Link Securities | SAB increased its net interest income by 9.8% (+8.8% year-on-year at constant rates; +1.1%; FactSet consensus) between January and June, compared to 1H2023, to €2,493 million, mainly due to higher credit yields and revenues from the fixed-income portfolio supported by higher interest rates, offsetting higher cost of funds and capital markets and lower average volumes.
– SAB also reduced its net fees and commissions by 3.3% year-on-year (-3.5% at constant rates) in 1H2024 to €674 million, mainly due to lower service fees and lower asset management fees. Together with net trading income (NTI) and other operating income and expenses, this resulted in gross income of €3,061 million, up 9.0% year-on-year (+8.1% at constant rates; -3.0%; analyst consensus).
– Total costs stood at €1,515 million at the end of June 2024, up 2.5% year-on-year, due to an increase in both personnel and general expenses, which neutralized the reduction in depreciation and amortization.
– As a result, SAB’s EBIT margin rose by 16.1% year-on-year (+15.5% at constant rates; +2.3%; FactSet consensus) in 1H2024 to €1,546 million.
– Loan-loss provisions and other impairment charges totaled €389 million at the end of June 2024, down -16.9% compared with €468 million at the end of June 2023, due to an improvement in loan-loss provisions.
– Thus, SAB’s pre-tax profit (PBT) reached €1,154 million (+35.9% year-on-year; +35.0% at constant rates; +7.4%; analysts’ consensus). Finally, SAB’s 1H2024 net income rose to €791 million, an improvement of 40.2% year-on-year (+39.3% at constant rates; +8.2%; FactSet consensus). This level of earnings allowed SAB to increase its RoTE yield to 13.1% at the end of June (+395 bps year-on-year and vs. 12.2% in the previous quarter and 11.5% at the end of 2023).
– In terms of the balance sheet, SAB’s outstanding loans grew 0.9% year-on-year, driven by the increase in business abroad, especially in Miami and Mexico. Customer funds showed a year-on-year increase of 2.1%, with a notable shift from demand accounts to time deposits, as well as to off-balance sheet funds, mainly mutual funds.
– In terms of non-performing loans, SAB’s balance of non-performing assets (NPAs) fell by €630 million in the last twelve months, with a reduction in 2Q2024 of €316 million, while coverage considering total provisions increased to 56.8%. The group’s stage 3 ratio improved to 3.2%, and the stage 3 coverage ratio with total provisions and the stage 3 coverage ratio increased to 59.7% and 44.1%, respectively.
– In terms of solvency, the CET1 fully-loaded ratio increased 18 bps in the quarter to 13.48% and the Total Capital ratio increased to 18.54%, which is above requirements with an MDA buffer of 454 bps.
On the other hand, SAB informed the CNMV that, in the meeting held yesterday and in compliance with the group’s shareholder remuneration policy, the Board of Directors of SAB agreed to distribute an interim cash dividend of €0.08 gross per share, to be paid on October 1, 2024.
In addition to the interim cash dividend, the Board of Directors of SAB agreed to set the percentage of profit to be distributed to shareholders (pay-out) at 60% of the group’s net attributable profit for the year 2024. This pay-out level is at the upper end of the range established by the group’s shareholder remuneration policy.
