BS Informe Anual 07 Angles

280 Pages·2008·6.16 MB·English

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Annual Report 2007
126th year
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Contents
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Annual
Report 2007
5 The Banco Sabadell 97 Risk management
group in 2007
0 111 Channels
8 Letter from the Chairman 112 Domestic branch network
116 International network
13 Macroeconomic environment 117 ATM network
117 Remote access channels
17 Share performance
121 Excellence
23 2007 - a year of growth
and value 127 Management team
128 Board of Directors
29 Financial review 130 Executive Committee
Balance sheet 131 Senior executives
Income statement
133 Corporate governance
57 Group businesses
58 Customer-facing businesses 143 Report of the Audit
58 Commercial Banking and Control Committee
66 Corporate Banking
70 Wealth Management 153 Report on Directors’
71 Cross-selling businesses remuneration
71 Bancassurance
72 Asset Management 157 Corporate social
74 Treasury and Capital Markets responsibility
76 Ibersecurities
77 International 168 Statutory information
78 Diversification businesses 170 Directors’ statement
78 Development capital of responsibility
80 Associate businesses 171 Auditor’s report
80 Banco Urquijo 173 Annual accounts
81 BancSabadell d’Andorra 258 Report of the Directors
81 Dexia Sabadell
82 BanSabadell Fincom 277 Banco Sabadell Group
83 TransAtlantic Bank contact details
83 Centro Financiero BHD
83 Banco del Bajío
83 Banco Millennium BCP
85 Resources CD • Annual Report on Corporate
85 Operations Social Responsibility
92 Resources • Report on Corporate
Governance
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The Banco
Sabadell group
in 2007
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€'000
Financial highlights 2007 2006 % 07/06
Group shareholders' equity 4,501,383 4,041,205 11.4
Total assets 76,776,002 72,779,833 5.5
Loans and advances to customers - gross 63,219,330 55,632,966 13.6
On-balance sheet deposits and issued securities 65,620,880 59,304,579 10.7
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he of which: Customer deposits 33,350,687 30,090,641 10.8
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an Customer deposits ex repos 29,929,049 25,572,584 17.0
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Sa Assets held in investment funds 15,548,492 16,482,067 (5.7)
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ell g Assets held in pension funds 3,502,159 3,317,514 5.6
rou Deposits and assets under management 86,578,086 80,247,702 7.9
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€'000
Income and earnings performance
Net interest income 1,317,237 1,097,871 20.0
Net income from basic operations 2,046,696 1,726,434 18.6
Gross operating income 2,196,395 1,811,476 21.2
Net operating income 1,059,029 813,718 30.1
Profit before tax 989,840 629,781 57.2
Net attributable profit 782,335 908,398 (13.9)
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an Net attributable profit - comparable basis (1) 782,335 569,308 37.4
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n Resources
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po Number of branches 1,249 1,204
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00 Number of employees 10,234 10,066
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Share data (2)
Number of shares 1,224,013,680 1,224,013,680
Number of shareholders 80,669 67,633
Quoted share price (€) 7.41 8.48
Attributable earnings per share (€) 0.64 0.74
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Dividend per share (€) 0.28 0.21
Total dividend paid (€'000) 342,724 253,983
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%
Ratios 2007 2006
Balance sheet and cost/income ratios:
ROA (net profit/average total assets) 1.08 1.48
ROA - comparable basis (net profit/average total assets) (1) 1.08 0.93
ROE (net attributable profit/average shareholders' equity) 20.37 28.09
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ROE - comparable basis (net attributable profit/average shareholders' equity) (1) 20.37 17.61 he
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Cost/income (general administrative expenses/gross operating income) 46.67 50.47 an
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Cost/basic income (general administrative expenses/income from basic operations) 50.08 52.96 Sa
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BIS capital ratios: ll gro
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Total 10.87 11.42 in
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Tier I 7.22 7.33 0
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Risk management:
Loan loss ratio 0.47 0.39
Provisions/bad and doubtful debts 394.29 466.56
(1)Previous year comparisons are distorted by the extraordinary gain on the sale of Landscape group in December.
(2)Adjusted to eliminate the effect of the 4-to-1 share split in May 2007.
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008-011-Carta Presidente ing 18/3/08 11:33 Página 8
Chairman’s
letter
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Dear Shareholder,
I am happy to say that 2007 has been another excellent year for
Banco Sabadell. The end-of-year results show that we are reaping
the benefits of our efforts over the last three years to grow and
create value. Growth and value creation were,of course,the
principal aims of the 2005-2007 master plan which came to an
end on 31 December. It is clear from the final result that these aims
were more than achieved and that the actions we took to bring this
about were the right ones.
Our consolidated balance sheet is now 68% above what it was
when we launched the plan,and during this time lending has
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increased by 84% and customer funds under management by airm
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90%. Our cost:income ratio has improved by 9% and our profitability n’s le
as measured by ROE is 7 points higher,having risen to 20.4%. tte
r
The growth of the world economy continued at a high rate
in 2007 thanks to the strength of the European economy and the
key role played by the powerhouse economies of the emerging
markets,China foremost among them.
The Spanish economy again performed very well and grew by
3.8%,outstripping the growth of the other euro zone economies.
A high level of capital investment and an improved contribution from
exports did much to offset a slowdown in consumer spending and
a downturn in construction after several years of very rapid growth.
The second half of the year,however,was marked by a global
financial crisis stemming from credit practices in the US mortgage
market and the distribution throughout the world of the associated
credit risk. Spanish banks,unlike banks in other European
B
a
countries,did not have any exposure to bonds linked to US nc
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mortgages,but the country’s financial system and the performance ab
a
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of Spanish financial companies were affected by the lack ell
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of confidence that dominated the markets. nu
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Rapidly rising borrowing costs and the difficulties faced by banks l Re
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in tapping sources of medium-term finance resulted in a loss rt 2
0
of confidence in near-term economic prospects and this adversely 07
affected the securities markets,which fell sharply in the last few
months of 2007 and early 2008.
Uncertainty over the depth and duration of the likely economic
downturn is now a factor in all decision-taking by economic agents.
Despite the generally unstable environment that we have been
seeing since mid-2007,Banco Sabadell completed its 126th year
of trading with a net attributable profit of €782.34 million,up
37.4% on the year before in comparable terms,i.e. after adjusting
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for the one-off profit in 2006 generated by the sale of the
Landscape real estate business. The profit from ordinary activities
is the best in the group’s history.
A healthy consolidated profit and excellent results across all
group businesses are not only a reflection of the strength of the
Bank and its successful business strategy,but a sure sign of its
ability to turn its recent acquisitions to account and to respond
swiftly and positively to changes in market conditions,no matter
how challenging.
In 2007 the new Banco Urquijo,created from the integration
of the private banking business of the old Banco Urquijo with that
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of Sabadell Banca Privada,completed its first year of trading and
confirmed its leading position in the Spanish private banking
industry. The good growth achieved this year and a €29.8 million
contribution to group profits clearly show that the purchase in May
2006 was justified.
Of the Bank’s many achievements this year,one that I would like
to highlight is the design and roll-out of a new strategic plan that will
take us through to the end of 2009.
The two-year plan is based on flexibility and prudence and has
been designed for the environment of economic slowdown that we
now face. Its aims are to boost operational efficiency and
commercial productivity and thus increase business volumes by
more than the average for the banking system as a whole,while
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airm keeping operating costs at a low level and without affecting our
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n’s le excellent risk and service quality levels,and to continue to build up
tte our financial strength and increase liquidity to be able to withstand
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any change for the worse on the economic front.
Optima ’09,as our new strategic plan is called,focuses on
innovation and leveraging the Bank’s capabilities and strengths
to ensure that it remains one of the most efficient and profitable
financial institutions in the Spanish market,consolidating its
leadership and its unique positioning in corporate banking and retail
banking targeted on high and medium-income earners.
Another major achievement was to boost the Bank’s position in
the Miami international banking market,where it has been operating
since 1993. This year saw the acquisition of Transatlantic Bank,
a local Miami-based operation,and the conclusion of an agreement
with BBVA to purchase its private banking business in that city.
These two purchases have significantly increased the Bank’s
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nc operational capability and market position in the business
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ab and personal customer-focused private and corporate banking
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ell businesses being carried on by our Miami branch.
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nu To ensure that we had the best IT systems available,and that
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l Re innovation would continue to be a key area of excellence and
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rt 2 a differentiating factor for the Bank within the marketplace,a number
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07 of major agreements were reached in the course of the year with top-
ranking IT suppliers such as Telefónica,Hewlett Packard and IBM.
This is the kind of initiative that will help to increase sustainability
and underpin confidence in the Bank in the coming years.
Another development this year was the start of work to extend
the Bank’s main central services building in Sant Cugat del Vallès,
which was opened in 2003. The extension has been made
necessary by high levels of usage of other Bank premises and
to accommodate anticipated growth in the coming years.
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2007 has been a difficult year for financial companies generally,
and these difficult conditions have continued into 2008. The solid
results achieved by the Bank are therefore all the more remarkable
and clearly reflect the exacting standards and the mature approach
of the management.
Our senior managers form a solid and close-knit team,led
by the heads of the various business units into which the Bank
is structured. Not only have they proved themselves capable
of achieving the objectives that were set for 2007– plus the added
burden of integrating a bank into the organization – but they have
also shown their ability to act firmly and cohesively when changes
in key personnel have occurred.