# Sabadell doubles Q2 net profit, lifts guidance for 2023 Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-07-27 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Sabadell Doubles Q2 Net Profit, Raises 2023 Guidance Meta Description: News of Sabadell's impressive Q2 performance and improved 2023 outlook, with higher earnings and lending income forecasts, driving investor interest. URL: https://financedigest.com/sabadell-doubles-q2-net-profit-lifts-guidance-for-2023html ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-07-27t053243z1lynxmpej6q04hrtroptp4sabadell-costs-jobs-1736813717244-compressed.jpg) # Sabadell doubles Q2 net profit, lifts guidance for 2023 By Jesús Aguado MADRID (Reuters) -Higher margins helped Spain’s Sabadell double net profit in the second quarter, beating market expectations and prompting the bank to lift its guidance for overall lending income and profitability in 2023. Spain’s fourth-largest bank by market value reported a net profit of 359 million euros ($398 million) for April-June, compared with 179 million euros in the same period last year. Analysts polled by Reuters had [expected a net profit](https://www.financedigest.com/taylor-wimpey-expects-full-year-profits-to-halve-amid-housing-gloom.html "Taylor Wimpey expects full-year profits to halve amid housing gloom") of 287 million euros. The bank generated higher lending income both in its home market and from British unit TSB, where [profit on a standalone basis rose](https://www.financedigest.com/zur-rose-delays-profitability-break-even-to-2024.html "Zur Rose delays profitability break-even to 2024") by 25% in the quarter to 50 million pounds ($65 million). TSB’s net [interest income](https://www.financedigest.com/abn-amros-q3-profit-jumps-as-interest-income-recovers.html "ABN Amro’s Q3 profit jumps as interest income recovers") (NII) – earnings on loans minus deposit costs – grew 9.7% year-on-year in the quarter. However, Sabadell’s Chief Financial Officer Leopoldo Alvear warned on Thursday against [market pressure to raise deposit costs](https://www.financedigest.com/complaints-from-cost-centre-to-marketing-discipline.html "Complaints: From Cost-centre to Marketing Discipline") at TSB, expecting NII at this unit to fall. “Probably NII (in the UK) will come down in the coming two quarters in ’23, (as the bank) won’t be able to cope with the repricing of deposits,” Alvear told an analysts’ call, mirroring similar comments from its larger UK rival Barclays. Shares in Sabadell were up 1%, adding to gains of around 13% in the last month. [Higher earnings](https://www.financedigest.com/italian-hearing-aid-maker-amplifon-expects-higher-2023-earnings.html "Italian hearing aid maker Amplifon expects higher 2023 earnings") helped Sabadell lift its return on tangible equity ratio (ROTE), a measure of profitability, to 10.78% in the second quarter from 9.9% in the previous quarter. It also raised its ROTE [guidance for 2023 to around 10.5% from a previous target](https://www.financedigest.com/takeover-target-thg-misses-downgraded-2022-earnings-guidance.html "Takeover-target THG misses downgraded 2022 earnings guidance") of above 9%. European [banks are benefiting from higher interest rates](https://www.financedigest.com/bank-of-england-says-britain-is-coping-with-higher-interest-rates.html "Bank of England says Britain is coping with higher interest rates"). Sabadell’s NII in the [quarter rose 30% year-on-year to 1.17 billion euros](https://www.financedigest.com/rheinmetall-wins-quarter-billion-euro-order-for-e-vehicle-parts.html "Rheinmetall wins quarter-billion euro order for e-vehicle parts"). [Analysts had expected NII of 1.15 billion euros](https://www.financedigest.com/naturgys-profit-rises-on-lng-gains-soothing-shareholders-by-pietro-lombardi-madrid-reuters-spanish-power-utility-naturgy-reported-on-monday-an-88-jump-in-profit-for-the-first-six-months-of.html "Naturgy’s profit rises on LNG gains, soothing shareholders By Pietro Lombardi MADRID (Reuters) – Spanish power utility Naturgy reported on Monday an 88% jump in profit for the first six months of the year, boosted by strong earnings at its liquefied natural gas (LNG) business, which could help it to win over restive investors. Earlier this month, the company said it would increase its dividend floor through 2025 while trimming expected investment, as it sought to make rewarding shareholders a priority. Pleasing them has become a focus as Naturgy considers changes that could reshape the company and after arguments over the potential appointment of a chief executive. Naturgy’s first-half net profit jumped to 1.05 billion euros (.16 billion), boosted by its liquefied natural gas (LNG) business. Shares were down 0.2% in mid-morning trading, bucking deeper declines, in particular for Spain’s blue-chip banks and utilities after a general election on Sunday produced no clear winner. Renta 4 Banco analyst Angel Perez Llamazares said Naturgy performed better than expected, adding “cash flows also beat our expectation,” and debt fell more than expected. After natural gas prices hit record levels last year, Naturgy said a fall in procurement costs this year and hedging gains had boosed profits. In the first half of the year, the company “exceeded the objectives of operating efficiency, cash generation, investment materialisation and debt reduction,” Executive Chairman and CEO Francisco Reynes said. After rival Iberdrola named a separate CEO last year, Naturgy is the only large energy company in Spain to combine the roles of executive chairman and CEO. Earlier this month, the company raised the dividend floor to 1.40 euros a share, from 1.20 euros. Operating profit (earnings before interest, tax, depreciation and amortisation) is expected to reach 5.1 billion euros, compared with a previous guidance of 4.8 billion euros. It said it was targeting net profit of 1.8 billion euros in 2025. Naturgy also relaunched its plan to split regulated infrastructure operations and liberalised energy businesses into two listed companies. The project had been suspended after the Ukraine war disrupted energy markets and analysts are still sceptical. “We believe it is unlikely that Naturgy will be able to implement its asset split in the short term and it is also unlikely that a big change in the shareholding of the company would occur,” said RBC analyst Fernando Garcia. ( = 0.8986 euros) (Reporting by Pietro Lombardi, editing by Inti Landauro and Barbara Lewis)"). For 2023, the bank raised its NII growth guidance to more than 20% from 2022, against a previous forecast for high-teens growth, on the back of higher and more [aggressive interest rate hikes](https://www.financedigest.com/dollar-bounces-as-fed-seen-keeping-up-aggressive-rate-hikes.html "Dollar bounces as Fed seen keeping up aggressive rate hikes"), and Alvear was even more optimistic for NII in Spain in 2024 due to pending loan repricing. Domestic rival Unicaja said its net [profit rose by around 6% year-on-year in the second quarter](https://www.financedigest.com/metro-bank-posts-second-quarter-of-profitability-on-mortgage-loans-demand.html "Metro Bank posts second quarter of profitability on mortgage loans demand"), also supported by higher financial margins. Shares in Unicaja rose 2.8%. ($1 = 0.9014 euros) ($1 = 0.7712 pounds) (Reporting by Jesús Aguado; Additional reporting by Emma Pinedo; Edited by Miral Fahmy, Mark Potter and Susan Fenton) --- This blog is powered by Superblog. 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