Banco Sabadell2Q14 Results

July 24th, 2014

Disclaimer

Banco Sabadell cautions that this presentation may contain forward looking statements with respect to the business. financial condition. results of operations. strategy. plans and objectives of the Banco Sabadell Group. While these forward looking statements represent our judgement and future expectations concerning the development of our business. a certain number of risks. uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include. but are not limited to. (1) general market. Macroeconomic. governmental. political and regulatory trends. (2) movements in local and international securities markets. currency exchange rate. and interest rates. (3) competitive pressures. (4) technical developments. (5) changes in the financial position or credit worthiness of our customers. obligors and counterparts. These risk factors could adversely affect our business and financial performance published in our past and future filings and reports. including those with the Spanish Securities and Exchange Commission (Comisión Nacional del Mercado de Valores).

Banco Sabadell is not nor can it be held responsible for the usage. valuations. opinions. expectations or decisions which might be adopted by third parties following the publication of this information.

Financial information by business areas is presented according to GAAP as well as internal Banco Sabadell group´s criteria as a result of which each division reflects the true nature of its business. These criteria do not follow any particular regulation and can include forecasts and subjective valuations which could represent substantial differences should another methodology be applied.

The distribution of this presentation in certain jurisdictions may be restricted by law. Recipients of this presentation should inform themselves about and observe such restrictions.

These slides do not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe to any securities nor shall they or any one of them form the basis of or be relied on in connection with any contract or commitment whatsoever.

2

1. Quarterly highlights

2. 2Q14 Results

3. Commercial activity and liquidity

4. Risk and capital management

5 Managing real estate assets

3

Quarterly highlights

� Recovery in credit demand with a noticeable pick up in SME and companies. Net loan growth at the closing of the quarter

� Further increase in net interest income and continued reduction in the cost of funding

� Current balance sheet structure allows for further growth in NII in a low interest rate environment

� Proactive asset and liability management has continued to contribute positively to the P&L

� Significant improvement in commission income driven by strong growth in banking services and off-balance sheet funds

� Third sequential decline in the stock of NPLs. Reduction in the NPL ratio and lower stock of non performing assets

� Solvia is consolidating its position as a leader in the real estate market, boosting asset sales

4

1. Quarterly highlights

2. 2Q14 Results

3. Commercial activity and liquidity

4. Risk and capital management

5. Managing real estate assets

5

2Q14 results

Note: 2014 includes BMN-Penedés network, Lloyds Spain and Banco Gallego, and 2013 includes 1 month of BMN-PenedésEuros in million

Jun. 13 Jun. 14% var 14/13

Net Interest Income 865.8 1,076.0 24.3%

Equity Method & Dividends 3.4 8.5 153.3%Commissions 356.6 414.5 16.2%Trading Income & Forex 1,046.3 1,171.2 11.9%Other Operating Results -74.9 -72.1 -3.7%Gross Operating Income 2,197.2 2,598.1 18.2%

Personnel Costs -524.9 -609.7 16.2%Administrative Costs -285.2 -293.4 2.9%Depreciations -105.5 -135.9 28.9%Pre-provisions Income 1,281.6 1,559.0 21.6%

Total Provisions & Impairments -1,073.3 -1,415.3 31.9%Gains on sale of assets -6.2 82.1 ---Profit before taxes 202.2 225.8 11.7%Taxes and others -78.8 -58.1 -26.3%

Attributable Net Profit 123.4 167.7 35.9%

6

Further increase in net interest income …

Net interest income evolutionEuros in million

* Excludes BMN-Penedés network, Lloyds Spain and Banco Gallego

Net interest income 1H14:+24.3% YoY

Net interest income 1H14 like-for-like*:

+17.9% YoY

451.2414.6

451.2497.7

530.0 545.9

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

3.94%3.66% 3.49% 3.51% 3.50% 3.47%

2.19% 2.07%1.87%

1.65%1.44%

1.25%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

1.75%

1.59%1.62%

1.86%

2.06%

2.22%

1.14%1.00% 1.05%

1.17%1.29%

1.36%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

7

… with continued improvement in customer spreads and lower cost of funding

Margin evolutionIn percentage

Customer spreadNet interest margin

Net interest margin ex-APS: 1.96%

Cost of customer fundsCustomer loan yield

Customer loan yield and cost of customer funds in percentage

8

Continued repricing of term deposits drives down the cost of the back book …

Contractual rates on term depositsIn percentage

Stock New production/renewals

New term deposits at 1%

3.26% 3.35%3.58%

3.36%3.13%

2.84%

2.37%2.16%

1.83%2.50%

3.06%

3.39%

2.16%1.85%

1.61%1.51%

1.29%1.05%

Jun-12 Dec-12 Jun-13 Dec-13 Jun-14

10,0851.68%

8,2331.71%

5,8501.83% 8,115

1.78%

3,4752.18%

3,775 2.18%

8,2911.89%

0.50%

0.75%

1.00%

1.25%

1.50%

1.75%

2.00%

2.25%

2.50%

0 1 2 3 4 5 6 7 8

9

… with a €300M positive contribution to NII over the next 12 months

Maturities of term deposits: volume and average int erest rate costEuros in million and percentage

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 >4Q15The size represents the volume of term deposits maturing every quarter. The percentage number is the current average interest rate paid on the term deposits

Current interest rate level of renewals

10

Limited downward pressure on the loan yield

Evolution of loan spreads by segmentIn percentage

Spreads on new loan productionreflecting the lower cost of funding

Back book

Front book

Back book

Front book

Back book

Front book

Mortgages to individuals 88 229 87 227 89 214

SME 269 526 270 500 277 492

Corporates 268 342 268 327 266 302

4Q13 1Q14 2Q14

25.9 28.6 31.4 37.5 39.7 48.6

52.4 53.8 53.3 52.8 53.455.3

90.1105.9 108.5

119.5 107.9109.6

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

11

Commission income is growing …

Commission income evolutionEuros in million

Asset Mgmt1 ServicesLending1 Including mutual funds commissions and pension funds and non-life insurance brokerage

188.2

168.4

193.2209.8 Commission income 1H14

+16.2% YoY201.0

Commission income 1H14 like-for-like*:+8.3% YoY

* Excluding BMN-Penedés network, Lloyds Spain and Banco Gallego

213.5

2,760 2,953

3,081 3,417

4,4404,902

1,2471,531790

901

March 2014 June 2014

12

… driven by strong performance in mutual funds

Evolution by type of investment fund Euros in million

� Bias towards higher margin products

� Annualised growth rate of 53% in funds under management

12,31813,705

Equity fundsBalanced funds

Fixed income funds Guaranteed funds

SICAV, External funds and Others

+11.3%

+10.9%

+7.0%

+10.4%

+22.8%

+14.1%

258.4 261.1 283.5 287.7 292.8 286.0

1.9 3.50.2 1.9 6.0

24.9

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

13

Personnel costs are being reduced …

Personnel expenses evolutionEuros in million

* Including BMN-Penedés network, Lloyds Spain and Banco Gallego in 2013 and excluding non-recurrent costs.

260.3 264.6

Personnel expenses 1H14 on a like-for-like basis*:

-2.6% YoY

283.7

Recurrent Non-recurrent

289.5 298.8

Personnel expenses 1H14:

+16.2% YoY

310.9

147.1 138.1 146.6 149.2 148.1 139.4

6.8 3.82.2

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

14

… and so are general expenses

General expenses evolutionEuros in million

General expenses 1H14:

+2.9% YoY

General expenses 1H14 on a like-for-like basis*:

-11.0% YoY

147.1138.1

146.6

156.0

Recurrent Non-recurrent

151.9

* Including BMN-Penedés network, Lloyds Spain and Banco Gallego in 2013 and excluding non-recurrent costs.

141.6

59.4% 60.0% 61.0% 59.6%56.3% 55.6%

Mar.13 Jun.13 Sep.13 Dec.13 Mar.14 Jun.14

15

The cost to income ratio is improving: in line with the Triple business plan

*Adjusting operating income for non-recurrent trading income. Same criteria applies for all quarters.

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

Employee and branch evolutionIn number

Cost income evolution *

In percentage

Branches Employees

1,383

10,550

2,202

16,754

Banco CAM

16,413

2,2041,898

15,596 14,957

1,889

2,382

17,253

BMN-Penedés & Lloyds Spain

17,233

2,2542,418

18,077

BancoGallego

2,343

17,924

2,336

17,698

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1. Quarterly highlights

2. 2Q14 Results

3. Commercial activity and liquidity

4. Risk and capital management

5. Managing real estate assets

17

Improving balance sheet dynamics

Customer funds and loans evolutionEuros in million

1 Other on-balance sheet term funds include term deposits and other funds placed in the retail network. Exclude reposNote Organic variation excludes Banco Gallego.

Jun-13 Mar-14 Jun-14% Var.

YoY% Org.

YoY% Var.

QoQ

Total assets 170,751 161,094 161,557 -5.4% -7.2% 0.3%Of which:

Gross loans to customers ex repos 125,893 123,510 122,838 -2.4% -4.0% -0.5%ALCO Portfolio 28,952 20,623 21,858 -24.5% -24.5% 6.0%

Total liabilities 161,560 150,529 150,719 -6.7% -8.6% 0.1 %Of which:

On-balance sheet customer funds 92,951 94,690 95,043 2.3% -0.1% 0.4%Other on-balance sheet term funds1

58,408 57,608 55,625 -4.8% -7.2% -3.4%Sight deposits 34,543 37,082 39,418 14.1% 11.9% 6.3%

Wholesale funding 25,460 24,701 24,364 -4.3% -4.3% -1.4%ECB Funding 18,000 5,500 5,500 -69.4% -69.4% 0.0%

Off-balance sheet funds 22,090 26,866 28,597 29.5% 26.9% 6.4%Of which:

Mutual funds 9,693 12,318 13,705 41.4% 35.5% 11.3%Pension funds 3,716 4,314 4,375 17.7% 17.7% 1.4%Third party insurance products 7,289 7,973 7,916 8.6% 8.6% -0.7%

28,894

28,350

27,943 27,881 27,898 27,932

28,298

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-140

20

40

60

80

100

120

140

160

180

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

18

Loan growth is being reactivated

SME and company loans evolutionEuros in million

Monthly residential mortgage productionEuros in million

In 1H14 the number of new mortgages increased by 54% YoY with volume growth of 61% YoY(43% and 50% like-for-like *)

During the month of June the SME and company loans book grew by €366M; +1.5% QoQ

* Excludes BMN-Penedés network, Lloyds Spain and Banco Gallego in 2014

Jun-14

Note: SME and company loans includes loans to SMEs, corporates and public sector

19

Strong growth in investment funds …

Off-balance sheet fundsEuros in billion

Commercial focus in the network to attract off-balance sheet funds

+12.7%

Investment fundsEuros in billion

+24.4%

11.012.3

13.7

7.5

10.0

12.5

15.0

4Q13 1Q14 2Q14

25.426.9

28.6

20.0

22.5

25.0

27.5

30.0

4Q13 1Q14 2Q14

27,085 28,874 34,543 33,902 36,862 37,082 39,418

53,095 53,81958,408 57,953 57,635 57,608 55,625

8,5858,987

9,693 10,05211,019 12,318 13,705

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

20

… contributing to the increase in customer funds

Note: On-balance sheet term funds include term deposits and other funds placed in the retail network: preference shares, mandatory convertible bonds, senior debt, commercial paper and other. Exclude repos. Loan to deposit ratio excludes provisions and third party loans

Evolution of customer funds and off-balance sheet funds Euros in million

Continued increase in customer funds

Loan to deposit ratioIn percentage

Demand deposits On-balance sheet term funds

Mutual funds/investment funds

121.9%

116.6%

111.0%109.2%

107.3%104.6%

103.6%

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

14.218.7 15.6

12.1

7.0

7.9

4.17.5

2.3

2.4

2.0 2.3

Dec-12 Jun-13 Dec-13 Jun-14

21

Fixed income portfolio remains unchanged

Fixed income portfolio evolutionEuros in million

Spanish government debt Other

Life insurance portfolio (Mediterráneo Vida)

21.226.6

19.7 19.6

ALCO portfolioEuros in billion and in percentage

The ALCO portfolio contribution is stable

Jun-13 Dec-13 Jun-14

ALCO portfolio 26.6 19.7 19.6

% of total assets 15.6% 12.1% 12.1%

Duration (in years) 3.8 4.9 5.0

Yield 3.3% 3.9% 3.5%

ECB liquidity position 18.0 8.8 5.5

22

Maintaining a balanced funding structure …

Group funding structure Group wholesale funding brea kdown

Deposits69.7%

Retail issues 0.9%

Repos5.9%

ICO financing 5.2%

Wholesale funding18.3%

Covered bonds 61.4%

Senior debt 3.9%

Prefs + Subordinated

3.9%

ECP6.1%

Securitisation 16.2%

GGB8.5%

23

… and efficiently managing liquidity …

Group wholesale funding maturitiesEuros in million

ECB liquidity positionEuros in million

Maturity by product type Euros in million

23,650

18,000

8,800

5,500

Dec 2012 Jun 2013 Dec 2013 Jun 2014

3Q14 4Q14 2015 2016 2017 2018 2019 >2020 Outst. AmountCovered Bonds (CH) 764 1,323 3,057 2,870 1,937 1,558 924 2,497 14,929GGB 0 1,005 0 0 1,066 0 0 0 2,071Senior Debt 0 0 0 682 0 100 57 25 864Preferred Shares and Subordinated Debt 0 0 0 318 66 0 0 480 864Other mid- and long-term financial instruments 0 70 0 0 0 18 0 18 105Total 764 2,398 3,057 3,870 3,069 1,676 981 3,019 18,833

764

2,398

3,057

3,870

3,069

1,676

981

3,019

0

1,000

2,000

3,000

4,000

5,000

3Q14 4Q14 2015 2016 2017 2018 2019 >2020

7644.25%

2,3983.08%

3,0573.21% 3,870

2.92%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

0 1 2 3 4 5

24

… allowing for lower cost of wholesale funding going forward

24

Current cost of whole sale funding maturities: average coupon and sizeEuros in million and in percentage

Lower levels when issuing in capital markets allow for a reduction in wholesale funding cost over time

Potential new issues pricing

3Q14 4Q14 2015 2016

Instrument Maturity Indicative price

Covered bonds 3-10 years 1% -2 .4%

Senior debt 3-5 years 1.45%-1.9%

The size represents the volume of wholesale funding maturing every quarter. The percentage number is the current average coupon cost

25

1. Quarterly highlights

2. 2Q14 Results

3. Commercial activity and liquidity

4. Risk and capital management

5. Managing real estate assets

26

Strong capital levels

Capital ratios. Core capital Basel III phase-inIn percentage

Note: According to the pending change to “circular 2/2014”

11.1%11.4%

1Q14 2Q14

22,99422,825

22,673

4Q13 1Q14 2Q14

6,973 7,037 7,185

5,506 5,570 5,602

4Q13 1Q14 2Q14RE assets ex-APS RE assets APS

16,021 15,788 15,488

8,874 8,841 8,611

4Q13 1Q14 2Q14Total NPLs ex-APS Total NPLs APS

27

The stock of NPLs continues the downward trend …NPL evolution Euros in million €300M further reduction of

NPLs, ex-APS, during 2Q14

Second consecutive quarter showing a decline in total problematic assets, ex-APS

On-balance sheet RE assets evolution Euros in million

Total problematic assets, ex-APS Euros in million

24,895 24,629 24,099

12,479 12,607 12,787

Note: NPLs include contingent risk

28

… with improved dynamics in the last quarters, like-for-like

Evolution of NPLs and RE assets. (Excluding reclassified loans and acquisitions unti l 1Q14) Sabadell ex-APS. Euros in million

Total problematic assets ex-APS are reduced by €152 M

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

Ordinary net entries 388 760 365 -12 -83 -203Change in RE assets 394 1 218 400 64 148Net entries + Change in RE assets 782 761 583 388 -19 -55

Write-offs 247 305 105 51 265 97

Re assets and NPL quarterly change 535 456 478 337 -284 - 152

9121,469 1,447

2009 2010 2011 2012 2013 June 2014

29

Provision requirements remain affordable

Net new NPLs, ex APS, like-for-like and excluding reclassified loansEuros in million

NPLs must be fully provided for after 12 months

Evolution of new NPLs, ex-APSEuros in million

Like-for-like, excluding reclassified loans

Impact from acquiredbusinesses

Reclassified loans

1,0141,362

803

5,4095,735

-533

142

455 494356

-233-300

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

Real Estate development and/or construction purposes 38.38% 42.99% 55.73% 62.98% 63.12% 62.19%

Construction purposes non-related to real estate dev. 5.96% 7.94% 9.84% 8.26% 8.32% 8.25%

Large corporates 7.40% 7.48% 8.91% 6.05% 6.02% 6.01%

SME and small retailers and self-employed 8.98% 9.81% 10.93% 13.33% 13.31% 13.31%

Individuals with 1st mortgage guarantee assets 8.07% 8.17% 8.78% 9.86% 9.84% 9.73%

NPL ratio 9.69% 10.62% 12.61% 13.63% 13.57% 13.35%

30

NPL ratio improving at a higher pace …

Evolution of NPL ratios by segment, ex-APSIn percentage

Note: NPL ratio is calculated including contingent risk.

Second consecutive fall in the NPL ratio, with improvement across all loan categories

2Q14 BS ex-APS APS Total

Real estate assets 40.5% 50.8% 45.0%

Real estate development loans 33.8% 47.4% 40.1%

Total real estate exposure 37.0% 48.9% 42.3%

Construction 12.2% 5.3% 10.3%

Large Corporates 6.5% 46.5% 8.2%

SME and small retailers and self-employed 8.5% 20.6% 9.6%

Individuals 3.8% 12.6% 4.2%

Rest of loan book 5.6% 20.2% 6.4%

Total 9.7% 39.5% 13.8%

31

… maintaining high coverage levels

Coverage by loan segment and real estate assetsSplit between asset protection scheme and rest

Comfortable coverage levels relative to expected loss levels

13.8%Global coverage of total loans and RE

assets

9.7% Global coverage of total loans and RE

assets, ex-APS

32

1. Quarterly highlights

2. 2Q14 Results

3. Commercial activity and liquidity

4. Risk and capital management

5. Managing real estate assets

33

Real estate assets management highlights

� Maintaining good results in real estate asset disposals. Sales volume in 1H 2014 has increased by 7%, YoY, while reducing discount levels

� The Spanish real estate market is changing� There are fewer real estate assets with a selling price below €100,000� Increase in number of transactions with mortgage funding� Price increases in some developments

� New commercial initiatives: � Launch of house rentals targeting the retail market� Solvia Innova initiates modular housing concept

Maintaining good sales results

Sales evolutionEuros in million

34

826

1,237 1,319

1H2012 1H2013 1H2014

+7%

+50%

Increase in sales in 1H14

Solvia has a 12% market share in

Spanish propertysales

Real estate market turning signs

35

� Pick-up in transactions in 2014 (INE, Public works Ministry)

� Price increase in 4 regions (Madrid, Cantabria, Basque Country, Balearic Islands) in 1Q14 (INE)

� House price expectations are improving� The proportion of people expecting

house price declines has changed from over 50% in 2012 to below 25% in 2014(Social research centre)

� Rental yields are improving (BoS)

House price evolution

Source: social research centre polls, INE; Public works Ministry

-18%

-13%

-8%

-3%

2%

7%

2007 2008 2009 2010 2011 2012 2013 1Q14

0%

36

Solvia has become a leader real estate company increasing its brand recognition

Real Estate Business

Asset Management

Commercialisation andservicing

Transformation(land transformation and development capabilities)

Institutional SalesReal estate as an

investment product

�Launch of house rentals initiatives

�Third party servicing

�Institutional and retail sales

Solvia brand recognition is improving and growing significantly among potential house buyers

One of the largest sales platform in Spain

37