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Investing.com -- Shares of Banco de Sabadell (BME:SAB) climbed 2.2% after the bank reported its first-quarter results for 2025. The uptick in stock price can be attributed to the bank’s announcement of resuming its share buyback program and delivering earnings that showcased resilience, despite a slight miss on consensus revenue expectations.
The Spanish bank restarted its previously suspended buyback related to FY23 results, amounting to EUR247 million, or EUR0.04 per share, with about 86% of the program executed as of May 2, 2025.
Following the completion of this program, Banco de Sabadell plans to initiate a new buyback for FY24 worth EUR755 million, already approved by shareholders and the European Central Bank (ECB). Additionally, the bank paid a second-half 2024 dividend of EUR0.1244 per share on March 28, 2025.
Banco de Sabadell’s Group Net Interest Income (NII) was 1% below the consensus of EUR1,222 million, down 5% quarter-on-quarter. The Group Net Interest Margin (NIM) of 2.02% was a 4 basis points decrease from the previous quarter, yet it reflected a 2 basis points increase when excluding a one-off from Q4’24. The bank’s core revenues were slightly below consensus, at 0.4% under the expected EUR1,566 million.
The bank’s gross operating income outperformed consensus estimates by 2%, driven by higher-than-expected income from equity method & dividends and trading income. Notably, there was a one-off EUR35 million positive impact in the TSB segment due to a recovery under indemnities from a third party.
Costs were reported to be 1% below consensus with no extraordinary expenses, and operating jaws expanded by 13% year-on-year (YoY), thanks to the non-repetition of the Spanish banking tax. Asset quality improved, with total provisions and impairments 17% below consensus and a lower non-performing loan (NPL) ratio of 2.67%.
The bank’s fully-loaded Common Equity Tier 1 (CET1) ratio of 13.31% was above the consensus of 13.13% and management’s target, marking a quarter-on-quarter increase of approximately 30 basis points.
An RBC (TSX:RY) analyst commented on the bank’s outlook: "We expect SAB to deliver resilient earnings in the coming years, even in an environment of falling rates in Europe."
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