By Jesús Aguado
MADRID (Reuters) – Spain’s Banco Sabadell said on Friday its British unit TSB swung back to a profit in the first quarter after speeding up a cost-cutting plan, however the group’s bottom line fell 22% as lending income remained under pressure.
The bank reported a net profit of 73 million euros ($88.5 million), above a 56 million euros forecast from analysts polled by Reuters, as it booked fewer provisions for loan losses.
Banks across Europe are under growing pressure from rising bad debts and record-low interest rates as they grapple with the effects of the COVID-19 pandemic.
Sabadell’s net interest income, earnings from loans minus deposit costs, fell 5.8% to 833 million, in line with market forecasts.
In the UK, TSB booked a net profit of 10 million euros, its first positive quarterly results in two years, adding 2 million euros to the group’s bottom line, after it cut 352 jobs and closed 70 branches in the quarter.
Sabadell bought TSB in 2015, but its acquisition backfired when IT glitches sent costs spiralling in 2018.
Though Sabadell, which will present its new strategic plan on May 28, had said it wanted to sell TSB, the Spanish lender’s new management team, headed by Chief Executive Officer Cesar Gonzalez-Bueno, has frozen the process for now.
Sabadell’s failure to merge with bigger rival BBVA in November added pressure and its CEO is expected to focus on new cost-cutting measures and a new digital drive.
($1 = 0.8253 euros)
(Reporting by Jesús Aguado, Editing by Inti Landauro and Shounak Dasgupta)
