2Q10 Results...1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 394.6 418.6 402.3 385.2 374.1 Net interest income...
Transcript of 2Q10 Results...1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 394.6 418.6 402.3 385.2 374.1 Net interest income...
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22nd July 2010
2Q10 Results
Banco Sabadell
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Disclaimer
Banco Sabadell cautions that this presentation may contain forward looking statements with respect to the business. financial condition. results of operations. strategy. plans and objectives of the Banco Sabadell Group. While these forward looking statements represent our judgement and future expectations concerning the development of our business. a certain number of risks. uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include. but are not limited to. (1) general market. Macroeconomic. governmental. political and regulatory trends. (2) movements in local and international securities markets. currency exchange rate. and interest rates. (3) competitive pressures. (4) technical developments. (5) changes in the financial position or credit worthiness of our customers. obligors and counterparts. These risk factors could adversely affect our business and financial performance published in our past and future filings and reports. including those with the Spanish Securities and Exchange Commission (Comisión Nacional del Mercado de Valores).
Banco Sabadell is not nor can it be held responsible for the usage. valuations. opinions. expectations or decisions which might be adopted by third parties following the publication of this information.
Financial information by business areas is presented according to GAAP as well as internal Banco Sabadell group´s criteria as a result of which each division reflects the true nature of its business. These criteria do not follow any particular regulation and can include forecasts and subjective valuations which could represent substantial differences should another methodology be applied.
The distribution of this presentation in certain jurisdictions may be restricted by law. Recipients of this presentation should inform themselves about and observe such restrictions.
These slides do not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe to any securities nor shall they or any one of them form the basis of or be relied on in connection with any contract or commitment whatsoever.
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Agenda
1. 2Q10 Results
2. Commercial activity and liquidity
3. Risk Management
4. Banco Guipuzcoano
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� Results featured by an important realisation of capital gains (sale&leaseback and exchange offer) which have been applied to higher provisioning
� Higher net interest margin due to active price management
� Good cost management
� Improvement in coverage ratios in the credit and real estate assets portfolio
� Important growth in number of customers and deposits
� Generating commercial GAP
2Q10 in summary
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1H10 Results
Euros in million
Jun-09 Jun-10 10/09 (%)
Net Interest Income 813.1 765.2 -5.9%
Equity Method & Dividends 42.2 47.8 13.3%Commissions 267.1 253.3 -5.2%Trading Income & Forex 185.7 175.7 -5.4%Other Operating Results 3.7 5.4 43.1%Gross Operating Income 1,311.9 1,247.4 -4.9%
Personnel Costs -370.5 -326.0 -12.0%Administrative Costs -152.6 -163.4 7.1%Depreciations -69.0 -78.7 13.9%Pre-provisions Income 719.7 679.3 -5.6%
Total Provisions & Impairments -358.9 -693.8 93.3%Gains on sale of assets 28.9 292.1 -Profit before taxes 389.7 277.7 -28.7%Taxes and others -57.6 -44.0 -23.6%Attributable Net Profit 332.0 233.6 -29.6%
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Strong capital position
6.63
1.160.9
2.271.78
7.70
Jun-09 Jun-10
BIS ratio (%)
Lower Tier I
Core Capital
Tier II
10.05 10.38
7Jun-09 Jun-10
- 5.9 %813.1 765.2
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
394.6 418.6 402.3 385.2 374.1
Net interest income supported by active price management …
391.1
Euros in million
Jun-10
NII 765.2
Dividends 10.5
Equity Method 37.3
Commissions 253.3
Trading income 152.1
Forex 23.6
Other op. results 5.4
Gross Op. Income 1,247.4
Personnel exp. -326.0
Administration exp. -163.4
Deprec. & amort. -78.7
Pre-provis.Op.Income 679.3
Prov. for NPLs and others -693.8
Gains on sale of assets 292.1
Taxes and minority int. -44.0
Disc. transactions 0.0
Attr. Net Profit 233.6
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2.17%2.31%2.52%2.72%
2.81%2.84%2.80% 2.81% 2.73% 2.05%
3.53%
4.21%
4.93%
6.29%6.06%5.93%
6.28%
5.56%
3.79%3.49%
1.44%1.36%1.48%1.70%
3.48%3.22%
2.21%
3.13%3.47%
2.83%
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
1.81%1.78%1.86%
1.80% 1.83% 1.79%1.85%1.98% 2.06%
1.95%
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
… with limited impact on customer spread
Net interest margin
Customer loan yield
Cost of customer funds
Customer spread
9
29.8
60.6
28.634.1 31.2 30.731.2
52.8 51.952.1 51.854.2
44.4 41.638.1
45.3 43.842.3
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
63.9
113.4
85.4
61.9
106.0
89.7
Jun-09 Jun-10
267.1 -5.2%253.3
134.9 132.2 118.7 125.3 129.3
Commissions reflect the current environment
124.0
Asset Mgmt1
Services
Lending
1 Including mutual funds commissions and pension funds and non-life insurance brokerage
Asset Mgmt1
Services
Lending
Euros in million
Jun-10
NII 765.2
Dividends 10.5
Equity Method 37.3
Commissions 253.3
Trading income 152.1
Forex 23.6
Other op. results 5.4
Gross Op. Income 1,247.4
Personnel exp. -326.0
Administration exp. -163.4
Deprec. & amort. -78.7
Pre-provis.Op.Income 679.3
Prov. for NPLs and others -693.8
Gains on sale of assets 292.1
Taxes and minority int. -44.0
Disc. transactions 0.0
Attr. Net Profit 233.6
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158.1 157.2 159.6 153.7 159.9 162.2
31.6 23.6 10.6 20.9 1.0 2.9
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
322.1315.4
55.23.9
Jun-09 Jun-10
370.5326.0
+ 2.1%
Recurrent Non-recurrent
- 12.0%
189.7 180.8
- 0.5%Like-for-like
170.2 174.6 160.9
Personnel expenses reflect excellent cost control…Personnel expenses
165.0
Euros in million
Jun-10
NII 765.2
Dividends 10.5
Equity Method 37.3
Commissions 253.3
Trading income 152.1
Forex 23.6
Other op. results 5.4
Gross Op. Income 1,247.4
Personnel exp. -326.0
Administration exp. -163.4
Deprec. & amort. -78.7
Pre-provis.Op.Income 679.3
Prov. for NPLs and others -693.8
Gains on sale of assets 292.1
Taxes and minority int. -44.0
Disc. transactions 0.0
Attr. Net Profit 233.6
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… and administrative costs increasing only due to the sale&leaseback transaction
78.9 76.0 82.4
5.1
88.080.873.7
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
152.6 158.3
5.1
Jun-09 Jun-10
152.6 163.4
+ 7.1%
0.0%Like-for-like
Sale and leaseback
12 months impact:
€ 30m
Administrative costs
Euros in million
Jun-10
NII 765.2
Dividends 10.5
Equity Method 37.3
Commissions 253.3
Trading income 152.1
Forex 23.6
Other op. results 5.4
Gross Op. Income 1,247.4
Personnel exp. -326.0
Administration exp. -163.4
Deprec. & amort. -78.7
Pre-provis.Op.Income 679.3
Prov. for NPLs and others -693.8
Gains on sale of assets 292.1
Taxes and minority int. -44.0
Disc. transactions 0.0
Attr. Net Profit 233.6
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The transformation plan is nearly completed ...
FTEs* administrative by branch 2.25
2.00 1.95
1.67
1.37 1.32 1.25
2004 2006 2007 2008 2009 1H10 2010P
Accumulated reduction: -717 FTE
The operating efficiency process keeps the trend in reducing back office time at the branch level
*FTE= Full Time Equivalents
Cost reduction measures
� New Administrative Center for Banco
Urquijo has enabled us to centralize
the branches back office workload
� Creation process of an outsourcing
center, that additionally to cost
optimization, enables us to free-up
capacity and take on new network
administrative tasks
� Strengthening the self-service
channels and focusing on telebanking
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45.5%43.1% 41.9% 43.1% 42.1% 42.3%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
1,229 1,2301,223
1,214
1,206 1,208
9,6689,615
9,559
9,466 9,484
9,395
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
… which has a continued positive impact in the company’s structure
Cost / income ratioNumber of employees and branches*
* Excluding Sabadell United
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Total provisions and impairments
Capital gains offset with higher provisions
Capital gains of S&LB (€250m*) and debt exchange (€89m) applied to real estate assets, specific provisions and BCP
Euros in million. * €265m before transaction costs
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Specific 105.9 148.4 168.5 141.0 228.0 212.2 of which:
NPLs entry 11.0 16.2 14.5 4.1 50.5 26.0 Calendar effect 80.8 121.7 155.2 174.8 164.6 175.6Extraordinary charge 0.0 0.0 0.0 0.0 0.0 90.0Substandard 41.9 87.5 258.7 3.4 -54.2 -31.2Metrovacesa 0.0 46.7 43.4 94.3 0.0 0.0Real estate assets 0.3 57.0 67.1 57.2 46.0 209.8BCP 0.0 0.0 0.0 210.0 0.0 38.5Goodwill and others 1.0 -0.3 9.1 53.5 8.9 5.3
Subtotal 149.1 339.2 546.8 559.4 228.6 524.6
Generic 0.0 -129.4 -315.5 -311.8 -61.2 1.7
Total prov. and impair. 149.1 209.8 231.3 247.6 167.4 526 .3
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Agenda
1. 2Q10 Results
2. Commercial activity and liquidity
3. Risk Management
4. Banco Guipuzcoano
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Commercial activity is being developed at a steady pace …
A strong commercial activity in a difficult environ ment allows us to increase market share
* Excluding repos and including preference shares placed in the retail network and convertible bond issue. Euros in million
On-balance sheet customer funds* 37,834 41,212 +8.9%
Jun-09 Jun-10 %
Fix-term deposits 22,615 24,191 +7.0%
Loans to customers 64,229 65,356 +1.8%+6.4%Loans to customers excluding real estate
Off-balance sheet fundsMutual funds 8,418 8,532 +1.4%Pension funds 2,297 2,777 +20.9%Third party insurance products 5,163 5,434 +5.3%
16,694 17,908 +7.3%
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Emisiones en mercados de capitales (no incluye las titul izaciones)
… due to the good results of our campaigns to attract clients …
25,814 new accounts
46,130 new accounts
Significant success in gaining new customers:
Two major campaigns to attract clients:
Jun-09 Jun-10 % Var.
Individuals 68,318 96,828 +42%
Companies 13,855 22,661 +64%
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Credit lines (number of new contracts)
Loans (number of new contracts)Mortgages (number of new contracts)
… emphasizing the transactions on the asset side …
,.000
2,000
3,000
4,000
5,000
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
2,000
4,000
6,000
8,000
10,000
2,000
4,000
6,000
8,000
10,000
CrediGlobal (number of new contracts)
500
1,000
1,500
2,000
2,500
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
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Emisiones en mercados de capitales (no incluye las titul izaciones)
… and with an important success in deposits …
€ 1,264.3 millions
Important efforts in cross selling through new depo sits campaigns (30% of the new deposits have also salary
account)
Cross selling4.3 products per client
2Q10 deposit attraction/taking
€ 1,005.0 millions
Flexible Deposit
Platinum Deposit
€ 607.1 millions18 months Deposit
Mass market
Personal Banking 7.4 products per client
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FINANCIACIÓN
Emisiones en mercados de capitales (no incluye las titul izaciones)
… that generates an important commercial GAP …
-1,000
0
1,000
2,000
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Positive commercial GAP
10,000
15,000
20,000
25,000
30,000
Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10
0
2,500
5,000
7,500
10,000
Funds evolution
Wholesale funding
Sight deposits
Fix-term deposits
Euros in million
Mutual funds (right axis)
21
1,00
530
1,20
950 0
1,63
01,
289
900
280
200
801,
500
500
01,
000
0 020
00
1,50
00 0
1,75
01,
137
0 5015
0030
020
00 0 13
170
0
500
1,000
1,500
2,000
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
1Q18
3Q18
FINANCIACIÓN
Emisiones en mercados de capitales (no incluye las titul izaciones)
… and provide us with a comfortable liquidity position for the coming quarters
Wholesale funding maturity calendar€ m
Covered bonds € 1,000m
Subordinated debt € 500m
Total capital market issues € 1,500m
1H10 issues: Wholesale funding breakdown:
Securitization 9.42%
Preference shares 0.75%
ECP 13.62%
Subordinated debt 5.67%
Senior debt 19.12%
Covered bonds 51.41%
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Service quality
7.937.917.907.838.037.827.44
6.797.20 7.37 7.19 7.03
6.59 6.52
2005 2006 2007 2008 2009 1Q10 2Q10
Banco Sabadell group Market
Ranking in retail banking network independent quality surveys 2
Ranking in service quality 1
0 2 4 6 8 10 12 14 16
San Consumer F.BanestoBarclays
Deutsche BankBankinter
GuipuzcoanoSantander
PastorValencia
AndalucíaBBVA
PopularSabadell 2008 2007
The only Spanish financial institution with a global ISO
9001 quality certificate
Renewal of the Global Award of
European Excellence
Source: 1 Bank of Spain, dec-08 Bulletin 2 STIGA, “RCB Objective Quality in Retail Banking Networks” 2Q10
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Agenda
1. 2Q10 Results
2. Commercial activity and liquidity
3. Risk Management
4. Banco Guipuzcoano
24
NPL ratio remains under control …
Source: Bank of Spain
02468
10
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 mar-10
jun-10
*Banco Sabadell estimates
*
Continued important NPL gap vs the system, with a co verage ratio of 64% (122% including mortgage guarantees)
System NPLs Ratio BS NPLs ratio
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10
NPL ratio BS 2.35% 2.82% 3.19% 3.47% 3.73% 4.09% 4.38%
NPL ratio system 3.37% 4.27% 4.60% 4.86% 5.08% 5.33% 5.62%
GAP (bp) 102 145 141 139 135 124 124
25
670.9671.8788.3748.5
625.4
806.7709.0
647.7
591.6578.9532.9
223.1
489.4
35.1
480.1531.9
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Evolution of entries and recoveries
Entries
Recoveries
… with entries and recoveries on a converging path …
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Entries 806.7 788.3 709.0 671.8 670.9 647.7
Other provisioned loans entries 0.0 35.4 41.0 63.9 349.7 256.4
Recoveries -480.1 -532.9 -531.9 -489.4 -578.9 -591.6
Write-offs -1.7 -25.4 -9.2 -31.2 -183.3 -93.1
Quarterly change on NPLs 324.8 265.4 208.9 215.1 258.4 219.4Euros in million
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Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10
Companies 1.60% 1.81% 1.95% 1.92% 2.05% 2.38%
SME 1.97% 2.54% 2.73% 2.89% 2.86% 3.32%
Small retailers and self-employed 2.42% 2.93% 3.59% 3.93% 3.96% 4.14%
Real estate development 7.34% 7.73% 8.05% 9.33% 12.60% 14.24%
Real estate management companies 3.37% 4.01% 4.63% 5.70% 6.95% 7.42%
Construction 3.84% 4.23% 4.71% 4.53% 4.88% 5.13%
Mortgages to individuals 1.48% 1.69% 1.99% 1.95% 2.11% 2.13%
Individual others 4.24% 4.91% 5.53% 5.43% 5.46% 5.43%
Total 2.82% 3.19% 3.47% 3.73% 4.09% 4.38%
… with no changes in the trend by segment
27
931 1,025 1,1121,025
Dic-08 Jun-09 01/12/yy 01/6/yy
-68
Results show the active management in Solvia …
Accumulated portfolio evolution
Acquisition
Repossession
Sales
Provisions
872 1,216 1,313 1, 468 1,498
-59 -59-129
-193
-43
250
460617
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun -10
714
-244
-84
1,112
Significant real estate provisioning effort has con tinued.Real estate assets coverage ratio stands now at 22%
1,566
-288
1,112
-95
837
1,687
-475
-162
1,212
1,112
Euros in million
28
% Real estate assets over loans
10%
12%
14%
16%
22%
0%
5%
10%
15%
20%
25%
SavingBanks
System BS Banks BS
4Q09 Jun-10
% Coverage
Saving Banks System BanksBS
2,74%
4,75%
3,79%
2,84%
0,00%
0,50%
1,00%
1,50%
2,00%
2,50%
3,00%
3,50%
4,00%
4,50%
5,00%
1T07 2T07 3T07 4T07 1T08 2T08 3T08 4T08 1T09 2T09 3T09 4T09 1T10
Source: Bank of Spain and annual reports
… with a better scaled portfolio than the sector average
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Agenda
1. 2Q10 Results
2. Commercial activity and liquidity
3. Risk Management
4. Banco Guipuzcoano
30
Key considerations
Transaction
� Exchange offer (“OPA”) for 100% Banco Guipuzcoano’s shares, subject to an acceptance level of at least 75%
� Irrevocable commitments by 45.61% of BG’s shareholders
� September: Extraordinary Shareholders Meeting
� Closing of the transaction: mid November
� -5% year 1, +6% year 2, +11% year 3
Economic terms
� 5 new ordinary shares + 5 mandatory convertible bonds (term 3 years; coupon 7.75%) for every 8 BG ordinary shares
� Equivalent effective price of €5.00 for every BG ordinary share and €5,47 for each BG preference share without voting rights
� Payment through BS ordinary shares and mandatory convertible bonds for an equivalent effective value of €749 million
EPS impact
Capital and Goodwill
� +15 bps in Core Tier 1
� Goodwill: €50 million
Note: Transaction is subject to the acceptance of the exchange offer
Synergies� Synergies of €60m (€53m in costs and €7m in revenues)� Achievement of 100% of the synergies in 2012
31Euros in million
A capital efficient transaction
401
50
348
602
Sharesoffered
Mandatoryconvertible
bonds offered
Goodwill Capital needfor RWA
Capital generation: 15 bps
Capital rising
Potential margin for assets revaluation due to accounting consolidation
Capital use
638
61
749
50
Acquisitionprice
BG bookvalue 1Q10
Fair valueadjustments
Goodwill
Only €50 million of goodwill
Capital generation / use
Note: Transaction is subject to the acceptance of the exchange offer
32
Strategic rationale
� Reinforces Banco Sabadell’s position as the fourth largest banking group in Spain and consolidates the domestic growth strategy
� Rebalances the geographic contribution of BS business, contributing with a more diversified network that reinforces Banco Sabadell’s presence in the Basque Country, whose GDP is the 5th in Spain (6.2%) and qualified with a rating of Aaa by Moody’s, AA+ by S&Ps and AAA by Fitch.
� Reinforcing the BS retail customer franchise
� It will allow the group to turn into the 6th (before 13th) financial entity (in number of branches) in the Basque Country (123 branches). Additionally, it will allow the group rising to the 6th position in Navarra and 7th in Madrid
� Banco Sabadell’s track record in integrations will improve the efficiency with €60 million of synergies, and at the same time, it will preserve the differentiated brand and Banco Guipuzcoano values
Note: Transaction is subject to the acceptance of the exchange offer
33
% : Market share
Customer deposits 1 (€bn)
167,0140,6
92,9 83,4 72,6 59,6 56,7 44,6 39,15,4
Caj
aM
adrid
SIP
La C
aixa
BB
VA
Esp
aña
CA
M S
IP
Red
San
tand
er
Pop
ular
Ban
esto
BS
+ B
G
BS
BG
Net loans to customers (€bn)
223,7 204,4176,7
115,6 95,0 94,5 75,6 70,4 63,2
7,2
Caj
aM
adrid
SIP
BB
VA
Esp
aña
La C
aixa
Red
San
tand
er
Pop
ular
CA
M S
IP
Ban
esto
BS
+ B
G
BS
BG
Domestic Branches
5.315 4.543
3.055 2.934 2.384 2.168 1.773 1.445 1.190
255
La C
aixa
Caj
aM
adrid
SIP
BB
VA
Esp
aña
Red
San
tand
er
CA
M S
IP
Pop
ular
Ban
esto
BS
+ B
G
BS
BG
Mutual funds and Pension funds (€bn)
40,2
27,9 27,4
14,5 13,0 12,2 11,9
1,1
BB
VA
San
tand
er
La C
aixa
Caj
aM
adrid
SIP
BS
+ B
G
Pop
ular BS
BG
10,7%13,6% 12,4% 7,0% 5,7% 4,6% 3,8% 0,4%
12,1% 6,9%10,4% 6,7% 4,9% 3,3% 2,7% 0,6%
14,1% 7,0%11,9% 7,8% 5,0% 3,3% 0,5%
16,2% 11,2% 11,1% 5,8% 5,2% 4,9% 4,8% 0,4%
6,1% 4,8%
4,0%
4,3% 3,8%
4,2%
5,8%
Reinforces Banco Sabadell’s position in Spain
Source: AEB, CECA and company data as of FY09Note: Santander does not include neither Banesto nor Santander Consumer Finance; BBVA España includes Spain and Portugal 1 Including REPOsNote: Transaction is subject to the acceptance of the exchange offer
34
Increasing market share in the Basque Country
2
2 199
5
3
2
126
52
1 27
1
252
12
4
395
110
39
19117
316
155
56
28
149
24
5
11
245
26
Banco Sabadell’s branchesBanco Guipuzcoano’s branches
Sabadell 1,1821
Guipuzcoano 2552
1 As of March 2010, 2 As of December 2009
2.0%
Branches market share in the Basque Country
8.6%
Without BG
With BG
Note: Transaction is subject to the acceptance of the exchange offer
35
Improving the positioning of BS in the Basque Country, Navarra and Madrid
243
225
187
140
133
102
99
98
67
63
24
123
Basque Country branches ranking
6th
13th
…
BS+B
G
Source: Company information, AEB, CECA (Data as of 2008). Banco Guipuzcoano as of December 2009 and BS as of March 2010
100
67
56
47
43
16
12
11
11
9
23BS+BG 6th
8th
775
575
510
305
301
159
158
155
207
198
1.066
BS+BG 7th
10th
Navarra branches ranking Madrid branches ranking
Note: Transaction is subject to the acceptance of the exchange offer
36
The importance of the economy in the Basque Country
9,8% 9,4%
11,8%10,7%
2007 2009
Basque Country Spain
Construction weight in the economy 3
Unemployment rate (1Q10)
10,9%
20,1%
Basque Country Spain
� Weight of the economy: 6.2% of GDP1
� Qualified with rating Aaa by Moody’s, AA+ by S&Ps and AAA by Fitch
� Spanish region with the lowest debt/GDP ratio (3.8%)1
� In the last six years, the economy in the Basque Country has shown a more favourable trend than in Spain as a whole
� The economic contraction in the Basque Country began later and is expected to have ended before than in Spain
� The GDP per inhabitant2 is above the country and EU average
1 Data as of 2009, 2 Nominal GDP per inhabitant, 3 Gross Value Added weight of the economy
Economic situation
Note: Transaction is subject to the acceptance of the exchange offer
37
Integration process
�Use of Banco Sabadell’s existing IT platform and operations
�Migration of IT platform to coincide with branch network consolidation
Key aspects
Calendar – main events 2010
End of exchange offer
EGM of Banco
Sabadell
New commercial structure
Integration IT/operations
Branch network integration
Board of Directors approval
Note: Transaction is subject to the acceptance of the exchange offer
June 25th September 18th February 2011November 14th
38
Key data Branch network
� Ranked as Spain’s 41st financial entity based on total assets
� 1.266 employees� €10.345m of total assets� €7.159m of net credit (58,9% SMEs,
32,4% individuals y 8,7% large corporates and other)
� €5.427m of client deposits (incl. repos of €241m)
� Net profit of €28m� Shareholder funds €639m� Tier 1: 9,1%� BIS: 12,6%� NPLs: €307m � NPL ratio: 3,9%� NPL coverage ratio: 91,5% 255
45% in Guipúzcoa and Navarra
Note: Data as of 2009. Euros in million
22 1 99
53
2
126
52
1 27
1
252
12
4Number of Banco Guipuzcoano branches
Note: Transaction is subject to the acceptance of the exchange offer
Annex I. Banco Guipuzcoano in summary
39
Annex II. Banco GuipuzcoanoCustomer loans and deposits
Customer loans Customer deposits
Note: Transaction is subject to the acceptance of the exchange offer
€ m 2007 2008 2009 09/08%
Public administrations 268.8 232.6 175.0 (24.8)%
Resident sector 4,920.4 5,172.8 5,166.2 (0.1)%
Sight deposits 1,763.6 1,659.8 1,697.2 2.3%
Current accounts 1,488.8 1,412.4 1,401.2 (0.8)%
Savings accounts 274.8 247.4 296.0 19.6%
Fixed-term deposits 2,258.6 2,800.3 3,157.8 12.8%
Fixed-term deposits 1,444.8 1,954.7 2,331.8 19.3%
Other¹ 813.8 845.6 826.0 (2.3)%
REPOs 896.5 643.0 241.2 (62.5)%
Valuation adjustments 1.7 69.7 70.0 0.4%
Non-resident sector 79.3 85.5 86.2 0.8%
Total customer deposits 5,268.5 5,490.9 5,427.4 (1,2)%
€ m 2007 2008 2009
Public Administrations 34.8 60.3 57.4
Resident sector 7,771.2 7,843.6 7,230.1
Individuals 2,699.0 2,882.3 2,776.4
SMEs 4,965.2 4,858.1 4,385.3
Other 107.0 103.2 68.4
Non-resident sector 163.9 159.9 152.4
Total gross loans 7,969.9 8,063.8 7,439.9
Valuation adjustments 179.5 222.3 281.4
Specific coverage 56.2 105.0 195.7
Generic coverage 123.3 117.3 85.7
Total net loans 7,790.4 7,841.5 7,158.5
40
179,2222,2
281,4
94
222,6307
2,8%1,2%
2007 2008 2009
Provisions NPLs
190% 100% 92%
%3.9%
Risk management
Coverage ratio NPL ratio
Solvency
Funding mix Wholesale funding calendar
5,62% 6,93% 7,37% 7,85%
4,78%4,05% 3,75%
3,48%11,09% 11,35% 11,79% 12,56%
1,23%0,67%0,64%
0,69%
2006 2007 2008 2009
Core Tier 1 Lower Tier 1 Tier 2
Covered bonds10,6%
Tradable securities
17,4%
Subordinated debt3,6%
Customer deposits53.3%
Interbank14,2%
Other1,0%
0
725
430
0 50
125
25
2010 2011 2012 2013 2014 2016 2022
Note: Transaction is subject to the acceptance of the exchange offer
Annex III. Banco GuipuzcoanoRisk management
41Data as of 2009 Note: The contribution analysis does not take into account the potential synergies obtained through the transactionNote: Transaction is subject to the acceptance of the exchange offer
10.7%
88.6%
90.7%
89.3%
92.2%
94.9%
9.3%
7.8%
5.1%
11.4%
Guipuzcoano Sabadell
Contribution analysis
12.2%
10.9%
11.1%
89.8%
87.8%
89.1%
88.9%
10.2%
Annex IV. Banco GuipuzcoanoBG represents c.10-12% of the combined entity
11.8%17.6%
10.7%
9.8%13.6%15.9%
88.2%82.4%
89.3%
90.2%86.4%84.1%
€m Guipuzcoano Sabadell Combined entity
P&LNet interest income 205 1,601 1,805Gross operating income 256 2,505 2,761Personnel and general expenses -142 -1,180 -1,321Net income before provisions 113 1,325 1,438Attributable net profit 28 522 551
Balance sheetNet loans to customers 7,158 63,233 70,391Customer deposits 5,427 39,131 44,558Shareholders' equity 639 5,226 5,866Total assets 10,345 82,823 93,168
OtherEmployees 1,266 9,466 10,732Branches 255 1,190 1,445
AverageMedianCapitalisation 773 4,892 5,665Ave. Capitalisation (last 5 years) 1,377 7,303 8,679
421 As of March 2010, 2 As of December 2009
GDP geographic distribution Branches geographic distribution
13.6%
3.1%
2.2%
2.5%
3.9%
1.3%
3.3%
5.9% 18.6%
9.7%1.7%
5.2%
18.0%
2.6%
1.7%6.2%
0.7%
# BS branches 1,1821
# Proforma branches 1,4372
2.8%
29.2%
1.8%
1.6%8.6% 0.7%0.4%10.5%
2.1%
14.4%
4.1%
0.4%
9.0%1.7%
9.5%
2.1%
1.2%
This transaction allows us to have a higher market share in the fifth most important Spanish region
%
%
33.3%
2.4%
12.6% 0.4% 2.0% 1.0%
4.7%
13.1%
0.4%
2.0%
0.3% 1.4% 9.3% 3.3%
1.6%9.9%
2.2%
Annex V. Banco GuipuzcoanoIncreasing market share in the Basque Country
Note: Transaction is subject to the acceptance of the exchange offer
43
The value of trust