Sabadell's Q3 net profit beats forecast despite lending income squeeze
Q3 net profit rises 8% to quarterly record of 503 mln euros
Sabadell's CFO quits to join Societe Generale
Q3 NII growth slows down due to lower rates
Lending income up 0.9% y/y, but falls 0.7% q/q
Net profit at TSB in the quarter rises 23%
Adds performance of British unit TSB in paragraph 4, details on profitability, capital in paragraphs 7 and 12, new CFO in paragraph 9
By Jesús Aguado
MADRID, Oct 31 (Reuters) -Sabadell SABE.MC said on Thursday its third-quarter net profit beat forecasts, supported by lower provisions and a recovery at its British unit TSB as the Spanish bank tries to fend off a hostile takeover bid from larger rival BBVA BBVA.MC.
Lending income, however, came under pressure in the third quarter due to the impact from lower interest rates.
Sabadell also announced the appointment of Sergio Palavecino Tome as its new finance chief following the voluntary resignation of Leopoldo Alvear, effective on Nov. 18, as he plans to take over as CFO of Societe Generale SOGN.PA.
Sabadell, Spain's fourth-largest bank in terms of market value, reported a quarterly record net profit of 503 million euros ($545.76 million), above the 447 million euros forecast by analysts in a Reuters poll.
Net profit on a standalone basis at TSB rose 23% year-on-year in the reported quarter to 59 million pounds, although lending income fell 2.3%.
Spanish banks have enjoyed increased revenue from loans primarily linked to variable rates, while savers have received only modest interest rate hikes.
Against that backdrop, Sabadell's net interest income (NII), the difference between earnings on loans and deposit costs, still rose 0.9% year-on-year to 1.25 billion euros. The NII came in line with forecasts, but fell 0.7% against the previous quarter, as rates in the euro zone are now moving downwards.
Higher revenues also helped Sabadell raise its return-on-tangible equity ratio, a measure of profitability, to 13.2% from 13.1% in June. It maintained its year-end outlook of above 13%.
Rejecting BBVA's offer, Sabadell has said the proposal significantly undervalued the lender's growth potential.
As it seeks to promote its stand-alone business case, Sabadell revised upwards in July its shareholder return against 2024 and 2025 results to 2.9 billion euros, up from 2.4 billion euros.
As of the end of September, the bank's fully loaded core tier-1 capital ratio, the strictest measure of solvency, rose 32 basis points against the previous quarter to 13.8%.
($1 = 0.9217 euros)
Reporting by Jesús Aguado; Editing by Inti Landauro and Sherry Jacob-Phillips
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