sabadell reported that its lending income remained under pressure in the fourth quarter, impacted by persistently low interest rates. This comes as the market’s attention increasingly turns to the bank’s profitability outlook following the unsuccessful takeover attempt by BBVA and the divestiture of its UK subsidiary, TSB. Banco Sabadell is a Spanish financial institution offering a range of banking services to individuals and businesses. The bank is currently navigating a challenging environment of squeezed margins, affecting Spanish banks despite benefiting from higher loan costs tied to variable rates, with lower borrowing costs for clients.
In the fourth quarter, Sabadell’s net interest income (NII), representing earnings on loans minus deposit costs, decreased by 5.2% year-on-year to €1.21 billion. This figure aligns with analysts’ forecasts. For the full year 2025, NII was down 3.7% to €4.84 billion. Looking ahead, as part of its strategic plan, Sabadell anticipates an NII of €3.9 billion for 2027, excluding TSB. This is the same amount it achieved in 2024 ex-TSB. The deal has yet to be closed. For 2026, it expects lending income to rise above 1%.
The group’s net profit for the fourth quarter experienced a 27.4% decline, settling at €386 million, which was in line with analysts’ expectations, after being impacted by a banking tax. Over the entire year 2025, net profit decreased by 2.8% to €1.78 billion, attributed to reduced one-off gains compared to 2024. Analysts are closely monitoring whether Sabadell can sustain its growth trajectory without TSB, a task that will be overseen by the new chief executive, Marc Armengol.
Sabadell announced it has received authorisation from the European Central Bank (ECB) for a new share buyback program of €800 million. This buyback is part of a broader plan to distribute €6.45 billion to shareholders between 2025 and 2027. (Conversion: €1 = $0.8475)
