Banco Sabadell: A simpler bank, a tougher road – Underweight

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Banco Sabadell: A simpler bank, a tougher road – Underweight

factories. In an industry where scale Prev Cur Δ

increasingly tells, SAB is outspent from above; and having sold most of its factories, Adj. EPS - 26E (€) 0.24 0.33 38.6%

it lacks the levers more integrated peers wield. CABK leads with a cut-price mortgage

Quarterly Forecasts (FYE Dec)

and cross-sells the rest, from insurance to savings (AWM and insurance are 23% of

Adj. EPS (€)

its revenues, against just 10% at SAB, Figure 32Revenuesbreakdown2025) while BKT’s in-house asset 2025A 2026E 2027E

management keeps yield-hungry savers from leaving. Q1 0.09 0.06A 0.07

Q2 0.08 0.13 0.07

The road ahead offers little relief. Neobanks are driving down what banks can Q3 0.07 0.07 0.08

charge for everyday services – pressure that we think bites harder at SAB, which leans Q4 0.07 0.07 0.07

FY 0.32 0.33 0.29

on service fees more than peers (14% of revenues versus 10% at CABK, Figure 31Dailybankingfesunderpresure).

Indeed, its new CEO concedes that ‘big tech could threaten bank revenue pools. Style Exposure

Fending it off means spending, pressuring costs and capital alike.

Capital: Sound but spoken for. SAB carries a 13.0% fully loaded CET1 ratio in

2Q26E, sound enough (360bps FL MDA buffer), but with returns that are solid rather

than stellar, capital builds more slowly than at peers (Figure 40Capitalgenerationacrosgrowthandprofitability and Figure 41Capitalgenerationacrosgrowthandearningspayout), and

with risk density already low there is little room to optimise further; indeed, we

calculate converging on the peer-group average would cost some 90bps of capital

(Figure 39Spain–SABvs.PerGroup*2Q25). A two-year payout commitment of €2.5bn leaves little strategic slack

(Figure 422026-28ECET1trajectory).

M&A is no easy fix.