Published by Global Banking & Finance Review®
Posted on February 6, 2026
3 min readLast updated: February 6, 2026
Add as preferred source on GoogleSabadell's Q4 net profit decreased by 27% due to lower lending income. The bank plans a share buyback and appointed a new CEO for tech transformation.
By Jesús Aguado
MADRID, Feb 6 (Reuters) - Spanish bank Sabadell's lending income remained under pressure in the fourth quarter from low interest rates, its earnings data showed on Friday, creating a test for new CEO Marc Armengol's ability to protect profitability.
Armengol is expected to take the helm in May and his chief task will be to ensure the bank maintains its strong track record on profitability after BBVA's failed bid and the sale of Sabadell's British unit TSB.
Shares in Sabadell were down 4.4% by 0904 GMT after the bank's results for the October-December period came "as no surprise", and it gave uneventful guidance for 2026 and reiterated its strategic 2027 plan, Spanish broker Renta 4 said.
Spanish banks have benefited from higher margins on lending due mostly to variable rates but lower borrowing costs for clients are squeezing margins.
Sabadell, Spain's fourth largest bank by market value, said net interest income (NII), or earnings on loans minus deposit costs, fell 5.2% year-on-year in October-December to 1.21 billion euros ($1.43 billion). That matched analysts' forecasts. For all of 2025, net interest income fell 3.7% to 4.84 billion euros.
For 2026, it expects lending income to rise by more than 1%.
As part of its strategic plan, the bank expects NII of 3.9 billion euros in 2027 without TSB, the same as in 2024 ex-TSB. The deal has yet to be closed.
In the fourth quarter, the group's net profit fell 27.4% to 386 million euros, in line with forecasts, while for all of 2025 net profit fell 2.8% to 1.78 billion euros.
Analysts will now be watching to see if Sabadell will be able to maintain growth rates without TSB, which in 2025 accounted for around 18% of the group's profits.
In 2027, Sabadell aims to make a net profit of more than 1.6 billion euros and reach a return-on-tangible-equity ratio (ROTE) of 16%, compared to a reported 14.3% ratio at the end of 2025, thanks to higher loan growth in Spain.
For 2026, Sabadell expects a recurrent ROTE of 14.5% ex-TSB.
In 2025, net profit at TSB rose 24.7% on a standalone basis, while lending income rose 7.2%
On Friday, Sabadell said it had received authorization from the European Central Bank for a new share buyback of 800 million euros, that is part of its plans to distribute 6.45 billion euros to shareholders over 2025-2027.
($1 = 0.8475 euros)
(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; Editing by Rashmi Aich and Susan Fenton)
Net profit is the amount of money a company earns after all expenses, taxes, and costs have been subtracted from total revenue. It is a key indicator of a company's profitability.
Lending income refers to the revenue generated by financial institutions from interest and fees charged on loans provided to borrowers.
Explore more articles in the Finance category
