TSB sale complete, NII inflects, and capital returns accelerate as new leadership sharpens focus on Spain and high-value customers
SAB.MC · Earnings Call · 2026-07-24
After the sale of TSB, Sabadell is now a simpler and growth-oriented Spanish bank, delivering attractive shareholder returns.
A Change of Guard, a New Tone
Banco de Sabadell's Q2 2026 results arrived with a new face at the helm. Marc Dulcet, who took over as CEO in May, opened his first earnings call by distilling what has arguably been the bank's most transformative quarter in years: the completion of the TSB sale, a simplified balance sheet, and a renewed focus on the domestic market. The Commercial momentum he highlighted is not just rhetoric — performing loans grew 3% quarter-on-quarter and customer funds rose 1.8%, confirming that the disruption from the hostile tender offer is firmly behind them.
Dulcet was quick to contrast his approach with predecessor Cesar Gonzalez-Bueno's more defensive posture on lending. Where the previous CEO had deliberately ceded mortgage market share — “we have intentionally reduced our market share of new mortgages lending from approximately 9% at the end of '24 ... to below 6% this quarter” — Cesar Gonzalez-Bueno Wittgenstein, CEO · 2026-05-05 — Dulcet signals a more balanced growth ambition, aiming for low-to-mid single-digit mortgage growth, double-digit consumer expansion, and mid-single-digit SME/corporate. His strategic priories center on leveraging AI and technology to serve high value customer segments and tilt the P&L toward fees.
"We see a big opportunity in terms of leveraging on AI to improve the relationship with our customers," “Dulcet said, also confirming he would present a new strategic plan after the current 2025–2027 one concludes” — Marc Dulcet, CEO · 2026-07-24. That forward-looking stance is new for Sabadell, whose prior calls were dominated by integration and defensive capital management.
The NII Inflection
CFO Sergio Palavecino delivered the most anticipated message of the call: net interest income has turned the corner. “NII has clearly reached an inflection point.” — Sergio Alejandro Tome, CFO · 2026-07-24 After bottoming in Q1, NII rose 3.4% quarter-on-quarter, driven by higher customer volumes, a favorable day count, and the ECB deposit facility rate on TSB-sale proceeds. This is precisely the trajectory flagged in February, when Palavecino said, “we expect the trough in the first quarter of the year because we will have a fewer number of days” — Sergio Palavecino, CFO · 2026-02-06.
Underlying the NII recovery is an improving cost picture. The early-retirement program was fully executed, delivering EUR 20 million of savings in H2 and EUR 40 million annually from 2027. Recurring cost growth guidance was tightened from ~3% to below 3%. Meanwhile, Service fees rose 4% QoQ, led by payments and corporate banking, and the bank reaffirmed mid-single-digit fee growth for the year. "We have clear levers to support continued revenue growth," “Dulcet said, pointing to widening jaws between revenue and costs” — Marc Dulcet, CEO · 2026-07-24.
The quarter also demonstrated capital discipline. CET1 ratio stood at 13.11%, with 20 basis points generated after paying a 60% dividend accrual and funding 3% loan growth. The bank completed its EUR 800 million buyback and announced a new EUR 331 million repurchase, alongside the extraordinary EUR 0.50 dividend from the TSB gain.
Deposit Strategy and M&A Non-Appetite
Perhaps the most sensitive area is deposits. Sabadell's online account now remunerates balances up to EUR 100,000, up from EUR 50,000, leading some analysts to question whether the bank is paying up for growth. Dulcet was categorical: “our intent is not to attract the funds. It is to make sure that we ... increase the level of loyalty” — Marc Dulcet, CEO · 2026-07-24. He stressed that over 50% of digitally-acquired customers make Sabadell their primary bank within a year. CFO Palavecino added that Deposit cost remained stable at 78 basis points, with a 30% pass-through on rates, and that the loan-to-deposit ratio at 93% remains comfortably within plan.
The bank's M&A stance is unchanged — and consistent with prior commentary. In November 2025, Cesar had said, “I don't think that in the book of probabilities, we should put a high score on further M&A transactions in Spain” — César González-Bueno, Chief Executive Officer (CEO) · 2025-05-10. Dulcet echoed that: "We do not see any opportunity whatsoever with the current conditions," “he said, while acknowledging eventual consolidation among mid-sized banks could make sense” — Marc Dulcet, CEO · 2026-07-24.
What has genuinely changed is the narrative. Under new leadership, Sabadell is no longer a bank in defensive mode — it's one that has completed its biggest strategic pivot, unlocked capital, and is now focused on seizing growth in its domestic market. The Q2 numbers back that up, and the market will be watching whether the new CEO can sustain the momentum into 2027 and deliver that 16% RoTE target.