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MADRID (Reuters) -Spain’s Sabadell bank handily beat market expectations with its fourth-quarter net profit, helped by higher banking margins, and forecast higher lending income and profitability in 2023, lifting its shares by as much as 8%.
While the bank’s net profit of 149 million euros ($162.51 million) came in 7.5% below year ago levels, dented in part by a loss at its British unit TSB, the result was far above 95 million euro forecast by analysts polled by Reuters.
For years, banks across Europe have been under pressure from record low interest rates, but over the past year rising rates have helped boosting financial margins.
Sabadell’s fourth-quarter net interest income jumped 24.8% from a year earlier to 1.08 billion euros ($1.93 billion), compared with analysts’ forecasts of 1.02 billion euros.
Sabadell shares were up around 8% as of 0907 GMT, outpacing a 0.6% rise by Spain’s blue-chip Ibex-35 index.
For the whole of 2022, the bank reported a net profit of 859 million euros, up 62% on lower provisions and costs and above forecasts of 804 million euros.
Positive results also lifted other pure domestic banks with Unicaja and Caixabank up around 2%.
Sabadell said its return on tangible equity ratio (ROTE), a measure of profitability, improved to 7.8% in 2022 from 5.05% in 2021. It forecast a further rise above 9% this year on the back of higher rates, even factoring in the impact from a banking tax in Spain, and said it expected its net interest income to achieve a high-teens percentage growth this year.
While TSB reported a loss of 6 million euros due to a fine of 48.65 million pounds over a botched IT platform migration, its 2022 statutory pre-tax profit of 183.5 million pounds ($226.74 million) was the highest since 2013 .
This allowed TSB to propose a dividend payment of 50 million pounds to its parent in the first quarter of 2023.
At a group level, Sabadell said its board agreed to raise the 2022 dividend pay-out ratio to 50% from 31.8% in 2021. It proposed for the next shareholders’ meeting a final cash dividend of 0.02 euro per share and the repurchase of 204 million euros in shares.
($1 = 0.9159 euros)
($1 = 0.8071 pounds)
