By Jesús Aguado
MADRID (Reuters) -Sabadell raised on Thursday its payout target for 2024 and 2025, as the Spanish bank tries to fend off a hostile takeover by its larger rival BBVA, with quarterly profits surpassing forecasts despite pressure on lending income.
BBVA wants to create a bank with more than 1 trillion euros in assets to gain scale and better cope with a lower interest rate environment.
As part of its strategy to strengthen its case for remaining independent, Sabadell announced a 3.4 billion euro shareholder payout for 2024 and 2025, up from 3.3 billion euros.
The revised goal came after Sabadell reported a quarterly rise of 29 basis points in its capital ratio to 13.31% at the end of March.
The lender’s move comes after Spain’s competition watchdog approved the proposed takeover deal, currently valued at around 14 billion euros ($15.87 billion), subject to several remedies.
The government, which is opposed to the bid, launched a non-binding public consultation on the matter earlier, which analysts say is another sign of political opposition to the deal.
Net interest income, the difference between earnings on loans and deposit costs, in the quarter fell 1.3% year-on-year to 1.22 billion euros, in line with analysts’ forecasts.
For 2025, Sabadell said it expects NII without its British unit TSB to fall by a low single-digit.
At 0815 GMT, shares in Sabadell rose 2%.
JPMorgan said that results were helped by “stronger than expected non-core revenues and benign credit losses.”
Net profit jumped 59% year-on-year to 489 million euros due to a lower impact from the renewed banking tax after a charge of 31 million euros as it evenly spread the levy on a quarterly basis. In 2024 it booked the entire 192 million euros in the first quarter.
Lower provisions helped Sabadell raise its recurrent return on tangible equity ratio, a measure of profitability, to 14.1% from 14% in December, in line with its profitability target.
Net profit at its primary Spanish unit surged 49% to 375 million euros in the reported quarter.
At TSB, its British unit, net profit almost doubled to 74 million pounds ($98.52 million), supported by a positive one-off, while lending income rose 9.4%.
($1 = 0.8812 euros)
($1 = 0.7511 pounds)
(Reporting by Jesús Aguado; additional reporting by Emma Pinedo, editing by Inti Landauro, Sherry Jacob-Phillips and Louise Heavens)
