Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
Sabadell1Q 2016 Results
April 22, 2016
Disclaimer
This presentation (the "Presentation") has been prepared and is issued by, and is the sole responsibility of Banco de Sabadell, S.A. ("Banco Sabadell" or "the Company"). For the purposes hereof, the Presentation shall mean and include the slides that follow, any prospective oral presentations of such slides by the Company, as well as any question-and-answer session that may follow that oral presentation and any materials distributed at, or in connection with, any of the above.
The information contained in the Presentation has not been independently verified and some of the information is in summary form. No representation or warranty, express or implied, is made by Banco Sabadell or any of its affiliates (Banco Sabadell Group), nor by their directors, officers, employees, representatives or agents as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions expressed herein. None of Banco Sabadell nor any of its affiliates, nor their respective directors, officers, employees, representatives or agents shall have any liability whatsoever (in negligence or otherwise) for any direct or consequential loss, damages, costs or prejudices whatsoever arising from the use of the Presentation or its contents or otherwise arising in connection with the Presentation, save with respect to any liability for fraud, and expressly disclaim any and all liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in connection with the accuracy or completeness of the information or for any of the opinions contained herein or for any errors, omissions or misstatements contained in the Presentation.
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 judgment 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 and other risk factors published in our past and future filings and reports, including those with the Spanish Securities and Exchange Commission (“CNMV”) and available to the public both in Banco Sabadell´s website (www.grupobancosabadell.com) and in the CNMV’s website (www.cnmv.es), as well as other risk factors currently unknown or not foreseeable, which may be beyond Banco Sabadell's control, could adversely affect our business and financial performance and cause actual results to differ materially from those implied in the forward-looking statements.
The information contained in the Presentation, including but not limited to forward-looking statements, is provided as of the date hereof and is not intended to give any assurances as to future results. No person is under any obligation to update, complete, revise or keep current the information contained in the Presentation, whether as a result of new information, future events or results or otherwise. The information contained in the Presentation may be subject to change without notice and must not be relied upon for any purpose.
This Presentation contains financial information derived from Banco Sabadell´s unaudited financial statements for the three-month period ended March 31, 2016. None of this financial information has been audited by our auditors. 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 a different methodology be applied.
Market and competitive position data in the Presentation has generally been obtained from industry publications and surveys or studies conducted by third-party sources. Peer firm information presented herein has been taken from peer firm public reports. There are limitations with respect to the availability, accuracy, completeness and comparability of such data. Banco Sabadell has not independently verified such data and can provide no assurance of its accuracy or completeness. Certain statements in the Presentation regarding the market and competitive position data are based on the internal analyses of Banco Sabadell, which involve certain assumptions and estimates. These internal analyses have not been verified by any independent source and there can be no assurance that the assumptions or estimates are accurate. Accordingly, undue reliance should not be placed on any of the industry, market or Banco Sabadell’s competitive position data contained in the Presentation.
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. Banco Sabadell disclaims any liability for the distribution of this Presentation by any of its recipients.
Banco Sabadell is not nor can it be held responsible for the use, valuations, opinions, expectations or decisions which might be adopted by third parties following the publication of this Presentation.No one should purchase or subscribe for any securities in the Company on the basis of this Presentation. This Presentation does not constitute or form part of, and should not be construed as, (i) an offer, solicitation or invitation to subscribe for, sell or issue, underwrite or otherwise acquire any securities, nor shall it, or the fact of its communication, form the basis of, or be relied upon in connection with, or act as any inducement to enter into any contract or commitment whatsoever with respect to any securities; or (ii) any form of financial opinion, recommendation or investment advice with respect to any securities.
By receiving or accessing to this Presentation you accept and agree to be bound by the foregoing terms, conditions and restrictions.
2
1Q take-aways
Profitability and efficiency
Commercial activity
Solvency and asset quality
TSB results and integration update
1Q take-aways
� Continued resilience of NII, which grew in both Spain and UK despite increased pressure
� Commission revenue fell QoQ mainly driven by market conditions’ impact in AuM
� Operating costs decreased QoQ
� Extraordinary trading gains resulted in an increase in extraordinary provisions
Profitability
TSBAsset quality & solvency
Commercial activity
� Continued improvement in lending mix and stable performing loan book
� Ongoing market share increase across products in Spain
� Digitalisation of product platform continued, includingkey distinctive initiatives i.e. Sabadell Wallet, Proteo Mobile, etc.
� Solid TSB performance, which continues to grow faster than scheduled in the business plan
� Costs reduced QoQ, as a result of point-in-time actions
� Integration on track, both in terms of costs and timing
� Sustained reduction in NPL ratio, reaching single digits at 9.45%
� Strong capital position with fully loaded CET1 increasing to 11.8%
3
4
Profitability and efficiency
Commercial activity
Solvency and asset quality
TSB results and integration update
1Q take-aways
1Q 2015 4Q 2015 1Q 2016 %QoQ %YoY 4Q 2015 1Q 2016 %QoQ %YoY
Net Interest Income 643.1 962.5 973.9 1.2% 51.4% 690.1 695 .7 0.8% 8.2%
Equity method & dividends 10.4 11.2 21.6 --- --- 11.1 21.6 --- ---Commissions 244.8 297.6 277.8 -6.7% 13.5% 260.0 245.9 -5.4% 0.4%Trading income & forex 782.6 68.8 311.0 351.9% -60.3% 66.0 306.3 364.1% -60.9%Other operating results -15.1 -120.6 -16.7 -86.2% 10.7% -119.3 -16.2 -86.4% 7.6%Gross operating income 1,665.9 1,219.6 1,567.6 28.5% -5. 9% 907.9 1,253.2 38.0% -24.8%
Personnel costs -301.0 -425.0 -415.5 -2.2% 38.0% -299.8 -306.7 2.3% 1.9%Administrative costs -146.3 -271.5 -249.2 -8.2% 70.3% -151.1 -146.4 -3.1% 0.1%Depreciation & Amortization -76.1 -94.2 -97.2 3.1% 27.8% -73.5 -78.3 6.5% 2.9%Pre-provisions Income 1,142.4 428.8 805.7 87.9% -29.5% 38 3.5 721.9 88.2% -36.8%
Total provisions & impairments -906.5 -377.9 -434.9 15.1% -52.0% -377.9 -434.9 15.1% -52.0%Gains on sale of assets 9.6 0.5 -3.1 --- --- 0.5 -3.1 --- ---Negative goodwill 0.0 24.5 0.0 --- --- 24.5 0.0 --- ---Profit before taxes 245.5 75.9 367.7 384.3% 49.8% 30.6 283.9 827.7% 15.6%Taxes and others -69.8 54.2 -114.4 -311.0% 64.0% 17.1 -92.3 -639.7% 32.3%Minority interest 1.1 1.5 1.3 -14.9% 16.1% 1.5 1.3 -14.9% 16.1%
Attributable net profit 174.6 128.7 252.0 95.9% 44.3% 46. 2 190.3 312.0% 9.0%
Sabadell, ex-TSBSabadell group
Income statement
*
Note: Euro millions. The EURGBP exchange rate of 0.77 used for P&L corresponds to the daily average rate of 1Q 2016.1 2015 commissions have been restated to include FX commissions, which were previously included in trading income and forex. Before this restatement, 1Q15 commissions amounted to EUR225.8mm and 4Q15 commissions amounted to EUR275.1mm. 5
1
272.4 278.2
4Q15 1Q16
690.1 695.7
4Q15 1Q16
NII maintains its positive trend
Group net interest income evolutionEuro millions
YoY growth: +51.4%
QoQ growth: +1.2%
Note: The EURGBP exchange rate of 0.77 used for P&L corresponds to the daily average rate of 1Q 2016.1 Assuming constant exchange rate.
Sabadell, ex-TSBEuro millions
TSBEuro millions
QoQgrowth: +0.8%
QoQgrowth: +2.1%
+9.0% in GBP1
6
643.1 655.9
941.3 962.5 973.9
1Q15 2Q15 3Q15 4Q15 1Q16
3.50% 3.47% 3.39% 3.32% 3.32%3.20%
3.06% 3.08% 3.06%
1.44%1.25%
1.10%0.97% 0.88%
0.73%
0.59% 0.49% 0.38%0.56% 0.57%
0.44% 0.33%0.25% 0.17% 0.16% 0.09% 0.01%
3.29% 3.28% 3.28%
0.62%0.53% 0.44%
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
Resilience in net interest margin
Net interest margin evolutionIn percentage
Customer spread Net interest margin as % of ATA
Customer loan yield and cost of fundsIn percentage
Customer spread, ex-TSB
7
Net interest margin as % of ATA, ex TSB
2.06%2.22%
2.29%2.35%
2.44% 2.47%
2.67%2.75%
2.84%
2.47% 2.59%2.68%
1.62%1.65% 1.72%
1.29%1.36% 1.40%
1.49%1.57% 1.59%
1.82% 1.83%1.91%
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
Cost of customer funds, ex-TSB
Customer loan yield, ex-TSB
Cost of customer funds
Customer loan yield
Euribor 12M
37.631.9
4Q15 1Q16
260.0245.9
4Q15 1Q1662.8 64.2 71.2 83.2 74.1
54.2 53.982.7
81.879.1
127.8 131.7
141.7 132.6124.6
1Q15 2Q15 3Q15 4Q15 1Q16
Group commission income evolution 3
Euro millions
YoY growth: +13.5%
QoQ growth: -6.6%
Commissions reflect a lower contribution mainly driven by market volatility
Asset Mgmt1 ServicesLending
.Note: The EURGBP exchange rate of 0.77 used for P&L corresponds to the daily average rate of 1Q 2016. 1 Includes mutual funds commissions and pension funds, insurance brokerage and wealth management.2 Assuming constant exchange rate.3 2015 commissions have been restated to include FX commissions, which were previously included in trading income and forex. Before this restatement, 1Q15 commissions amounted to EUR225.8mm and 4Q15 commissions amounted to EUR275.1mm.
244.8 249.8295.6 297.6 277.8
Sabadell, ex-TSB 3
Euro millions
8
TSBEuro millions
QoQgrowth: -5.4%
QoQgrowth: -15.2%
-9.4% in GBP1
122.5105.3
2.73.6
4Q15 1Q16
296.6 300.0
3.3 6.7
4Q15 1Q16295.5 295.3
407.6 419.1 405.3
5.6 19.2
9.2 5.9 10.3
1Q15 2Q15 3Q15 4Q15 1Q16
We have reduced personnel cost this quarter … Group personnel expenses evolutionEuro millions
Recurrent Non-recurrent
Note: The EURGBP exchange rate of 0.77 used for P&L corresponds to the daily average rate of 1Q 2016. 1 Assuming constant exchange rate.
YoY growth: +38.0%
QoQ growth: -2.2%
301.0 314.5
416.8 425.0 415.5
Sabadell, ex-TSBEuro millions
TSBEuro millions
Recurrent QoQ
growth: +1.1%
Recurrent Non-recurrent
299.8 306.7
125.2108.9
Recurrent Non-recurrent
9
Recurrent QoQ
growth:-14.1%
-8.2% in GBP1
105.295.1
15.2 7.7
4Q15 1Q16
145.2 145.0
264.2 250.8 241.5
1.1 1.2
1.0 20.7 7.7
1Q15 2Q15 3Q15 4Q15 1Q16
145.7 146.4
5.5
4Q15 1Q16
Group general expenses evolutionEuro millions
… and there is also an overall reduction in general expenses across the group
Note: The EURGBP exchange rate of 0.77 used for P&L corresponds to the daily average rate of 1Q 2016.1Assuming constant exchange rate.
YoY growth: +70.3%
QoQ growth: -8.2%
146.3 146.2
265.2 271.5 249.2
Recurrent Non-recurrent
Sabadell, ex-TSBEuro millions
151.1 146.4
120.4 102.8
Recurrent Non-recurrent
Recurrent Non-recurrent
10
TSBEuro millions
Recurrent QoQ
growth: +0.5%
Recurrent QoQ
growth:-9.6%
-3.4% in GBP1
11
1Q take-aways
Profitability and efficiency
Solvency and asset quality
TSB results and integration update
Commercial activity
Balance sheet dynamics
Customer funds and loans evolutionEuro millions
1Term funds include term deposits and other funds placed in the retail network. Exclude repos and deposits from institutional clients.2 1Q 2016 gross loans have been reduced to reflect the €825 million payment received regarding Banco CAM Asset Protection Scheme.Note: Exchange rate EURGBP used for Balance Sheet data of 0.7916 (as of 31-Mar-16). 12
Our performing loan book (ex-TSB) remained stable w hen adjusting for APS payment2
Mar-15 Dec-15 Mar-16 Mar-15 Dec-15 Mar-16
Total assets 167,480 208,628 204,021 21.8% -2.2% 167,480 1 65,250 161,189 -3.8% -2.5%Of which:Gross loans to customers ex repos 118,527 152,697 149,828 26.4% -1.9% 118,527 116,635 115,087 -2.9% -1.3%Fixed income portfolio 27,259 25,413 27,041 -0.9% 6,4% 27,259 23,692 25,217 -7.5% 6.4%
Total liabilities 155,901 195,860 191,232 22.7% -2.4% 155 ,901 155,162 150,939 -3.2% -2.7%Of which:On-balance sheet customer funds 94,899 131,489 131,290 38.3% -0.2% 94,899 96,227 97,493 2.7% 1.3%Term funds1 49,419 46,953 48,039 -2.8% 2.3% 49,419 42,377 43,381 -12.2% 2.4%Savings accounts 12,680 33,647 32,267 154.5% -4.1% 12,680 14,445 14,491 14.3% 0.3%Current accounts 32,800 50,889 50,984 55.4% 0.2% 32,800 39,405 39,620 20.8% 0.5%
Wholesale funding 22,340 27,068 24,486 9.6% -9.5% 22,340 22,569 20,438 -8.5% -9.4%ECB funding 8,900 11,551 11,000 23.6% -4.8% 8,900 11,551 11,000 23.6% -4.8%
Off-balance sheet funds 34,215 37,381 37,107 8.5% -0.7% 3 4,215 37,381 37,107 8.5% -0.7%Of which:Mutual funds 18,674 21,427 21,153 13.3% -1.3% 18,674 21,427 21,153 13.3% -1.3%Pension funds 4,529 4,305 4,194 -7.4% -2.6% 4,529 4,305 4,194 -7.4% -2.6%
Third party insurance products 7,220 7,647 7,981 10.5% 4.4% 7,220 7,647 7,981 10.5% 4.4%
Sabadell, ex-TSB
%YoY %QoQ %YoY %QoQ
Sabadell group
Market shares by product in Spain continued to increase …
Market shares by products
Source: Sabadell estimates and Inverco.Note: 2016 data as of March 2016 or last month available.1 Insurance calculated per number of contracts.2 PoS market share has been adjusted to include international transactions. 13
Companies
Market shares by product
Individuals
1
Mar.15
Mar.16
Mar.15
Mar.16
2
… with high standards in quality of service
Source: STIGA, EQUOS (Objective Quality Analysis in Banking Networks, 1Q 2016).
Level of service quality Evolution of Sabadell quality index vs. sector
Maintaining the quality gap versus the sector
14
7.54
7.21 7.327.20 7.24
6.90 6.897.16
7.617.84
6.956.77
6.61
6.11 6.06 6.01 6.036.29
6.74
7.05
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Sabadell Sector
We are engaged with the digital transformation …
∆ Productivity
∆ Efficiency
Transformation plan
“There, wherever you are”
Clients - Mobile
Key milestones achieved during the Triple plan:
• 85% of transactions through remote channels
• 18% of sales through digital channels
• More than 15 monthly connections per client through the Mobile App
Key milestones achieved during the Triple plan:
• 85% of transactions through remote channels
• 18% of sales through digital channels
• More than 15 monthly connections per client through the Mobile App
Thousands
Clients - Web
∆ Client service 820
1,312
2013 1Q 2016
+60%
Thousands
1,5291,820
2013 1Q 2016
+19%
15
• TSB contributes an additional c.1.6mm digital customers as of 1Q 2016
• TSB contributes an additional c.1.6mm digital customers as of 1Q 2016
16
• Communicated to all retail customers
- Code card is replaced by a pin code received in our clients´mobile phone
- ∆ use of mobile application
• Compliance with Central Bank regulations
�Extension to business clients
Plan for 2016
• Available in main application stores
• Continuous improvements to increase usability
• Solution for any kind of mobile device
� Instant payment capability
Digital Signature
Sabadell Wallet
… and continue to innovate…
Digital & Agile Lab�Launch of new lab in
London expected for this year
• Successfully launched in Barcelona
• Opened in 2015, provides an agile in-house platform for the development of leading digital fintech tools
Launched in December 2015
Launched in February 2016
… while improving customer experience
HUB
Spoke1
Spoke3
Spoke2
Hub & Spoke branch
17
• Implemented in 466 branches distributed throughout the territory:
- ∆ Specialised management- ∆ Commercial productivity
�Expand to additional:� + 400 branches reshaped
� + 2,000 employees impacted
� + 900,000 clients involved
Proteo Mobile
�~ 3,500 tablets in use
�+ 16,000 new businesses captured
• Brings the bank to customers' homes
• Available to business, personal and private banking segments
• Main functions: Commercial visits, risk sanctions, simulations, registering of new clients…
Plan for 2016
Launch of new TSB mobile app expected this yearLaunch of new TSB mobile app expected this year
We are positioning to be leaders in NPS in every single segment by 2019
Source: 2015 Accenture NPS benchmark report. * Ranking within the peer group.
Customer experience represents a key cornerstone in our strategy
18
Customersegment
Sabadell 1Q 2016 NPS Ranking*
NPS improvement
since 2013
Retail -9% 4 +13 p.p.
Affluent 17% 3 +21 p.p.
SMEs(<€5M turnover)
21% 1 +17 p.p.
Companies(>€5M turnover)
32% 1 +18 p.p.
19
1Q take-aways
Profitability and efficiency
Commercial activity
TSB results and integration update
Solvency and asset quality
Strong capital position
CET1 fully loaded at
11.8%*
Common Equity Tier 1 phase in evolutionIn percentage
20
11.8% 11.5% 11.6% 11.5% 11.9%
Mar.15 Jun.15 Sep.15 Dec.15 Mar. 16
* CET1 fully loaded ratio does not include positive value adjustments, from sovereign debt AFS gains. If we were to include this adjustments CET1 fully loaded ratio would increase to 12.0%.
11.68%10.98%
10.38% 9.86% 9.45% 8.51% 7.79% 7.50%
51.4% 52.8% 54.5% 53.1% 54.4% 55.3% 53.6% 54.7%
1Q15 2Q15 3Q15 4Q15 1Q16 3Q15 4Q15 1Q16
Evolution of NPL ratio and NPL coverageIn percentage
Note: NPL ratio is calculated including contingent risk and 20% of the APS.
NPL ratio
NPL coverage
Sabadell groupSabadell ex-TSB
21
NPL ratio continues its downwards trend
25,878 25,860
25,347
24,75823,922
23,18922,350
21,57920,867
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
17,72717,386
16,777 15,910 14,863 13,962 13,122 12,344 11,674
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
Rapid reduction in NPA continues
NPL evolution, ex-TSB Data includes 20% of APS. Euro millions
€0.7bn further reduction ofNPLs during 1Q16
NPAs decreased by €0.7bn in 1Q16
On-balance sheet RE assets evolution, ex-TSBData includes 20% of APS. Euro millions
Total problematic assets, ex-TSBData includes 20% of APS. Euro millions
Note: NPLs include contingent risk. 22
8,151 8,474 8,569 8,848 9,059 9,227 9,228 9,234 9,193
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
67,18863,130
354,132
439,584
775,300
552,080
413,388319,058
359,824
311,414319,389
2007 2008 2009 2010 2011 2012 2013 2014 2015 - Cum.Feb-15
Cum.Feb-16
The positive momentum in the Spanish real estate market …
� Real Estate is growing as an investment niche given its larger profitability vs. other products
� Prices, transactions and rental yields continue to increase
� Increase in use of financial aid by first-time buyers
� Strong interest from internationalprivate and institutional buyers(record year)
� Land transactions and developers’ activity start to gain momentum
Market commentary
Symptoms of a new real estate cycle, with improvement in
prices and sales units
New property sales evolution (in units)
% of surveyed individuals who think house prices will fall, hold or raise (CIS survey)
Price expectations for individuals
-29%
Hold / NA
Rise
Fall
-25% +6% -18% -11% +3% +11%-2% +6%
% yoygrowth
Source: INE, CIS (Consumer confidence index). 23
… led to an improvement in real estate assets sales results
Number of foreclosed assets soldUnits
Foreclosed assets soldEuro millions
24
329409 374
680805
1Q15 2Q15 3Q15 4Q15 1Q16
2,164
2,9162,428
3,902 4,025
1Q15 2Q15 3Q15 4Q15 1Q16
25
1Q take-aways
Profitability and efficiency
Commercial activity
Solvency and asset quality
TSB results and integration update
TSB continues to perform ahead of its business plan
� Strong contribution of TSB to the group´s results
� NII continues to grow supported by strong intermediary growth and UKAR portfolio contribution
� Solid asset and deposit growth driven by franchise business
� Reduction in costs have mitigated the impact of lower for longer interest rate environment
� Strong management profit growth, up 75% year on year
� PCA´s market share at 7.1% of new accounts, well ahead of the 6.0% target
� Positive NPS1 progress, which increased to 20.8 from 16.6
� Integration well advanced and migration planned developments well on track1 NPS is based on the question “On a scale of 0-10, where 0 is not at all likely and 10 is extremely likely, how likely is it that you would recommend TSB to a friend or colleague?” NPS is the percentage of TSB customers who score 9-10 after subtracting the percentage who score 0-6. 26
Integration on track, both in terms of cost and timing
27
� TSB migration program remains on track to be delivered by the end of 2017
� Total costs in line with what was initially forecasted
� New TSB IT platform Design Phase has been completed successfully, IT&OPs Building Phase is progressing at full speed
� In parallel to the migration program, a new mobile banking app will be delivered this year
� Execution strategy and customer impact management plan already defined
Launch of a new TSB mobile app
Implementation of a ‘friends and family’
test pilot
Capacity to launch a new online savings
brand
Migration event Proteo4UK fully
operational
1 2 3 4
Key execution steps:
TSB income statement
28
� NII growth due to strong Franchise business volumes and contribution of UKAR portfolio
� Fees declining, as expected, due in part to lower interchange commissions and servicing costs of UKAR portfolio
� Improved fraud and impairment performance, benefiting from the economic environment and successful investment in detection processes
� Costs reduced QoQ, as a result of point-in-time actions
� Franchise NIM slightly reduced due to change of mix in asset portfolio towards lower margin secured lending
1 Franchise comprises the retail banking business carried out in the UK which offers a broad range of retail financial services.2 Mortgage Enhancement is a separate portfolio of mortgage assets which was assigned to Total TSB with effect from 28 February 2014. This segment was established in response to a review by the Office of Fair Trading of the effect on competition of the divestment of TSB and is designed to enhance TSB’s profitability.3 Acquired UKAR Assets is a £3.0 billion portfolio of former UKAR mortgages and unsecured loans for which beneficial interest was acquired from Cerberus Capital Management group with effect from 7 December 2015.
GBP in million 1Q 2015 4Q 2015 1Q 2016 %QoQ %YoY
Franchise1 172.3 180.4 183.2 1.6% 6.3%
Mortgage enhancement2 20.0 16.7 14.8 -11.4% -26.0%
Portfolio UKAR3 --- 3.3 20.5 --- ---
Net Interest Income 192.3 200.4 218.5 9.0% 13.6%
Franchise1 33.1 30.9 28.6 -7.4% -13.6%
Mortgage enhancement2 -2.6 -2.4 -2.2 -8.3% -15.4%
Portfolio UKAR3 --- -1.1 -1.9 72.7% ---
Other operating income 30.5 27.4 24.5 -10.6% -19.7%
Total income 222.8 227.8 243.0 6.7% 9.1%
Total operating expenses (excl. one-offs) -169.8 -176.5 -164.0 -7.1% -3.4%
Franchise1 -18.8 -21.9 -18.5 -15.5% -1.6%
Mortgage enhancement2 0.0 -0.1 --- --- ---
Portfolio UKAR3 --- --- -0.6 --- ---
Impairment on loans & advances -18.8 -22.0 -19.1 -13.2% 1.6%
Management profit (excl. one-offs) 34.2 29.3 59.9 104.4% 75.1%
1Q 2015 4Q 2015 1Q 2016 %QoQ %YoYFranchise NIM 3.71% 3.45% 3.38% -0.07 pp -0.33 pp
TSB balance sheet
29
� Asset growth driven by strong Mortgage Intermediary business performance –lending up c.4% QoQ and 28% YoY
� £1.9 billion of new mortgage applications in the quarter, maintaining the momentum from 2015
� Strong customer deposits net inflow, particularly in savings, following recent rate increases
� Franchise loan to deposit ratio increased to 83.8%
� Strong capital position with CET1 at 17.7%
GBP in million Mar 15 Dec 15 Mar 16 % YoY %QoQ
Core mortgages 16,461 18,904 20,200 22.7% 6.9%
Mortgage enhancement 2,678 2,272 2,157 -19.5% -5.1%
Portfolio UKAR --- 3,006 2,873 --- -4.4%
Other net customer lending 2,242 2,215 2,200 -1.9% -0.7%
Total Customer lending (Net) 21,381 26,397 27,430 28.3% 3.9%
Savings deposits 16,759 17,026 17,605 5.0% 3.4%
Current account deposits 7,031 7,872 8,191 16.5% 4.1%
Business banking deposits 871 975 948 8.8% -2.8%
Total customer deposits 24,661 25,873 26,744 8.4% 3.4%
Mar 15 Dec-15 Mar 16 % YoY %QoQ
Loan to deposit (Franchise) 75.8% 81.6% 83.8% 8.0 pp 2.2 pp
Common Equity Tier 1 Capital ratio 19.8% 17.8% 17.7% -2.1 pp -0.1 pp
Note: Customer lending and customer deposit exclude macro fair value hedge accounting adjustment.
More people than ever would recommend TSB
NPS evolutionMortgage Gross Lending
NPS improved from 16.6 (Dec 15) to 20.8 (Mar 16)
Note: Net Promoter Score (NPS) is based on the question “On a scale of 0-10, where 0 is not at all likely and 10 is extremely likely, how likely is it that you would recommend TSB to a friend or colleague?” NPS is the percentage of TSB customers who score 9-10 after subtracting the percentage who score 0-6. 30
-19.8
1.1
13.2
16.6 20.8
-25
-15
-5
5
15
25
Dec-13 Sep-14 Jun-15 Mar-16
Appendix
31
32
Annex
Mortgages57%
Loans and credits36%
Working Capital5%
Leasing and renting
2%
Gross lending by product type
33
Sabadell groupIn percentage
Sabadell, ex- TSBIn percentage
Mortgages66%
Loans and credits29%
Working Capital4%
Leasing and renting
1%
Note: Data as of March 2016.
Business mix by customer type
Sabadell groupIn percentage
Sabadell, ex- TSBIn percentage
34
Corporates13%
SME20%
Individuals54%
Public Sector4%
Real Estate Developer
6%
Other3%
Corporates 16%
SME27%
Individuals 40%
Public Sector5%
Real Estate Developer
8%
Other4%
Note: Data as of March 2016.
Credit spreads evolution
Evolution of loan spreads by key segments, ex-TSBIn basis points
Back book loan spreads by segment, ex-TSBIn basis points
Mortgages to individualsTotal SMEs Corporates
35
181 178 176 175 175
94 95 96 98 98
284 282 282 281 281
229 219 210 202 195
1Q15 2Q15 3Q15 4Q15 1Q 16
Back book
Front book
Back book
Front book
Back book
Front book
Back book
Front book
Back book
Front book
Mortgages to individuals 94 187 95 173 96 175 98 178 98 175
SME 284 459 282 417 282 414 281 401 281 412
Corporates 229 233 219 233 210 225 202 213 195 194
1Q 161Q15 2Q15 3Q15 4Q15
Covered bonds 49.4%
Senior debt 6.0%
Prefs + Subordinated
5.6%
ECP10.2%
Securitisation 24.6%
GGB4.3%
Deposits71.2%
Retail issues 2.8%
Repos3.3%
ICO financing 2.8%
Wholesale funding13.8%
ECB6.2%
Funding structure
Funding structureIn percentage
Wholesale funding breakdownIn percentage
36Note: Data as of March 2016.
Term deposits: contractual rates and maturities
Contractual rates on term deposits, ex-TSBIn percentage
Stock New production/renewals
Maturities of term depositsEuro millions
37
Maturity VolumeAverage interest
rate cost
2Q16 10,943 0.87%3Q16 6,915 0.72%4Q16 6,625 0.55%1Q17 5,417 0.48%2Q17 713 0.60%
>2Q17 544 0.71%
1.40%1.19%
0.99%
0.76%0.64%
0.47% 0.37%0.32% 0.34%
0.24%
Mar-15 Jun-15 Sep-15 Dec-15 Mar-16
Wholesale funding cost evolution
Wholesale funding cost evolutionIn percentage
Wholesale funding cost Wholesale funding cost, ex-TSB
38
3.54% 3.51%3.41%
3.05%
2.71%
2.56%
2.28%
2.28%2.12%
2.35%
2.27%2.12%
Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Wholesale funding maturities
Wholesale funding maturitiesEuro millions
Maturity by product type Euro millions
2018 2019 2020 202120172016 >20222022
2,300 1.66%
3,1633.52% 1,679
3.40%
1,1242.80%
2,590 2.05%
2,6452.35%
1,144 3.19%
1,328 1.54%
Note: Including TSB. 39
The size of the bubble represents the volume of maturities. The percentage number is the current level of coupon payment
2016 2017 2018 2019 2020 2021 2022 >2022 Outst. AmountCovered Bonds (CH) 720 2,022 1,561 1,124 2,165 2,108 1,119 1,289 12,108GGB 0 1,059 0 0 0 0 0 0 1,059Senior Debt 1,293 17 100 0 0 0 25 0 1,434Preferred Shares and Subordinated Debt 287 66 0 0 425 527 0 33 1,338Other mid- and long-term financial instruments 0 0 18 0 0 10 0 6 34Total 2,300 3,163 1,679 1,124 2,590 2,645 1,144 1,328 15,973
ALCO portfolio
Fixed income portfolio evolutionEuros in billion
ALCO portfolio, ex-TSB
TSB
Life insurance portfolio
ALCO portfolio, Sabadell groupEuros in billion
ALCO portfolio, Sabadell, ex- TSBEuros in billion
40
Sep-15 Dec-15 Mar-16
ALCO portfolio 24.4 21.4 22.9% of total assets 14.7% 12.7% 14.2%Duration (yrs) 3.9 3.5 3.6
Sep-15 Dec-15 Mar-16
ALCO portfolio 25.9 23.1 24.7% of total assets 12.6% 11.1% 12.1%Duration (yrs) 4.2 3.9 3.6
24.421.4 22.9
2.32.3
2.4
1.51.7
1.8
Sep-15 Dec-15 Mar-16
ALCO portfolio composition
ALCO portfolio composition evolution, Sabadell grou pEuros in billion
41
sep-15 dic-15 mar-16Spanish Public Debt 9.01 7.55 9.70Italian Government Debt 7.18 6.06 4.84US Government Debt 2.56 2.34 2.35UK Government Debt 1.48 1.69 1.79Other Government 1.68 1.54 1.93 of which: Portuguese Government 0.86 0.68 0.78 Mexican Government 0.57 0.58 0.77 Netherlands Government 0.08 0.08 0.08Agencies 1.39 1.41 1.41Covered Bonds 0.67 0.66 0.65Corporates & Financials 1.94 1.82 2.00
TOTAL 25.9 23.1 24.7
Evolution of NPLs and RE assets, ex-TSB
Evolution of NPLs and RE assets, ex-TSB Data include 20% of APS. Euro millions
42
4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
Gross entries 1,091 755 740 735 729 654Recoveries -1,660 -1,557 -1,471 -1,275 -1,273 -1,111Ordinary net entries -569 -802 -731 -540 -544 -457Change in RE assets 279 211 167 1 7 -41
Net entries + Change in RE assets -290 -591 -563 -539 -5 37 -498
Write-offs 298 245 170 300 234 213
Real estate and NPL quarterly change -588 -836 -733 - 839 -771 -711
NPL ratios
NPL ratios by segment, ex-TSBIn percentage
Note: NPL ratio is calculated including contingent risk and 20% of the APS. 43
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16Real Estate development and/or construction purposes 52.56% 52.11% 51.47% 52.17% 49.21% 47.21% 47.84% 38.81% 37.01%Construction purposes non-related to real estate dev. 8.38% 7.41% 7.35% 8.08% 9.03% 8.74% 8.58% 14.36% 12.18%Large corporates 6.19% 6.13% 6.30% 6.46% 6.55% 6.14% 5.41% 4.62% 4.58%SME and small retailers and self-employed 13.08% 13.08% 13.11% 12.60% 12.20% 11.96% 11.38% 10.83% 10.23%Individuals with 1st
mortgage guarantee assets 9.85% 9.75% 9.23% 9.25% 9.12% 8.76% 8.27% 7.83% 7.82%
NPL ratio ex-TSB 13.94% 13.85% 13.44% 12.74% 11.68% 10.98% 10.38% 9.86% 9.45%
9,301 7,602 6,138 6,170
7,480
5,819
3,893 3,624
8,096
8,848
9,234 9,193
24,877
22,269
19,265 18,987
Dec13 Dec14 Dec15 Mar16
Sabadell real estate exposure
Note: Contingent exposures included. Unsecured assets or with pledge, personal or 2nd mortgage guarantees. It does not include capital instruments.1 Unsecured assets or with pledge, personal or 2nd mortgage guarantees.2 It does not include capital instruments. Euro millions and %.
Balance sheet (real estate exposure)Euro millions
Foreclosed assets²Developer credit (Non Performing)
Developer credit (Performing)
Mortgage guarantee
(1st mortgage)
Other guarantees1
From No RED
From RED
13,42110,031
16,781
44
9,794
Real Estate portfolio breakdown by asset class
Real estate portfolio break-down
Foreclosed assets 1 9,193 100%
Finished property 54%
Under construction 6%
Land 40%
Developer loans 9,794 100%
Finished property 58%
Under construction 5%
Land 25%
Others2 12%
Total RE related exposure 18,987
Data as of March 2016. Euro millions (gross value)
Note: Contingent exposures Included. It does not include capital instruments. First mortgage guarantees and other guarantees. 1 It does not include capital instruments.2 Other guarantees.
March2016
%
Developer loans 9,794 51%
Normal 5,574 57%
Substandard 596 6%
Doubtful 3,624 37%
Developer credit break-down
45
Data as of March 2016. Euro millions (gross value)
Real Estate portfolio breakdown by asset class and region
Finished product
Under construction
Land
Portfolio breakdown by maturityIn percentage
Portfolio breakdown by region
1 Other guarantees.Note: Data as of March 2016.
Others 1
>80% of finished properties in coastal areas and Ma drid
46
March 2016
REOs/Foreclosed assets segmentation
Foreclosed assets by useIn percentage
Foreclosed assets by locationIn percentage
Note: Data as of March 2016. 47
For any additional information, please contact:
+44 2071 553 853
Investor Relations