April 26, 2019 / 5:40 AM / a year ago

UPDATE 2-Spain's Sabadell draws line under costly IT glitch at TSB

* Q1 net profit falls 0.4 pct to 258.3 mln euros

* TSB breaks even and books profit of 7.3 mln euros

* NII under pressure, sees improvement in 2019

* Ends quarter with fully-loaded capital of 11 pct

* Shares up 1 pct in early trade, leading gainers (Releads, adds details, share price update)

By Jesús Aguado

MADRID, April 26 (Reuters) - Sabadell put costly IT troubles at Britain’s TSB behind it on Friday as the Spanish bank reported a quarterly net profit almost unchanged against the same quarter in 2018.

Spain’s fourth-largest bank in terms of total assets said net profit was 258 million euros ($288 million), above analysts’ estimates of 221 million euros in a Reuters poll, with TSB breaking even after lower charges relating to the IT glitch.

Sabadell said that all complaints related to the IT migration at TSB, which left customers locked out of their online accounts for weeks, had been resolved and TSB had booked a profit of 7.3 million euros for the quarter.

Madrid-based brokerage Renta 4 had forecast a loss of 17 million euros at TSB, which Sabadell bought for 1.7 billion pounds ($2.2 billion) in 2015, in the quarter as a result of economic uncertainty over Brexit and low interest rates.

In March, a banking source told Reuters that incoming chief executive Debbie Crosbie would work on a plan to cut costs at TSB, including a potential cut in branches.

Sabadell’s shares fell 40 percent last year, in part because of the TSB crisis which also hit its capital levels. In early trade, Sabadell shares were up around 1 percent, outperforming the overall market, with the Ibex falling 0.35 percent.


At end-March, Sabadell had a fully loaded core tier-1 capital ratio of 11 percent compared to 11.1 percent in December due to regulatory headwinds.

On a pro forma basis, the bank said its fully-loaded ratio ended Q1 at 11.3 percent taking into account the sale of its real estate unit Solvia Servicios Inmobiliarios and disposals, such as portfolios of non-performing assets.

Sabadell said it aimed to end 2019 with a fully-loaded ratio of 11.6 percent.

Sabadell’s first-quarter net interest income (NII), or profit on loans minus funding costs, fell 1.2 percent to 901 million euros year-on-year.

This was down 3.4 percent from the previous quarter due to ultra-low interest rates and the impact of new international accounting standards. Analysts had estimated NII of 915 million euros for the period.

Sabadell said it expects 1-2 percent growth in NII in 2019. ($1 = 0.7753 pounds) (Reporting by Jesús Aguado; Editing by Paul Day, Sherry Jacob-Phillips and Alexander Smith)

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