Sabadell Bank raises shareholder payout promise as BBVA eyes takeover

Spain’s Sabadell Bank announced on Friday that it had achieved a record full-year profit, allowing it to offer generous shareholder payouts.

The bank shared that it had made €1.83bn in 2024, a year-on-year jump of 37% – while fourth-quarter profit jumped 19% annually to €532 million.

Sabadell intends to offer €3.3bn to shareholders from profits made in 2024 and 2025, up from the previously promised €2.9bn.

That total is made up of cash dividends of 20.44 cents per share for 2024, with at least the same expected for 2025. It also includes share buybacks.

Shareholders should therefore receive around 61 cents per share over the two years.

“We are returning a record amount of remuneration to shareholders. No banking peer in Spain plans to pay out a similar proportion of income,” said Josep Oliu, chairman of Sabadell.

“We are starting the new year with confidence and ambition,” he continued.

César González-Bueno, CEO of the bank, added: “Banco Sabadell has achieved a record profit in 2024, and we are on an exceptional growth trajectory. As we look ahead, we are confident that our strategy will continue to deliver long term sustainable growth and value for shareholders”.

Sabadell partly attributed its strong results to dynamic business performance in Spain in both retail and business banking, and a growing contribution from TSB – its British subsidiary.

TSB Bank ended 2024 with standalone net profit of £208m, up by 18.9% year-on-year.

This boosted its positive contribution to Banco Sabadell Group profit to €253m over the year, the highest contribution since its acquisition in 2015. 

Sabadell also noted a rise in net interest income thanks to elevated lending rates, with this total coming in at €5,021m at the end of 2024, up by 6.3% year-on-year. 

BBVA takeover attempt

Friday’s earnings update comes as Sabadell is fending off a hostile takeover from fellow Spanish bank BBVA, the second such attempt from the larger bank in four years.

Sabadell has said that its rival’s bid undervalues its operations and growth prospects.

Supporters of a merger believe that larger banks could boost the competitiveness of the Spanish economy by increasing lending capacity. 

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Critics worry that consolidation of the banks could create an unfair monopoly, harming consumers.

Spain’s antitrust body CNMC decided to extend its review of the takeover in November, meaning the deal could be pushed back well into 2025.

The decision to extend the assessment is viewed as a bad sign for BBVA, as it may be required to make greater concessions to satisfy CNMC.

The Spanish government has previously expressed hostility to the takeover although Prime Minister Pedro Sanchez has since offered a softer message, saying the state will defer to CNMC’s decision.

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But Sanchez’s government still has the power to block the merger.

Catalan politicians have also opposed the takeover, fearing that it could undermine Sabadell’s contribution to Catalonia’s economy.

The bank announced last month that it would move its headquarters back to the region, seemingly part of its strategy to resist BBVA.

The decision to offer shareholder payouts also appears to be part of Sabadell’s plan to remain independent.

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If the bank can convince stakeholders that it is sufficiently profitable as a standalone business then it’s likely there will be weakened support for a takeover offer.