February 23, 2018 / 9:53 AM / a year ago

Spain's Sabadell raises profitability target to 13 pct by 2020

MADRID, Feb 23 (Reuters) - Banco Sabadell said on Friday it aimed to increase its return on tangible equity ratio (ROTE) to around 13 percent by 2020 from 7.27 at end-2017, buoyed by higher interest rates as it cuts non-performing assets as part of its new strategic plan.

In the 2017-2020 period, Sabadell said it expected net interest income (NII) - profit from loans minus funding costs - to register a compound annual growth rate of over 4 percent after it fell 1 percent in 2017 due to pressure from ultra-low interest rates.

Spanish banks are struggling to lift earnings from loans as interest rates hover at historic lows and increasing competition erodes margins. To offset pressure at home, Spanish banks have been expanding abroad in search of higher revenues. (Reporting By Jesús Aguado; Editing by Paul Day)

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