January 30, 2020 / 5:19 PM / 19 days ago

UPDATE 1-Sabadell swings to fourth-quarter loss on higher provisions

* British unit TSB books 34 mln euro loss

* Sabadell’s full-year profit still more than doubles

* Sabadell’s NII falls 2.4% in Q4 y/y (Adds British unit loss, details)

By Jesús Aguado

MADRID, Jan 30 (Reuters) - Spain’s Banco Sabadell swung to a loss of 15 million euros ($16.6 million) in the fourth quarter from a profit of 80 million euros a year ago due to higher-than-expected bad loan provisions and losses at its British unit TSB.

Analysts surveyed by Reuters had expected, on average, a net profit of 16 million euros, although some projected a loss.

The bottom line was affected by total impairments of 370 million euros set aside mainly to cover the clean-up of real estate asset sales of more than 6 billion euros closed in the last quarter of 2019.

Spanish banks have gone abroad in search of higher revenues, but Sabadell’s 2015 purchase of TSB has been marred by major technology glitches.

In the fourth quarter, TSB booked a loss of 34 million euros.

Still, Sabadell’s overall net profit for the whole of 2019 more than doubled to 768 million euros as total provisions fell almost 30% against 2018, when the Spanish bank suffered costs of 350 million euros related to the TSB IT glitch.

As part of TSB’s turnaround announced in November, Sabadell’s British unit said it would shut 82 branches in 2020, or 15% of its network, in a bid to save a total of 100 million pounds ($128 million) by 2022.

Ultra-low interest rates squeezed Sabadell’s net interest income (NII), a measure of earnings on loans minus deposit costs, which fell 2.4% in the fourth quarter to 910 million euros. Analysts expected NII to come in at 898 million euros.

In an attempt to offset increasing competition, Spanish banks are focused on cost-cutting and shifting to more profitable consumer and enterprise business, while also building up their capital positions.

At the end of December, Sabadell increased its core tier-1 capital ratio by 34 basis points to 11.7%, above the 11.6% minimum guidance for the whole year.

Taking into account other asset disposals, such as the asset management unit sold to Amundi in January, Sabadell said its pro-forma core-tier 1 capital ratio was 12.1%.

$1 = 0.9014 euros Reporting By Jesús Aguado; editing by Ashifa Kassam and Andrei Khalip

Nuestros Estándares:Los principios Thomson Reuters
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