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* Second quarter net profit rises to 147 mln euros
* Net interest income increases 3.9% year on year
* TSB books net profit of 41 mln pounds in second quarter
* Sabadell says it is on track to deliver strategic plan
(Adds details on British unit TSB)
By Jesús Aguado
MADRID, July 29 (Reuters) - Spain's Banco Sabadell
said on Thursday its second quarter net profit almost trebled
from the same period a year ago boosted by a solid performance
from its British unit TSB and lower overall costs and
provisions.
The country's fourth-largest bank by assets reported a net
profit of 147 million euros ($173.6 million) in the April to
June period. Analysts polled by Reuters expected a net profit of
86 million euros.
The lender said its board had proposed a cash dividend
pay-out of 30% against 2021 results, following ongoing
conversations with the supervisor..
In Britain, TSB booked a net profit of 41 million pounds in
the second quarter compared to a loss of 41 million pounds in
the same period last year on lower impairments.
Sabadell's acquisition of TSB in 2015 backfired when IT
glitches sent costs spiralling in 2018. It has for now frozen
its plans to sell TSB until it completely turns around its
business.
Banks across Europe are under growing pressure from low
interest rates as they grapple with the COVID-19 impact but a
more benign economic scenario allowed Sabadell to reduce its
cost of risk, which acts as an indicator for potential losses in
the future, to 53 basis points from 69 basis points in March.
It did not book coronavirus provisions in the quarter.
It also said it was on track to meet its strategic plan
year-end targets, which foresees a low single digit growth in
net interest income, earnings from loans minus deposit costs,
in 2021.
Its net interest income already rose 3.9% in the second
quarter compared to the same quarter a year ago to 852 million
euros, slightly above analysts' forecasts of 848 million euros,
thanks to an increase in mortgage lending in Spain and the UK.
Its three-year strategy sets a return on equity target
(ROTE), a measure of profitability, of more than 6% by the end
of 2023. It finished the first half with a ROTE of 3.88%.
Sabadell's failure to merge with bigger rival BBVA
in November added pressure and the bank is also expected to
focus on new cost-cutting measures in Spain.
The lender's fully loaded core tier-1 capital ratio remained
stable at around 12% in June.
(Reporting by Jesús Aguado; additional reporting by Emma
Pinedo; editing by Inti Landauro)
