Spanish lender Banco Sabadell has reported record-breaking profits for 2024, allowing it to offer €3.3 billion to shareholders in dividends and buybacks over the next two years.
The bank’s full-year profit surged by 37% to €1.83 billion, while fourth-quarter earnings climbed 19% to €532 million, Sabadell announced on Friday.
As a result, the bank has increased its planned shareholder payouts from €2.9 billion to €3.3 billion, including cash dividends of 20.44 cents per share for 2024 and at least the same amount in 2025. Share buybacks will further boost returns, with shareholders expected to receive around 61 cents per share over two years.
“We are returning a record amount of remuneration to shareholders. No banking peer in Spain plans to pay out a similar proportion of income,” said Josep Oliu, chairman of Sabadell.
César González-Bueno, the bank’s CEO, described the results as evidence of “exceptional growth,” adding that Sabadell remains confident in its long-term strategy.
Factors Behind Sabadell’s Strong Performance
Sabadell attributed its profit growth to strong performance in retail and business banking in Spain, as well as a significant contribution from its UK subsidiary, TSB Bank.
TSB reported £208 million in standalone net profit for 2024, a 18.9% increase from the previous year. This led to TSB contributing €253 million to Sabadell’s overall profit, the highest since Sabadell acquired the UK bank in 2015.
Additionally, higher lending rates helped drive Sabadell’s net interest income up 6.3% year-on-year, reaching €5.02 billion in 2024.
BBVA Takeover Battle Continues
The positive earnings announcement comes as Sabadell fights off a hostile takeover attempt from BBVA, one of Spain’s largest banks.
BBVA has been trying to acquire Sabadell for the second time in four years, but Sabadell has rejected the offer, arguing that the bid undervalues its business and growth potential.
Supporters of a BBVA-Sabadell merger believe it could strengthen Spain’s financial sector by creating a larger, more competitive bank capable of increasing lending. However, critics worry that a merger would reduce competition and harm consumers.
Spain’s competition authority (CNMC) extended its review of the takeover bid in November, a move seen as a setback for BBVA. The delay means that any deal may not be finalized until well into 2025, and BBVA could be forced to make concessions to gain regulatory approval.
While the Spanish government has previously expressed opposition to the takeover, Prime Minister Pedro Sánchez recently softened his stance, saying the final decision would rest with regulators. However, the government still has the power to block the deal if it chooses.
A Strategic Move to Stay Independent?
Sabadell’s decision to return record-breaking shareholder payouts appears to be part of its strategy to resist the BBVA takeover. By proving its strong financial health and profitability as an independent bank, Sabadell hopes to reduce shareholder support for BBVA’s bid.
Additionally, Sabadell announced last month that it would move its headquarters back to Catalonia, a move widely seen as an attempt to gain political support against the takeover.
With its record earnings, growing UK operations, and shareholder-friendly policies, Sabadell is making a strong case for maintaining its independence—setting the stage for a heated financial and political battle in the months ahead.
