Banco Sabadell Rejects Hostile Takeover Bid with Record ProfitBanco Sabadell reported a record net profit of €791 million in the first half of 2024, up 40.3% year-on-year, beating analysts' expectations. The bank increased its promised dividend by 21%, committing to distribute €2.9 billion between 2024 and 2025, in response to BBVA's hostile takeover bid. Return on tangible equity (RoTE) rose to 13.1%, and the top-quality capital, CET1 fully loaded, reached 13.48%. The improvement in profits was due to growth in SME and corporate financing, mortgages, and an improved credit risk profile. The bank also announced an increase in pay-out to 60%, with the first payment of 8 cents per share in October. The board of directors rejected BBVA's takeover bid as insufficient.
Looking at the chart since February, Banco Sabadell has been climbing, with its latest price rise since June 14 to date being 16.25%. This shows that its enterprise value is very well consolidated in the market. If we compare it with BBVA, which since the publication of the hostile takeover bid in May, has shown how Sabadell sustained its price, while BBVA depreciated. Since the last period of June both firms have been climbing positions. This is closely related to the ECB's monetary policies.
Sabadell is currently giving an overbought RSI signal at 69.48% which we could keep an eye on after the issuance of dividend payments, a very frequent occurrence. If we look at the price bell, currently the POC is 1.1250, with the high being the current trading area in a rather double bell.
It would be expected with the “Hype” that has been created that Sabadell will rally a bit more to then try to establish a new higher support zone.
Ion Jauregui - ActivTrades Analyst
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