Thank you for joining Sabadell's results presentation for the fourth quarter and the full year 2025. We are joined today by our CEO, César González-Bueno, and our CFO, Sergio Palavecino.

The presentation will follow a similar format as in previous quarters. First, our CEO will walk us through the key highlights of the year.

Then, our CFO will go into the financials and the balance sheet before our CEO concludes with closing remarks. Finally, we will open the floor for a live Q&A session where you can ask your questions.

César, over to you.

Thank you, Lluc, and good morning, everyone. We announced yesterday that the Board of Directors of the bank and I have agreed on my resignation as Sabadell's CEO, while Marc Armengol has been appointed new CEO.

These changes will take place around May, following our AGM and once regulatory approvals have been obtained. Until then, I will remain as Sabadell's CEO, and Marc will remain TSB's CEO.

I think now is the right moment for me to step down, and I say that absolutely sincerely. Our current strategic plan is solid and well-defined and supported by everyone, including Marc, who has been a great part of its construction.

Targets for '26 and '27 are ambitious, but achievable, and we are in course. Now, it's all about execution, execution, and execution of the current plan and planting seeds for an exciting future.

Therefore, the bank is on the right track to deliver its targets. Just very briefly, on a more personal note, no?

Look, I had opted for retirement 6 years ago, and the opportunity of joining Sabadell was so tempting that I couldn't let it pass. I was called for this project.

I could not refuse. It has been far more exciting and rewarding than I could have expected, and I think now it's the time to go.

On top of delivering on our plan, Sabadell also needs to start thinking about this future beyond 2027. There's an increasing number of opportunities from banks arising from technology in general, and from artificial intelligence in particular.

I think we have done a tremendous development in digitalization, but AI goes beyond, and that plan needs to be accelerated, and it will transform the bank, not in the next year, but in the years to come, and this transformation will be profound. In this context, my dear and friend Marc Armengol is the perfect CEO to deliver our targets for '26 and '27, because he has the managerial skills.

Beyond, Marc brings strategic vision and delivery, combining CEO experience with developing and executing corporate strategy in the US and in UK. He has proved his commercial mindset at TSB, where he has improved competitiveness by getting even closer to customers.

He also brings exceptional technological, operational, and digital expertise, from business integrations to large-scale transformations in Spain, UK, US, and Mexico. Very important: he knows everything about Sabadell.

He's definitely not a newcomer. As a matter of fact, this is the first internal CEO appointment since Sabadell went public over a quarter of a century ago.

I think this proves maturity for this great institution. All in all, now is the right time for the bank to address this change.

It is the right moment for me, and it is the right moment for Marc. Before moving to the result presentation, let me repeat it one more time.

We have announced my resignation and the appointment of a new CEO, but we remain fully committed to delivering our plan and reaching our financial targets for '26 and '27. Key messages for the next full year, we are in page 4.

Given that the TSB sale is expected to be completed during the second quarter of 2026, we are presenting figures with reference to the ex-TSB perimeter. First, volumes grew at mid-single digit during the year.

Performing loans increased by 5.4% and customer funds by 6.4%. Second, core revenues performed in line with expectations, with NII at €3.6 billion, while fees were up by 3.6% year-on-year.

Third, asset quality continued its positive trend. Total cost of risk declined by 16 basis points and stands at 37 basis points.

Moreover, NPAs decreased by 17% year-on-year, while the NPA coverage ratio stood at 64%, up 2 percentage points versus last year. Fourth, this year's shareholder remuneration is €1.5 billion.

We have already distributed €700 million through two interim cash dividends, and in addition to this, we will allocate €800 million to a new share buyback program. We have already received authorization from ECB, and the program will start on Monday.

Finally, return on tangible equity stands at 14.3%, and the core Tier 1 ratio is 13.1% after deducting the excess capital that will be distributed. During '25, before dividend accruals, we generated, I think this is a big number, 196 basis points of capital.

Slide 5. This is a little bit of a reason why.

Let me explain why Sabadell is well-positioned to keep improving its profitability looking forward. We have a clear strategy that supports profitable growth, as we shared last July during the presentation of our strategic plan.

Our ongoing transformation focuses on delivering growth alongside improved asset quality. Although this means marginally lower loan yields, these are more than offset by a much lower cost of risk.

Overall, this results in both profitable growth and stronger capital generation. This is a structural and permanent looking forward.

Let me explain a little bit further on this. The probability of default is now at the levels of which we wanted.

That is done. The impact on the P&L is immediate, because of course, you lose income, because you're doing less risky assets.

The benefits of that come over time, and it depends also on the duration of the different portfolios. We will still see tails for a long time in the different products.

We will see tails of improvement of the risk cost, and we will see tails of improvement of the capital generation due to this. This is perfectly in line, as we said, with the strategy, and I think it will yield over the course of the year.

Furthermore, it makes the bank very sound. However, and now going to the right-hand side of the slide, following the tender offer period, our business was a bit less dynamic than expected for a time.

We have now clearly regained our commercial momentum. For instance, month-on-month evolution of on-balance-sheet funds in December '25 was better than in December '24, and new lending to SMEs was also higher in December '25 than '24.

Furthermore, and this is meaningful, customer acquisition in December '25 was also significantly higher than in '24. To sum up, we have solid fundamentals and a clear strategy that will support profitable growth and capital generation going forward.

Let's go to slide 6. Performing loans, excluding TSB, remain flattish quarter-on-quarter, and grew by more than 5% year-on-year.

At TSB, lending volumes at constant FX remain flattish in the quarter, as expected. Moving on to customer funds, on-balance-sheet funds regained momentum and increased by 3.4% in the quarter.

This momentum, as we just saw, was more towards the last part of the quarter. Off-balance-sheet funds also continued to perform well, rising by 1.9% in the quarter and 14% on the year.

All in all, in '25, we increased our loan book by €6 billion and our customer funds by €11 billion ex-TSB. This represents mid-single-digit growth, which is in line with our guidance.

This in combination with the growth of capital, because growing capital generation, but not growing the business, is not as attractive as doing both things at the same time. Let's move to slide 7, loan origination in Spain.

In Q4, new mortgages decreased by 3% year-on-year. We have been reducing our market share in new mortgage lending over the past few months as front-book yields have compressed.

We remain focused on managing our new lending through risk-adjusted return on capital, ensuring that growth is delivered on in a profitable manner. New consumer loans in Q4 increased by 8% on a year-on-year basis.

In the whole year, new lending of consumer loans increased by 16%. Quarterly new loans and credit facilities granted to SMEs and corporate decreased by 15% year-on-year.

This results in a slight decline of 5% if we compare with the full year of '25 with '24. On the other hand, origination of working capital finance remained broadly stable in the year.

All in all, a strong performance in new lending during the year delivered loan book growth across all products and segments. If we move to slide 8, regarding payment-related services in 2025, card turnover increased by 6% year-on-year, while point-of-sale turnover increased by 2%.

Let me share that the merchant acquiring business will remain within our perimeter looking forward. Therefore, we will keep this fee income stream.

Regarding savings and investment products, we reached a total stock of €70.6 billion in December '25. This represents an increase of €4.2 billion in the year, driven by an increase in off-balance-sheet products of €6.5 billion, most of it €4.6 billion coming from net inflows.

In slide 9, the breakdown of performing loan book across segment and geographies, excluding TSB. In Spain, performing loans fell by 0.9% in the quarter.

Mortgages and consumer loans posted positive growth in the quarter. On the other hand, SME and corporate lending fell by 3.6% quarter-on-quarter, mainly due to the fact that these firms have been drawing less heavily on their credit facilities.

Year-on-year, performing loans in Spain increased by 5.2%. The mortgage book grew by 5%, consumer loans delivered double-digit growth, and the stock of SME and corporate loans increased by 2.4%.

International operations also delivered strong momentum, with performing loans rising by approximately 15% year-on-year at constant FX. If we move now to slide 10, the UK business.

As expected, TSB's performing loans and customer deposit remain broadly stable both quarter-on-quarter and year-on-year. Looking at the main lines of the P&L, NII increased by 7.2% in the year, in line with high-single-digit guidance.

Fees, which are less relevant for the UK business, declined by 15% year-on-year. Total cost decreased by 2.6% in the year, in line with the 3% decline guidance.

Provisions increased by around 50% year-on-year. Let me remind you that in '24, TSB recorded releases related to the improvement of macroeconomic assumptions.

The resulting cost of risk in 2025 was 13 basis points, considerably better than the 20 basis points guidance. All in all, TSB's net profit reached £61 million in the quarter, translating into almost £260 million for the full year.

This implies growth of around 25% in 2025. Standalone return on tangible equity was 13.5% despite maintaining a high level of solvency with a core Tier 1 ratio of 16.7%.

Finally, tangible net asset value increased by £154 million between April and December. This, together with the additional TNAV to be generated until the closing of the transaction, will be added to the £2.65 billion sale price, ensuring that TSB continues to contribute to Sabadell until the transaction closes.

On slide 11, a summary of our results. In '25, we posted net profits of €1.8 billion.

This represents a 3% decline year-on-year. It is worth noting that, when adjusting 2024 net profit for extraordinary items, net profit actually increased by 3.4% year-on-year.

All lines have been performing in line with the expectations. Sergio will explain the P&L in more detail shortly.

To conclude this section of the presentation, I will outline our shareholder remuneration. The amount for 2025 has been improved to €1.5 billion.

This is 9% of our market cap. 2025 remuneration includes €700 million in cash, which have already been paid, and €800 million in share buyback.

Last year, we paid two interim cash dividends, one in August and one in December, of €350 million each. These distributions will be followed by a final dividend of €365 million as well as a €435 million of excess of capital.

These amounts to €800 million via share buyback program scheduled to begin next Monday. Note that, exceptionally, the final dividend will be distributed entirely through a share buyback.

The main reason is that we believe that the stock is currently trading at a discount to its fair value, making a buyback the best option to reward our shareholders. We expect to distribute €2.5 billion across '26 and '27, which also represent 9% of the market cap each year once we deduct the extraordinary dividend related to the sale of TSB.

All in all, we are on track to deliver on our commitment to distribute a cumulative €6.45 billion of remuneration over '25 and '27. On top of that, we reiterate our commitment to deliver an annual cash dividend per share above 20.44 euro cents from '26 onwards.

I will now pass the floor to Sergio, who will provide a more detailed overview of the bank's financial performance.

Thank you, César, and good morning, everyone. Let me begin by presenting the full detailed P&L.

As we will explain during the presentation, the annual performance shows an alignment with our year-end targets. We recorded a net profit close to €1.8 billion, or 1.46 when excluding TSB.

Before we go through each line, I'd like to highlight a few extraordinary items and reclassifications recorded this quarter. Firstly, on the trading income line, we recorded an expense of €15 million related to the exchange rate hedging on the full proceeds from the sale of TSB.

This impact will be recurrent until the transaction closes. Secondly, and following the termination of the agreement to sell the merchant acquiring business, we have reclassified €23 million from other provisions to depreciation and amortization.

The impact of this on net profit is neutral. Finally, on the gain on sale of asset line, we adjusted €20 million related to certain IT and software assets.

We will now review the main P&L items in more detail, focusing on Sabadell's performance excluding TSB. Starting with NII on slide 15, we recorded €3.6 billion in NII for the year, fully aligned with our guidance.

In the quarter, Sabadell ex-TSB delivered close to €900 million, broadly stable versus the previous quarter. Now let's look at the top right-hand side of the slide.

To understand the drivers behind this quarterly evolution, moving from left to right, customer NII had a positive impact of €2 million. Within this, the customer margin decreased by €7 million due to the negative repricing of variable rate loans, although interest rate pressure on loan yield has already eased significantly.

The good news is that volumes more than offset the customer spread compression. ALCO, liquidity, and wholesale funding contributed by €3 million, supported by lower refinancing needs and lower spreads.

Other items had a combined impact of -€9 million. This mainly reflects the negative impact of certain interest rate hedges related to the fixed rate mortgage portfolio.

TSB added €11 million positive this quarter, reaching 314, as the contribution from the structural hedge was higher than the depreciation of the sterling. For 2026, we expect NII to increase by more than 1%, with a clear acceleration throughout the year.

In fact, we expect NII to bottom in first quarter 2026, mainly due to fewer calendar days and the final repricing of the variable rate loans. From that point, it should grow steadily quarter after quarter, being the fourth quarter of '26 mid-single digit higher versus the fourth quarter of '25.

For these estimates, we are assuming interest rates to remain at the same levels as at the end of 2025. We are expecting volumes to perform in line with what we have seen this year, around 6% growth in loans and between 3% to 4% in on-balance-sheet funds.

Loan yield could decline some basis points in the first half of the year, but should return to current levels, driven by higher growth in consumer and SME lending. On cost of deposits, we still see room for further improvement as we reprice the last part of the term deposits.

Finally, the impact from the sale of TSB bonds in the ALCO portfolio will be offset by savings in wholesale funding as we will have lower MREL funding needs after the sale. Leaving the NII line aside and moving on to fees.

Fees and commissions within the ex-TSB perimeter increased by around 4% year-on-year. Asset management and insurance fees were the main contributors, growing by 15% year-on-year.

This performance was driven by a strong volume growth in off-balance-sheet funds, fully aligned with what we presented at our Capital Markets Day. The fourth quarter was the strongest of the year, with ex-TSB fees rising by 6% quarter-on-quarter, supported by a strong commercial activity and a seasonal uplift in asset management and insurance fees, including a success fee component of €12 million.

Looking ahead, we expect fees to increase by mid-single digits in 2026. This growth will be again largely driven by asset management and insurance fees.

Moving on to the cost on slide 18, total ex-TSB cost increased by €44 million in the quarter, mainly driven by two factors. First, a reclassification of €23 million from other provisions to amortization following the termination of the merchant acquiring agreement with Nexi.

Consequently, going forward, the quarterly run rate for ex-TSB amortization line is expected at around €100 million. Second, the special remuneration in shares to all employees related to the end of the takeover bid, amounting to €16 million.

All in all, total cost at ex-TSB increased by 2.5% year-on-year. This evolution is totally consistent with the target of low-single-digit growth, despite the reclassifications recorded at the one-off personnel cost I have just explained.

For 2026, we expect total cost, including amortization, to grow by around 3%, fully in line with the strategic plan targets. Moving on to slide 19, we will now cover credit cost of risk and other provisions.

Total cost of risk for the year 2025 was 37 basis points, better than the already improved guidance of 40 basis points for the ex-TSB perimeter. Meanwhile, credit cost of risk fell to 24 basis points, which represents 9 basis points reduction in the year.

Now looking at the bridge of the different components of the total provisions for this quarter on the top right-hand side, we booked €107 million of loan loss provisions, excluding TSB. Then, we add €8 million positive impact driven by real estate asset disposals sold at an average double-digit premium.

NPA management costs remain in line with the usual run rate. Other provisions, mainly related to litigations and other asset impairments, were impacted this quarter by the €23 million reclassification previously mentioned.

Finally, TSB provisions were €18 million this quarter. For 2026, we expect total cost of risk to remain at around 40 basis points, underpinned by positive asset quality dynamics and the gradual impact of our risk management measures.

This better asset quality will offset the potential shift in business mix as we expect a stronger growth in companies and consumer lending. Moving on, in the next section, I will walk you through asset quality, liquidity, and solvency.

On slide 21, we can see that non-performing loans and coverage ratio continued to improve during the year. Within the ex-TSB perimeter, NPLs decreased by close to €700 million over the year, demonstrating continued success in portfolio de-risking and proactive credit risk management.

As a result, the NPL improved 66 basis points to 2.65%. The reduction in NPLs is also consistent with the improvement in stage 2 loans, which declined by more than €1.3 billion in the year.

Finally, the coverage ratio increased by 3 percentage points, reaching 69%. Moving on, in terms of foreclosed assets, net NPAs as a percentage of total assets remained comfortably below the 1% threshold, confirming the bank's structurally improved risk profile.

The stock of NPAs declined by 15% year-on-year, equivalent to more than €800 million in absolute terms. Meanwhile, the coverage ratio has improved by 2 percentage points.

The sales of real estate assets continued their positive trend as 23% of the stock was sold over the last 12 months with an average premium of around 10%. On slide 23, we are happy to see the continued improvement in asset quality over the past 2 years, explained by three favorable dynamics: a consistently decline in NPL ratio, a quarter-on-quarter improvement in the cost of risk, along with a higher coverage ratio.

Turning now to liquidity and credit ratings. In short, liquidity buffers have remained broadly stable over the year, with credit ratings improved, as you can see on the slide.

Standard & Poor's upgraded our rating by one notch to A- with a positive outlook. During the year, Moody's and Fitch also upgraded our rating by one notch to Baa1 and BBB respectively, both with a stable outlook.

Turning to the next slide, we can see our current MREL position, which stand well above the required levels. It is also in line with the buffer of more than 200 basis points set as a threshold in our strategic plan.

It is important to note that in 2025, we issued a total of €3.1 billion across the capital structure as well as through covered bonds. We also carried out three securitization transactions with significant risk transfer during this year, using both synthetic and cash instruments.

Let me highlight that once the TSB sale is completed, we will deconsolidate TSB's risk-weighted assets, and therefore, our funding needs will be lower this year. Note that we currently have excess buffer in AT1, even excluding the €500 million issuance that we have just announced that it will be called in March.

On the next slide, we can see that we have been able to generate 196 basis points of capital while growing our loan book at mid-single digits. Looking at the quarterly evolution in more detail, we recorded 20 basis points of capital generation before deducting the accrued dividend.

This includes 25 basis points from organic CET1 generation after deducting AT1 coupons, -6 basis points from higher risk-weighted assets, mainly from the update of operational risk, representing -14 basis points, and partially offset by the release obtained through the SRT transaction completed in Q4. Then, the accrual of a 60% dividend payout ratio had a -29 basis points impact, bringing the capital ratio to 13.65%.

Given that we're distributing €435 million of excess capital, 54 basis points must be deducted, which takes the CET1 ratio to 13.11% and implies an ample MDA buffer close to 400 basis points. With that, I will hand over to César, who will conclude today's presentation.

Thank you, Sergio. On slide 28, you can see the achievement of our 2025 targets, a summary of the new guidance for '26, and the reconfirmation of our 2027 strategic plan targets.

As we have seen throughout the presentation, the 2025 results have been in line with our year-end guidance. For '26, the guidance we're giving the main P&L lines points to a recurrent return on tangible equity ex-TSB of around 14.5%, considering tangible equity of roughly €10 billion.

Of course, the return on tangible equity that will be reported will be higher because it will include the TSB impact. Our business model, which is built around strong capital generation, allows us to reconfirm shareholder remuneration of €2.5 billion across '26 and '27.

Last, but not least, we are reconfirming every single one of the targets for '27 that we presented at our Capital Markets Day. To conclude the presentation, I would like to summarize a little bit of our equity story, no?

First, Sabadell is a franchise that pursues growth while preserving asset quality. This has been a major turnaround of the last years, no?

Since the tender offer finished, we have been regaining commercial momentum, and we have room to gain some market share in a growing market in the products and segments of our choice. Second, we have strong capacity to generate capital while continuing to grow, which enables us to offer attractive shareholder remuneration.

Third, it's all about execution, and this team knows about that. We've been consistently delivering on our guidance since '21, and we now have a clear path towards a 16% return on tangible equity in 2027.

All of this comes while we are trading at a discount to peers in terms both of total shareholder yield and multiples such as PE. Our distribution yield, meaning dividends plus excess capital returned to shareholders, was around 9% in 2025 and is expected to remain around that level in '26 and '27.

This compares with a peer average of below 6% for 2025. When looking at PE multiples, it's important to adjust Sabadell for markets cap for the extraordinary dividend associated with the disposal of TSB.

Many market participants, we believe, are not fully doing this. Once adjusted, Sabadell is actually trading at below 9 times earnings, while Spanish peers are trading well above 10 times.

There is therefore a clear opportunity here, with considerable upside potential for Sabadell's stock. That's why the entire amount pending distribution to shareholders, the final dividend, and the excess capital will be executed through a share buyback starting on Monday.

It will be equivalent to more than 5% of our market cap, significantly higher than any other Spanish peer. With this, I hand over to Lluc.

Thank you, César. We will now open the Q&A session.

Given the limited time available, we would appreciate if you could please keep your questions to a maximum of two. Operator, could you open the line for the first question, please?

Please go ahead. [5% in the?]

[unclear] targets, could you walk us through the mathematics? The second one is on deposit growth ex-TSB, it has slowed in the fourth quarter and grew below the sector average.

Can you please walk us through your thinking on why this is happening and what will you do to recover growth? Thank you.

Thank you very much, Max, for these questions. In order to help with the mathematics of the NII for 2027 that we are confirming it will be at around 3.9%, we've been showing in slide 16 what are the expected dynamics on the quarterly NII.

As you can see in that slide, we expect a trough in the first quarter of the year because we will have a fewer number of days. We still have the last part of the repricing of the variable rate loans, the ones repricing with Euribor 12 months.

Then from there on, we will have the tailwinds that we are currently enjoying for volumes that cannot be seen in NII because of the headwinds of customer spread. Customer spread will stabilize, and then by the second half of 2026, volumes will be compared to the quarter of the previous year, already growing at the mid-single digit.

That dynamic in our view will continue into 2027. As customer spread will increase a little bit, we are still expecting our customer NII to get close to 300 basis points in 2027.

Also, the rates today are somewhat more positive as we see that Euribor 12 months in 2027 will steepen somewhat. The dynamics that we show for the end of 2026 will continue into 2027.

Yes, in our mathematics, they will lead us to a NII that will be close to around €3.9 billion. Then your second question was deposit growth.

Deposit growth, it was year-on-year 3.6%. It decelerated from the third quarter, as you mentioned.

This is rather due to very strong growth, really strong growth in the fourth quarter of last year. When we look at our dynamics on customer funds, we see that currently are strong.

Customer funds have growth more than 6%. That's €11 billion growth, a bit skewed towards the off-balance-sheet products, €6.5 billion growth in the off-balance-sheet products, €4.5 billion growth in the on-balance-sheet.

When you do the average growth of deposits, it's actually 4.5%. As César has mentioned, we have acknowledged that we got some minor impacts during the tender offer period in September and October, but we were very happy to see that we have fully recovered the commercial momentum, and December has been very good, and all commercial feedback getting into the new year is good.

We're positive on the volume growth that we are sharing with the market today.

I think indeed that's spot on. I think that at the helm of the hostile takeover, of course, there was some decline in balances.

We see very clearly the recovery, the momentum, and everything is on track for the future, and that's why we're very positive.

Thank you, Max. Can we jump to the next question, please?

Yes, good morning. Congratulations, César, and all the best.

Two questions for me. On NII, I want to ask about the quarterly NII bridge in slide 15, particularly on the column others with €9 million of interest rate hedges the negative.

You can give details on these hedges, what impact in '26 if that should unwind in '27 or not. Also, you can comment on the impact from TSB MREL and quantify then the impact in '26 and '27.

Also, yes, lastly on this NII, in the customer spread that you expect by the end of '26 is by reducing the cost of deposits with rates stable or slightly repricing. How do you plan to achieve that?

Do you think that you have been overpaying for online deposits in '25, and you will adjust your digital offering, and would you grow deposits even if you pay less? Then my second question is on costs.

Your 3% cost guidance for '26, I understand you include the full year impact of the D&A related to the merchant business. Excluding that, I get to cost inflation of just 1%.

What type of efficiency measures would you implement to get there? How can you reassure that you will not be underinvesting in the technological transformation?

Thank you.

Thank you, Paco, for your questions. Let me see if we got them all.

The first one is regarding the hedges that we show in page 15. I think we already share with you guys in the third quarter that we are having an impact on the hedge that we have of the fixed rate mortgage portfolio.

As the Spanish market now for a number of years, and us in particular, we have been originating virtually everything in mortgages in fixed rate. Now it's been a number of years, and recently quite a strong production.

That's a lot of duration, and therefore we've been hedging that duration. That means that the hedge is we pay fixed as we get paid fixed in the mortgage, and we receive Euribor 6.

This hedge is we pay fixed, we receive Euribor 6. Euribor 6 has been trending down for a number of quarters, but the good news is that this has been the last quarter, the way we see it, because Euribor 6 has been already flat in the fourth quarter.

Going forward, we'd no longer expect impact from the hedge, of course, connected with Euribor 6. Then if Euribor 6 goes up and down, of course it will have an impact, but so far with the current level of rates, it should be flat.

Then your second question was on MREL. Currently the MREL bonds of TSB are roughly £1.4 billion, and the spread is around 200 basis points.

That MREL then is MREL that we raise in group in the capital markets. We will no longer have this income, but we no longer have the cost in the wholesale funding.

This may take some quarters, but at the beginning, we will also have the help of the price that we will get from the sale. Initially, it will be close to £5 billion if you add up the price of the shares and the price of the bonds, and that will yield in the treasury account, and that will, combined with the savings in the wholesale funding, all together will offset the impact of the lower MREL of TSB in the ex-TSB perimeter.

For deposits, yeah, we expect, as we have written in the presentation, still somewhat reduction in the cost. This is not only connected with the online, of course it's also connected with the online.

On the online, we have a strategy like any other one of acquiring, having a very attractive offer, acquiring customers, and then we manage the acquisition. Connected with that, we have an offering.

Then the price of the book will go down in March, and we will keep on having new offerings. It's a dynamic, of course, product, and we're quite happy because it's been quite successful.

The reduction is more coming from term deposits, 1-year, 2-years, that will come due either have already matured at the end of the last quarter or will mature in the first quarter of 2026, and when this is renewed, the price is lower, connected with the lower prices that we have in the market. Finally, cost that you mentioned, the reclassification of €23 million that we did is permanent, because we are now not considering the sale of the payment business.

The payment business is going to remain within the perimeter. Therefore, it's apples with apples.

The comparison with 2026 and the increase in the 3% is not going to be distorted by that. In the 3% rate and CAGR that we already share with the market in the Capital Markets Day, there are three major components: salaries, we're expecting salaries to grow at inflation, and that is let's say close to 2%.

Then we're seeing a general cost flattish thanks to the different efficiency initiatives that we're running in the bank. Then amortizations connected with the investment in IT are going to be higher, probably at mid-single digit or so.

We're really allowing ourselves with the room that we need in order to keep investing into the business so that we ensure that we make this business growth as we expect. Not necessary if you want to add something.

No, I think that's spot on. Just on the digital account and to explain a little bit the rationale and the commercial rationale of all of it and so forth.

First, more than 50% of our new client acquisition comes from digital, and we think that that is a phenomenal success. When interest rates were at 4%, we paid 2%, but now that interest rates are at 2%, we are going down, as you mentioned, Sergio, to 1% starting on March.

It's very attractive because it's a full-serviced and with all the gadgets current account that at the same time has a remuneration, but it is capped at €50,000. Therefore, what it is doing, it is attracting customers with 50% of their payrolls, 45% of them do payments every day, and we are getting them to be part of the bank in an attractive way.

This is not a funding strategy, but nevertheless, because the volumes are starting to be significant, now it is the time to reduce the payment from 2% to 1%. It has already been announced to clients.

It needs a lead period until you can implement from the moment you announce, and it will happen on March. It will have some impact, it's around €30 million year-on-year over the course of the year.

Thank you, Paco. I would kindly suggest to switch off the microphone when the analysts are asking the questions, because we've been told that they cannot hear the questions when they talk.

Operator, could you open the line to the next question, please?

Thank you, Britta. Regarding the MREL dynamics, the maturities in the group are quite front-loaded, actually what we're seeing is that by the fourth quarter of 2026, the impact of the sale of the TSB bonds will be already being offset by lower funding needs in group already in the fourth quarter of 2026.

Regarding the volume developments that you wanted to discuss, at the end of last year, as you can see, we're seeing mortgages growing at a 5%, consumer at a high double digit, and SME corporate growing at a low-single digit, right? We are seeing corporates and SME poised to accelerate growth.

In our expectation of 6% growth of the loan book, we are considering still consumer loans to grow at a double digit, SMEs and corporates to accelerate from the current low-single digit to mid-single digit, and we expect some deceleration on the growth of mortgages from the currently 5% to maybe something between 4% or between 3% to 4%. Those are our assumptions, and those are the assumptions that give a combined growth of 6% in the loan book.

I think there was a last question, but I'm not sure.

There was about the liability side, but let me just add a couple of comments here. I think what Sergio explained is just in line with what we did during the strategy day: corporates and SMEs above, mortgages in line, and consumer loans well above.

On the liability side, I think what we are expecting is a larger growth than we originally expected from the off-balance-sheet part, and that will partially compensate. On the mortgages, I think there has been a lot of hype around this, and I have to say that when the interest rates of the new production were above the 8-year swap, we were gaining market share.

We got to a point in quarter 3 '24 in which, when this gap was still positive, we went to almost a 9.5% market share of new acquisition. We are down to 7% purposely, strategically, we are not gaining market share.

We have been declining over the course of the quarters until 4 Q4 '25, in which we landed at 7% market share of new production. That is purposely, because despite the fact that they have positive RORAC of above 20% or around 20%, their margin is negative, and the investments and the upfront costs are important.

They're value creation in the longer term, but they have a negative impact in the short term on the P&L, and certainly in NII they are not the most exciting thing. Nevertheless, with the cross-selling, they become attractive.

This confirms in a line that has had a lot of discussion, which is mortgages, that we will be in line with our current market share, which is approximately 7%, and adapting up and down depending on the attractiveness and the pricing of the market.

Thank you. I think your last question was regarding our expectations of the ALCO book.

When we size the ALCO book is mainly connected with our liquidity and with our ALM. Liquidity is expected to remain strong, because on top of this dynamics of loans and deposits, we will have the inflow of the price of the TSB transaction.

When we look at the expected evolution of liquidity will be positive, and then we also expect liabilities, current accounts to grow. We expect a marginal growth on the ALCO book in line with the balance sheet.

Shall we move on to the next question, please?

very much for the presentation and congratulations, César. I just have one question on costs and one question on capital.

Looking to costs, I was just wondering whether at a given point in time you could consider using part of the capital generation that you have to fund an early retirement plan or a voluntary scheme so that you can help to compensate on that side the investments that you have in IT. The second question on capital generation, going forward, is there any lever that could accelerate the capital generation that we see for 2025 around 200 bps?

Is there anything that we could have in terms of DTA that could accelerate the capital generation going forward? Thank you.

I think on the first one, there has been a long time since we did the restructuring in '21. That means that the age of a part of the population here at Sabadell is 4 years older, and therefore I think there's nothing final yet, as a ongoing and without nothing extraordinary, but we are starting to consider that there could be some early retirements from now on.

As I say, it's not a major thing probably, but we are looking into it as we speak.

Regarding capital generation, Nacho, it's been quite strong, as we have explained in 2025 at 196 basis points. It has also benefited from the impact of the first application of CRR3, also from the three securitizations that we have done.

It's important to take into account that we are self-financing the growth in the loan book. Going forward, we are actually looking at fantastic opportunities of keep increasing the loan book.

Of course, that has been taken into account in our projections. Therefore, we think that they both consider profitability, but also growth.

Of course, growing the loan book, it weighs on capital, but we believe that it's a very good opportunity to actually improve profitability going forward. The capital generation is connected with both the increased level of profitability and the good momentum in the loan book growth that we're seeing.

Right. Operator, could we have the next question, please?

Nacho, we cannot hear you. I don't know if you have unmuted your mobile.

Could you please check that? We can hear you now.

Thank you, Nacho.

On the first one, and you can complete me of course, Sergio. The 2.5, the distribution between what is dividends and what is share buybacks, of course, will depend on final decisions of the board, and we cannot anticipate that.

What we have is a commitment of distributing 60% of the proceeds through dividends and no less than 20-plus cents per share per year. We expect an excess of capital generation over that, and it would make sense at that point in time that that would be share buybacks.

Neobanks have been in play for a while. I think they have an impact.

I think I was very close to that because the first kind of neobank was ING Direct 25 years ago, and they continue having an impact. They acquire a lot of customers, and that's mainly the account opening where they have more success.

The challenge for them, and it's not a negative comment at all, the challenge for them is cross-selling, deep selling, having savings, having a number of things, no? We certainly see that there's a challenge there, but we continue seeing very successful, as I mentioned before, that our digital account is bringing a significant number of clients, and it will be at 1%, as I mentioned before, not for the acquisition, which will still have promotions and the fourth, and it's 50% of our acquisition.

We can live with them, and we congratulate them because, of course, in terms of number of accounts, they are doing extremely well.

Perfect. Shall we move on to the next question then, please?

Yes, hi, good morning. Just a couple of follow-up questions on my side.

When you're discussing the outlook for NII in 2027, you mentioned 300—

Carlos, Carlos, I don't know if you could check your microphone, please, because we cannot hear you very well. Could you check that or speak louder, please?

Yes,

is that better now? Much better.

Much better. Thank you, Carlos.

Okay. Thank you.

As I was saying, that basically follow-up questions. The 300 basis points customer spread improvement to 300 basis points that you mentioned, is that something that you see as being achievable already before year-end 2026, or something that you intend to get to by 2027?

Also along with that, or in those lines, I might have missed it. How much do you expect volume growth, loan growth, and deposit growth, how much do you expect it in 2027?

You see it at level similar to the 2026 levels? Just trying to get a better bridge to the 3.9 billion in 2027.

Thank you very much.

Thank you, Carlos. Of course, we'll do our best.

The customer spread at the end of this year is being 288 basis points. In our model, in our expectations, it will be marginally higher, but probably very few basis points at the end of 2026.

Then it will keep on gradually growing until reaching at around 300 basis points that actually we shared with you guys at the Capital Markets Day. Regarding the composition of expected volume growth behind that assumption at the end of the day, in Capital Markets Day, we guided for a CAGR of mid-single digit of loans.

Deposits, I think we were at rather 4%. I think we are on track to get to those volume growths.

In 2025, the Spanish economy performed very well. GDP expanded by 2.9%.

In 2026, the consensus is already above 2%. Connected with this growth, we expect a similar levels of growth in the loan portfolio and in the deposit book.

Similar rates of growth we are assuming for 2026 at this moment in time.

Shall we move to the next question then, please?

Hello, good morning. Thank you very much for taking my questions.

I have a couple of questions on the NII outlook, please. Firstly, I understand that after the sale of TSB, your MREL requirements may be lower.

Maybe there's some opportunity for funding cost savings in case you are able to amortize more expensive MREL issuances. Then my second question would be on the digital deposits.

If you could kindly provide the amount outstanding of digital deposits, and also what are your expectations for the costs and the volumes of digital deposits going forward? Lastly, if you could provide details on corporate CapEx outlook and investment from corporates in Spain, please.

Thank you, Borja, for your questions. Regarding the first one connected with MREL, MREL requirement will not decrease after the sale of TSB, but it's a percentage of the risk-weighted assets.

What will go down are the risk-weighted assets when TSB is sold. Then, as a matter of fact, once we have less risk-weighted assets, we will have a lower total amount of MREL requirements, right?

That's why we're saying that after the sale, we will have lower funding needs, and therefore we will be issuing less in the market. We will sort of fix this by not rolling the coming maturities.

It will be very natural. Yes, we will have savings from not rolling the maturities, and therefore having lower wholesale funding needs.

Then for the digital deposits, could you like to take this one?

On digital deposits, we have from the beginning decided not to give the exact numbers. What I can say again and repeat is that this is more than for the volumes, it is for the customer acquisition and for the whole relationship that comes with it, and the cross-selling that comes with it.

I already shared that the new pricing and the reviewed pricing will give us a saving of around 30 million on full-year terms, and that starts on March. It's 50% of our acquisition.

It's relevant, and I think we can leave it at that. In corporates and SMEs, we closed the year with a growth of 2.4%.

As we mentioned before, looking forward, loan demand from corporates and SMEs remains solid, and we have particularly a strong pipeline of medium- and long-term loans. Therefore, we're confident that the growth will accelerate back to mid-single-digit levels.

By the way, the front-book yields and spreads remain stable.

Operator, could we have the next question, please?

[unclear] César. My first question was [unclear] guidance for [unclear] you mentioned that [unclear] insurance were going to— Pablo, Pablo,

Pablo, sorry to interrupt you. I think we cannot hear you very very clear.

It looks like the sound is I don't know if you could check your mobile or could you try again, please?

Is this better now?

I think so. Can you start the question, please?

Yes, sure. Thank you [unclear] ask questions.

My first question was [unclear] you mentioned asset management and insurance were going to—

Pablo, Pablo, I'm afraid I'm afraid it doesn't work. I don't know if you could please send us send me an email, and we'll I will read the question for you if if it's possible.

I'm sorry, sorry for that. Operator, could we move to the next question, please, while Pablo is is sending us an email?

Thank you.

Hello, can you hear me?

Perfect.

Thank you for the time. My two questions.

On OpEx, the 3%, and I'm talking about slide I think is 28. The 3% CAGR seems like an acceleration versus '25.

When you talk about the moving parts, staff growing inflation, other have been flat, D&A growing I think mid-single digits. I just can't see how it got to three.

I get to more something like a 2% low, 2% in a bit. Is the guidance too conservative on OpEx?

The second question is similar: cost of risk. You have a slide where the total cost of risk keeps coming down.

You ended at 37, but then the guidance assumes you picks up to 40. Again, are you being a bit too conservative there or not?

Thank you.

Thank you, Hugo, for your questions. We try to be prudent, and the guidance on cost has the components that we have just gone through.

What we would say is that we are very comfortable with the 3%, and this means that we're not going to be higher than that. We will work, and César mentioned some different work streams that we are already exploring so that we can improve the outlook for growth in cost and therefore improve efficiency going forward.

Regarding cost of risk, in 2025, we have reported a 37 basis points cost of risk, 24 credit, 13 others. For 2026, again, we're very comfortable with the 40.

We think that credit cost of risk is not going to be higher than 30 basis points, and all the rest is going to be around 10. Again, it's a very comfortable cost of risk that takes into account that we're seeing a very growth momentum in things like consumer and SME, and that may marginally add a little bit more, because we're not seeing any increase in cost of risk in the different products.

Of course, the cost of risk of consumer is higher than the ones in mortgages, for instance. Growing progressively more in consumer has an impact.

Actually, that impact is rather offset by the good performance in the cost of risk of each different product. I think what I could say is that we feel very comfortable in the guidance of this cost and cost of risk.

Would you agree with that, César?

I agree fully, and I think the perfect expression is we feel very comfortable with the 40 basis points. Is it conservative or not, the time will tell.

As I think we tried to explain during the presentation, the fact that we have reached a much clearer and lower levels of probabilities of default across all product lines has a lagged effect on cost of risk, and on capital generation. Therefore, that's a tailwind that should help the cost of risk.

How much of that will be offset by a change in mix into more profitable and better yielding products like the consumer lending and the SME lending in which we expect marginally more growth and significant more growth than the market in consumer lending, how much that will offset that is difficult to know, but in general, I think the perfect expression is that we feel confident with the 40 basis points.

Then we also have the questions that Pablo sent to me. The first one is regarding the asset management and insurance business, if we could elaborate a little bit more on the assumptions that we've made in terms of market impacts and others when we guided for this fee growth for 2026.

The second one is regarding the breakdown of the on-balance-sheet funds between fixed-term and current accounts going forward.

I think we'll share we'll share this one. From a qualitative perspective, I think we're growing very handsomely already in asset management, and I think we are in record productions in in terms of insurance.

Over the course of the years, I think we are going to see that fees gradually increases as a percentage of core banking revenues, and therefore reduce somewhat the bottom-line P&L sensitivity to interest rate movements, no? That's on the back of asset management and and mortgages.

Indeed. In 2025, we had a very sound growth in asset management and insurance.

This was 14% growth, and the growth that we see in fees connected with that was 15%. We're seeing that clearly the revenue is fully connected with the volumes.

For 2026, we're expecting a similar pattern with double-digit growth in insurance and asset management. They have been very successful performance on the business.

Regarding on-balance-sheet funds, out of the €128 billion, I think, of on-balance-sheet ex-TSB, roughly one-third of that is remunerated, more than two-thirds are non-remunerated. More than €80 billion are stable and transactional current accounts non-remunerated, and the other third is term deposits or remunerated current accounts, and that is connected with the different customers that we have and the different franchises.

Of course, the remunerated part is the part sensitive to interest rates.

Operator, could we have the next question, please?

Thank you very much for taking my questions and congratulations, César, on your trajectory, and also wishing you all the best for the next stage. My first question is a follow-up on a recent question.

Looking at recent trends, the new production has been largely dominated by mortgages and consumer lending. You also expressed during the call and in your strategic plan your intention to grow in corporates and SMEs.

I was just wondering if you were able to specifically tell us what's the cost of risk you are observing in SME and corporate lending, and also in consumer lending where you have been expanding quite rapidly? Then just a small one on fees, I just wanted to make sure that the fees from your payment business have been included in the fee line for the entire 2025, just wondering if the 5.5% growth is like-for-like, '26 versus '25.

Thank you very much.

Let me take the second one, and thank you, Cecilia, for your questions. Regarding the fee lines is, yes, fully comparable.

The payment business fees are included in the 2025 reported figures, and the expected growth considers the same, the answer is yes. On the first one, I don't think we have given a specific cost of risk for consumer lending or SMEs.

The only thing I can tell you is that the PDs have gone down by 50% since '24, and that is the major driver for the cost of risk. We have reached the levels of cost of risk that we wanted to have on the longer term, although as I said before, they will take some time to go fully through the P&L both in terms of cost of risk and capital generation.

We've got one final question, operator, please.

Hi, thanks for taking my question. I have a follow-up on the hedging on the NII to the 9 million.

I'm just wondering how long is the hedge, and what is the sensitivity to Euribor if Euribor steepens? Then another question on your ambition of the international business.

I guess, Lento, the last question is regarding the international business, no? Thank you.

Let me take the first question. The hedge of the fixed rate mortgages, I think we just mentioned that that hedge is connected with this fixed rate, and is a hedge where we pay fixed, we receive floating Euribor 6.

As Euribor 6 has been going down, that is the source of the impact. The good news is that Euribor 6-month has been already stable for a number of months, this effect will fade completely in the next quarter.

César, would you like to take the one on the international business?

I think, well, Mexico and Miami represent, more or less, give or take, 5% of our capital each. We are seeing currently quite a lot of opportunities for growth.

They are profitable, they have positive returns on tangible equity, and we have been seeing that the growth in '27, our expectations of our growth for '27 are higher than the national growth. That doesn't mean a change in our ambition.

It's marginal. It's not very significant.

It's just that we're seeing opportunities there. They're very linked to our verticals in which we have a lot of expertise, and they are linked to Spanish customers.

It's difficult to separate what is international and what is national. The two verticals in which we do extremely well is especially hospitality and energy, and to a lesser extent, civil engineering.

Right. That concludes our presentation today.

Thank you, César and Sergio, and thanks to all of you for joining us today. If you have any further questions, the Investor Relations team is always here to help.

Have a great day.

Thank you very much.

Thank you.