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Banco Sabadell maintains its strategic objectives despite the impact of the war

Sabadell Bank refuses to review its strategic plan for 2023. The entity considers that it is premature to carry out a downward analysis of the macroeconomic scenarios. “As far as I know, César (González Bueno, the CEO) has not told me that the plan is going to change,” said the non-executive president of the Catalan bank, Josep Oliuin a meeting with journalists organized in Alicante, the entity’s headquarters, on the occasion of the holding of the ordinary annual meeting of shareholders, which will take place this Thursday, March 24.

Oliu has full confidence that it will reach 6% profitability (ROTE) marked in its strategic plan, which in its calculations already included external shocks. This position is taken by the board of directors because it thinks that, although the Russian war over Ukraine may affect growth pace, it will not about recovery. They also completely rule out the stagflationa question often repeated by some international institutions, including by the European Central Bank (ECB). “Although it is less than expected, slowed down by the effect of the war, the recovery will continue,” said Oliu, whose words have been underlined by the CEO, César González-Bueno.

Although in the medium term they do not see any risk, they do In the short term, imbalances are expected in the business fabric due to sustained inflation. “There are favorable tailwinds and inflation will bring a rate hike (…), but there are also clouds“, has specified Oliu, who observes the possibility of an increase in delinquency rates Circumstantially, though not significantly. In any case, he considers that the bank will be able to keep any controlled risk.

The entity communicated in May of last year to the market its new Strategic plan for the period between 2021 and 2023, a new solo roadmap whose main lines showed a turnaround in its business model and with which it hopes they will lead to a ROTE of over 6% in 2023. This would translate into earn about 670 million euros at the end of the three-year period. The entity began its plan with a profit of 2 million euros at the end of 2020 and a ROTE of 0.02%.

“TSB woke up and now there is even appetite in the market”

Regarding a possible merger, both bankers have reiterated that their vocation is to carry on alone and to consolidate an important position in the domestic market. On TSB they have positioned themselves in a similar way. They recognize that at the time, after the crisis caused by the migration problems, they questioned whether Banco Sabadell would be able to rebuild the British subsidiary. Finally woke up and now even generates cravings. “The problems are over,” Oliu remarked.

Why lose one of the most profitable businesses of the group?” asked Oliu. As he said, the reasons that led the bank to make this investment exist now and there is no reason to feel that it should not be part of the group. “TSB could seem like a very daring operation; the market doubted whether Sabadell was capable of lifting migration. But we, like the Ukrainians, bend our knees. The English are coming now to put a medal on us,” Oliu stressed.