BANCO DE SABADELL SA

Ethifinance Ratings affirms Banco Sabadell's unsolicited rating of "BBB" with a "Stable" outlook. Banco Sabadell, S.A. (hereinafter Banco Sabadell) is the fourth-largest banking group in Spain in terms of total assets. The business model encompasses commercial banking, corporate banking, private banking and asset management services, with presence in Spain, the United Kingdom, and Mexico. The rating is based on a solid solvency position, very comfortable levels of liquidity, a reduction in delinquencies, a slight increase in profitability and improved efficiency, with expectations of improvement due to interest rate hikes and cost savings, as well as a progressive income diversification resulting from the positive performance of the British subsidiary TSB. However, the rating is constrained by the high concentration of profits in the Spanish market, the significant exposure of the loan portfolio to SMEs and entrepreneurs, and the expectations of increased delinquencies in a complex economic scenario.