Banco de Sabadell S.A. reported record high profits in 2023, outperforming the target that it announced alongside its restructuring plan in mid-2021, and thereby narrowing the gap with higher rated peers. Sabadell has significantly shrunk its cost base and progressed in digitalizing its business model, while it continues to turn around its U.K. operations. These achievements, combined with the still positive--albeit declining--interest rate environment, should help the bank sustain its strengthened profitability. We therefore raised to 'BBB+' from 'BBB' our long-term issuer credit rating on Sabadell and affirmed our 'A-2' short-term rating. The stable outlook reflects that we expect Sabadell to remain focused on leveraging its franchise and further progressing in digitalization and efficiency, while keeping a sound financial profile.
