4Q22

Quarterly Financial Report

Contents

1

Summary

3

2

Key figures

5

3

Performance review

6

Macroeconomic environment

6

Income statement

8

Balance sheet

15

Risk management

19

Liquidity management

23

Capital management and credit ratings

24

Results, by business unit

26

4

Share price performance

31

5

Key developments in the quarter

32

6

Glossary of terms on performance measures

33

Disclaimer

This document is strictly for information purposes only and is not an offer of any product. No agreement or commitment should be based or dependent on this document or any part thereof. Any decisions concerning financial transactions should take into account the client's needs and their appropriateness from a legal, fiscal, accounting and/or financial point of view, in accordance with the information documents envisaged by the law in force. Investments mentioned or recommended herein may not be of interest to all investors. The opinions, forecasts and estimates contained in this document are based on available public information and are an evaluation by Banco de Sabadell, S.A. as of the date of preparing this document. No assurance is given that future results or events will conform to these opinions, forecasts and estimates. The information is subject to change without prior notice, its accuracy is not guaranteed and it may be incomplete or summarised. Banco de Sabadell, S.A. accepts no liability whatsoever for any losses arising from the use of this document or its content, or otherwise in connection herewith.

Basis of presentation

The consolidated income statement and balance sheet as of the end of December 2022 and 2021, together with the disclosures shown in this Financial Report, are presented in accordance with the accounting standards, principles and criteria defined in Note 1 to the Group's consolidated annual financial statements as of 31 December 2022.

Pursuant to the Guidelines on alternative performance measures published by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415), a glossary has been included with the definitions and the reconciliation with the items presented in the financial statements of certain alternative financial measures used in this document. See Glossary of terms on performance measures.

Fourth quarter of 2022

2

1. Summary

Net interest income

Net interest income followed a positive trend, ending 2022 at 3,799 million euros, representing year-on-year growth of 10.9%, due to higher loan book yields, improved revenue from the fixed-income portfolio, as well as strong growth of volumes, where it is particularly worth mentioning the growth of mortgages at TSB; all these facts served to offset higher wholesale funding costs.

In the quarter, this item grew by 11.6%, also supported mainly by higher yields and the increased contribution of the ALCO portfolio, which offset the increased wholesale funding costs.

Net fees and commissions

Net fees and commissions amounted to 1,490 million euros as at the end of 2022, representing year-on-year growth of 1.5%, driven by service fees, where it is particularly worth mentioning the higher levels of card transactions and currency exchange, and also driven by fees related to risk transactions.

In quarterly terms, this item fell by -4.1%, due to a reduction in service fees, in particular fees on payment cards affected by seasonality and fees on sight accounts.

Total costs

Total costs followed a positive trend, amounting to 2,883 million euros as at the end of 2022, representing a -12.8% reduction from the figure as at the end of 2021, which included non-recurrent costs arising from the efficiency plans carried out. Excluding this impact, recurrent costs fell by -3.5%year-on-year, driven by savings on staff expenses delivered by the efficiency plans and also by the efforts made to reduce general expenses.

Quarter-on-quarter, total costs were down by -0.4%, mainly due to a reduction in general expenses.

Net profit of the Group

As at the end of 2022, the Group's net profit amounted to 859 million euros, with profit ex-TSB amounting to 771 million euros and profit at TSB to 87 million euros, representing year- on-year growth of 61.9%. ROTE stood at 7.8%.

In the quarter, profit amounted to 149 million euros, impacted by the expense related to the contribution to the Deposit Guarantee Fund (DGF) and the payment of the tax on deposits of credit institutions (IDEC), and by the impact of the agreement regarding the issues emerged following the migration of the TSB's IT platform, which was partially offset by insurance claims.

It is worth highlighting the good performance of core results (net interest income + net fees and commissions - recurrent costs), which increased by 26.3% year-on-year and by 15.5% in the quarter.

(1) Change in recurrent costs.

Net interest income

Total group

Constant FX

Excl. TSB

Change YoY:

+10.9%

+10.0%

+9.7%

Change QoQ:

+11.6%

+13.6%

+15.5%

3,425

3,799

1,151

1,011

2,414

2,648

965

1,077

304

296

669

773

FY21

FY22

3Q22

4Q22

TSB

Excl. TSB

Net fees and commissions

Total group

Constant FX

Excl. TSB

Change YoY:

+1.5%

+1.2%

+0.7%

Change QoQ:

-4.1%

-2.8%

-2.1%

1,468

1,490

121

134

1,347

1,356

388

372

39

31

349

342

FY21

FY22

3Q22

4Q22

TSB

Excl. TSB

Total costs

Total group (1)

Constant FX (1)

Excl. TSB (1)

Change YoY:

-3.5%

-4.3%

-4.4%

Change QoQ:

-0.4%

+1.4%

+0.9%

3,307

0

320

2,883

923

909

0

2,065

1,973

723

720

0

228

221

495

499

FY21

FY22

3Q22

4Q22

Excl. TSB TSB

Non-recurrent costs

Group net profit

Total group

Constant FX

Excl. TSB

Change YoY:

+61.9%

+60.9%

+87.2%

Change QoQ:

-52.9%

-50.4%

-44.2%

859

87

530

118

317

771

39

149

412

278

155

-6

FY21

FY22

3Q22

4Q22

TSB

Excl. TSB

Fourth quarter of 2022

3

Performing loans

Performing loans grew by 0.8% year-on-year, affected by the depreciation of the pound sterling over the year. At a constant exchange rate, performing loans grew by 2.0%, driven by growth in all geographies, although particular note should be taken of the growth of TSB's mortgage book and of the good performance in Spain, mainly in terms of its lending to individuals, notably mortgages, and in terms of its lending to SMEs and Corporates.

In quarterly terms, lending dropped by -0.4%, also impacted by currency depreciations. At a constant exchange rate, this item grew by 0.3%, supported by the growth of foreign businesses.

Customer funds

On-balance sheet customer funds increased by 1.3% year- on-year and by 0.5% in the quarter, affected by the evolution of foreign currencies. At a constant exchange rate, they grew by 2.5% year-on-year and by 1.0% in the quarter, due to both the positive evolution of term deposits, in particular at TSB, and by the growth of sight accounts.

Off-balance sheet funds recorded a reduction of -7.6% year- on-year, impacted by volatility in financial markets, particularly in mutual funds, while in the quarter the trend shifts and they grew by 1.2%, also driven by positive flow of net mutual fund subscriptions.

Non-performing assets

The balance of NPAs fell during the quarter and amounted to 6,971 million euros (gross) as at the end of 2022, with coverage remaining steady at 52.3% considering total provisions.

The Group's stage 3 ratio stood at 3.4%, while the stage 3 coverage ratio considering total provisions stood at 55.0% and the stage 3 coverage ratio increased during the quarter to 39.4%.

The gross NPA ratio was 4.1%, while the net NPA ratio stood at 1.9% considering total provisions.

The Group's credit cost of risk stood at 44 bps and the total cost of risk stood at 60 bps as at the end of 2022, improving by 5 bps and 11 bps respectively compared to the end of 2021.

Capital ratio

The phase-in CET1 ratio stood at 12.66%, while the Total Capital ratio stood at 17.13%, which is above the requirements, with an MDA buffer of 402 bps. The fully-loaded CET1 ratio stood at 12.54%.

Performing loans

Total group

Constant FX

Excl. TSB

Change YoY:

+0.8%

+2.0%

+1.9%

Change QoQ:

-0.4%

+0.3%

-0.8%

154,912

156,745

156,130

44,050

42,857

43,110

110,862

113,889

113,020

Dec 21

Sep 22

Dec 22

TSB

Excl. TSB

Total customer funds

Total group

Constant FX

Excl. TSB

Change YoY:

-0.5%

+0.4%

+0.5%

Change QoQ:

+0.7%

+1.0%

+0.4%

203,698

201,296

202,632

42,779

40,163

40,931

41,678

38,049

38,492

119,242

123,084

123,208

Dec 21

Sep 22

Dec 22

TSB Off-balance sheet customer funds On-balance sheet customer funds Excl. TSB

Stage 3 exposures

58.4

56.9

56.4

56.3

55.1

55.0

44.7

42.0

42.2

41.2

39.0

39.4

4.44

4.10

4.13

3.65

3.40

3.41

Dec 21

Sep 22

Dec 22

Dec 21

Sep 22

Dec 22

Excl. TSB

Total group

Stage 3 ratio

Stage 3 coverage ratio with total provisions

Stage 3 coverage ratio

Problematic assets

1,362

1,209

1,157

6,203

5,830

5,814

Dec 21

Sep 22

Dec 22

Stage 3 assets

Problematic RE Assets

CET1 phase-in

12.50

12.65

12.66

Dec 21

Sep 22

Dec 22

Fourth quarter of 2022

4

2. Key figures

Excl. T SB

(6)

3 1.12 .2 1

3 1.12 .2 2

Yo Y (%)

Profit and loss account (€ million)

Net interest income

2,414

2,648

9.7

Core revenues

3,761

4,004

6.5

Gross operating income

3,925

3,985

1.5

Pre-provisions income

1,560

2,012

29.0

Attributable net profit

412

771

87.2

Balance sheet (€ million)

Total assets

199,369

198,894

-0.2

Performing gross loans

110,862

113,020

1.9

Gross loans to customers

115,878

118,005

1.8

On-balance sheet customer funds

119,242

123,208

3.3

Off-balance sheet customer funds

41,678

38,492

-7.6

Total customer funds

160,919

161,701

0.5

Net equity

--

--

Shareholders' equity

--

--

Profitability and efficiency ratios (%)

ROA

--

--

RORWA

--

--

ROE

--

--

ROTE

--

--

Efficiency

50.85

39.77

Efficiency with amortisation & depreciation

60.26

49.51

Risk management

(1)

Stage 3 exposures (€ millio n)

5,559

5,250

-5.6

Total problematic assets (€ millio n)

6,921

6,406

-7.4

Stage 3 ratio (%)

4.44

4.13

Stage 3 coverage ratio (%)

44.7

42.2

Stage 3 coverage ratio with total provisions (%)

58.4

56.4

Problematic assets coverage (%)

54.5

53.1

Liquidity management (%)

Loan-to-deposits ratio

93.6

92.5

LCR

249

267

NSFR

(2)

--

--

Capital management

Risk weighted assets (RWA) (€ millio n)

--

--

Common Equity Tier 1 (%)

--

--

Common Equity Tier 1 fully-loaded (%)

--

--

Tier 1 (%)

--

--

Total capital ratio (%)

--

--

M REL (% RWA)

--

--

M REL (% LRE)

--

--

Leverage ratio (%)

--

--

Share data (period end)

Number of shareholders

--

--

Total number of shares (millio n)

--

--

Share price (€)

(3)

--

--

M arket capitalisation (€ millio n)

--

--

Earnings per share (EP S) (€)

(4)

--

--

Book value per share (€)

--

--

TBV per share (€)

--

--

Price / Tangible book value (times)

--

--

Price / Earnings ratio (P/E) (times)

--

--

Other data

Branches

1,303

1,243

Employees

14,308

13,413

T o tal gro up

(5)

(6)

31.12 .21

31.12 .22

Yo Y (%)

3,425

3,799

10.9

4,893

5,289

8.1

5,026

5,180

3.1

1,719

2,298

33.7

530

859

61.9

251,947

251,380

-0.2

154,912

156,130

0.8

160,668

161,750

0.7

162,020

164,140

1.3

41,678

38,492

-7.6

203,698

202,632

-0.5

12,996

13,224

1.8

13,357

13,841

3.6

0.220.34

0.661.08

4.056.31

  1. 7.76
  1. 45.12
  1. 55.65

6,203

5,814

-6.3

7,565

6,971

-7.9

3.653.41

41.239.4

56.355.0

53.152.3

96.395.6

221

234

141

138

80,646

79,612

-1.3

12.5012.66

12.2212.54

15.4714.73

  1. 17.13
  1. 26.34

10.018.26

  1. 4.62

228,432

218,610

5,627

5,627

0.592

0.881

3,306

4,927

0.080.13

2.392.47

1.922.03

0.310.43

7.696.58

1,593

1,463

20,070

18,895

  1. The NPA coverage ratio is based on total provisions.
  2. Taking into account the best estimate as at the date of publication of this report.
  3. Historical values not adjusted.
  4. Net profit adjusted by the Additional Tier 1 coupons recorded under shareholders' equity.
  5. The cumulative EUR/GBP exchange rate as at 31.12.2022 applied throughout the report is 0.8532 in the case of the income statement and 0.8869 in the case of the balance sheet.
  6. Throughout this document, YoY changes in relation to the income statement refer to the cumulative twelve-month period of 2022 versus the same cumulative twelve-month period of 2021.

Fourth quarter of 2022

5

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Banco de Sabadell SA published this content on 26 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 January 2023 06:22:07 UTC.