Sabadell flexes its muscles with its "solo project" after boosting profits by 58.6%.

Banco Sabadell earned €489 million in the first quarter of 2025, a 58.6% year-on-year increase . This figure is supported by volume growth, the improvement at TSB, and also by the impact of how the banking tax is now accounted for. All of this helps the bank flex its muscles at a crucial moment in the BBVA takeover bid , which is currently being analyzed by Pedro Sánchez's government.

The group is weathering the change in the European Central Bank's (ECB) interest rate environment, which is in the midst of cutting money prices, and boosting its profits. " The bank's accounts have been boosted by higher volumes thanks to the robust performance of commercial activity, improved asset quality, and therefore the reduction in provisions, as well as by the growth of its subsidiary TSB, supported by interest rate hedging (structural hedges)," the bank stated.

In this regard, Sabadell emphasizes that its results are aligned with its objectives for the entire fiscal year, "which reaffirms the entity's commitment to achieving its plans and the reliability of its sole project ."

The income statement details show that the group has increased profitability, measured in ROTE, by 276 basis points year-over-year, reaching 15%. The entity has further improved its financial strength in the quarter, bringing its capital ratio to 13.31%, after generating 29 basis points of capital in the quarter, above expectations, and 103 basis points year-over-year.

At the start of 2025, CEO César González-Bueno emphasized that "we continue to deliver positive messages: We have a clear business model, which is operating at an increasingly faster pace and which gives us a great capacity to generate capital for our shareholders." "In the first quarter, we generated more capital than we had announced, and this allows us to once again raise our estimate for shareholder remuneration. We estimate that for the years 2024 and 2025 combined, the sum of dividends and share buybacks will total €3.4 billion," announced the executive, who emphasized that "the involvement and commitment of all teams contribute to the strength of our sole project and, once again, to the rigor in the execution of all our commitments."

As the CEO announced, shareholder compensation through 2025 will be €1.3 billion, as they can allocate more money—€100 million more—due to excess capital. The cash payment per share this year will be, at least, the same as last year, as the company reported.

Likewise, one of the factors driving the soaring profits is the way the banking tax is recorded this year. This quarter, 31 million euros were recorded for this item , equivalent to 25%, as it is spread over the four quarters throughout the year. In the previous year, as this was a temporary tax, the entire amount was charged in the first quarter; for example, in 2024, the full 192 million euros owed to be paid were recorded between January and March.

The group's net interest income, as has been the case at other entities, fell by 1.3% to €1.216 billion in the first quarter, offset by a 1.3% increase in net fees to €344 million. Thus, banking revenues stood at €1.56 billion, a 0.7% year-over-year decrease.

"Total costs stood at €758 million in the first three months of the year, up 0.9% year-over-year, in line with expectations. Meanwhile, the recurring margin (interest income plus fees less recurring costs) stood at €801 million (-2.3%). Overall, the group's efficiency ratio improved by 1.4 points year-over-year, closing at 46.2%," the company added.

The British subsidiary TSB , for its part, reported a standalone net profit of 74 million pounds at the end of March 2025, as a result of strong sales, cost control, and the positive impact of structural hedges, representing a year-on-year increase of 96.1%. This subsidiary thus concluded the quarter with a contribution to the group of 94 million euros.