SAB: Model update

Research evidence excerpt

SAB: Model update

Banco de Sabadell, S.A.

Target/Upside/Downside Scenarios Investment summary

We believe SAB's Capital Markets Day targets strike the rightBanco de Sabadell, S.A.

balance between ambition and realism. However, at this point

4 125 Weeks 15FEB24 - 07JUL26 we fail to identify meaningful catalysts for the shares, which

3.5 now trade at fair value in our view.

CURRENTCURRENT 3.123.12

TARGETTARGET 2.952.95 The sale of TSB in July 2025 was very well-timed considering

2.5 the context of BBVA's takeover process. SAB achieved a

2 healthy multiple that has allowed it to boost its distribution

1.5 profile for the coming years. However, the sale of TSB comes

1 at the cost of lower geographical diversification.

600m

400m 200m We generally like banks geared towards the Spanish economy

2024 2025 2026 given its solid macroeconomic fundamentals and future

F M A M J J A S O N D J F M A M J J A S O N D J F M A

M J J expected growth outperformance. However, intensifying price SAB SM Rel. MSCI EUROPEAN INDEX MA 40 weeks

Source: Bloomberg and RBC Capital Markets estimates for Target competition amongst incumbents and digital-only players in

the Spanish banking market can be a headwind for SAB, whichValuation

exhibits a relatively lower ability to compensate NIM erosionWe value SAB using a SOTP model based on our 2027

or volume growth headwinds through cross-selling of fee-estimates discounted back one year to 2026E at a cost of

generating products.equity of 11.0%, using a return on allocated capital for each

division. Our SOTP includes a c.2.3% growth rate to account Risks to rating and price targetfor longer-term business volume growth. Our EUR2.95 price Our price target and rating are subject to a number of risks andtarget supports our Sector Perform rating. uncertainties.