Banco Sabadell

BoAML Banking & Insurance CEO Conference

Jaime Guardiola, Consejero Delegado October 5th, 2011

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 (Comisin 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 groups 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

Index

1. Economic environment 2. Liquidity and funding 3. Commercial activity 4. Asset quality and real estate

1. Economic environment

Spain's economy has stabilised

4Q10 1Q11 2Q11 GDP (% chg. QoQ)
Private consumption Inv. capital equipment Inv. construction Exports

0.2 0.3 1.2 -3.1 3.9 0.6

0.4 -0.1 0.0 -2.8 5.8 0.9

0.2 0.6 0.3 -0.9 -1.9 0.7

GDP (% chg. YoY)

Industrial output
(% chg. YoY)

Consumer confidence
(level)

10 0

0 -10 -20

-10 -20 -30 2006 2007 2008 2009 2010 2011

-30 -40 -50 2006

2007

2008

2009

2010

2011

Sources: INE and European Commission

Exports have driven growth in activity

Exports of goods and services
(real terms, 2Q95 = 100)

Contribution to GDP growth

(%)

300 250 200 150

-4 4

100 50 1995 Spain 1998 2001 2004 France 2007 Italy 2010
-8 2000

2002

2004

2006

2008

2010

Germany

Domestic demand

Net foreign demand

Sources: Bloomberg and INE

Significant fiscal consolidation process

Impact of fiscal policies on GDP growth (2011-12, %)
0 -0.5 -1 -1.5 -2 -2.5 SP 2011 GR 2012 PT BE IT FR NE AUT GE IE

Government balance
(2010, % of GDP)
2 0 -2 -4 -6 -8 -10 -5.7 -6.7 -9.2-9.3 -2.8-2.4 -0.5-0.4 -0.2 0.2

M un ic ip al itie s

C en tra lg ov t.

eg io na lg ov ts

se cu rit iy

Data

Target

Adjustment measures adopted

- VAT increase - Civil service wage cuts - Public investment declined - Certain benefits eliminated

Central government balance

(cumulative, bn)
0 -20 -40 -60 -80 -100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sources: IMF and Economy Ministry

2009

2010

2011

So ci al

Pu bl ic

se ct or

In a context where public debt is sustainable

General government debt
(2010, % of GDP)
160 120

Cost of outstanding sovereign debt

(%)
6

5
80

4
40 0 SP FR GE PT IE IT GR

3.90%

3 2000 2002 2004 2006 2008 2010

Interest expenditure (2010, % of GDP)

6

Public debt* (% of GDP)

95 90 85

Stressed scenario

80 75 70

Banco Sabadell

65 60 55

Government
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

0 SP GE FR PT IE IT GR

50

Sources: Eurostat, Treasury, European Commission and Banco Sabadell *Note: Sustainability analysis of Spanish public debt. Based on different assumptions of the primary fiscal balance, the GDP nominal growth and the interest rate associated to the debt. The government scenario is based on government numbers until 2014 and BS estimates for 2015 and onwards. The stressed scenario assumes 0% nominal GDP growth until 2014

Progress is being made with structural reforms

Fiscal governance reform Progress in structural reforms

Law tying spending to medium-term economic growth Budget stability enshrined in Constitution, limiting the structural deficit Greater transparency in regional governments' fiscal information

Labour market and pension system reform Measures to reduce the paperwork for creating companies Restructuring of the financial system and greater transparency in financial system exposure to construction and real estate development

Part of Spanish industry is very productive

Labour productivity and company size (as a % of average productivity in the USA) Breakdown of workforce by size of company (2007)

Germany
1 to 9 employees

Spain
10-19

UK
20-49

USA
50-249 over 250 1 to 9 employees 10-19 20-49 50-249 over 250

The low productivity in the economy as a whole is broadly linked to the large percentage of SMEs
Source: FEDEA

10

Improvement in the behaviour of productivity and unit labour costs

Real labour productivity per capita in Spain (2000 = 100)
109 107 105 103 101 99 2000 2002 2004 2006 2008 2010

Real labour productivity per capita (Dec. 07 = 100)

109 107 105 103 101 99 97 95 dic-07 Spain jun-08 dic-08 jun-09 dic-09 jun-10 dic-10

Eurozone

Labour costs in Spain

(% chg. YoY)
6 5 4 3 2 1 0 -1 2001 2003 2005 2007 2009 2011

Unit labour costs

(Dec. 07 = 100)
108

106

104

102

100 2007 Spain 2008 2008 2009 2009 2010 2010

Sources: INE, Eurostat and Bank of Spain

Eurozone

11

Competitive position of Spanish companies

Exports' price sensitivity*
65

Share of services exports

(2000=100)

60

140
Lower price sensitivity

55

120 100 80 60

50

45

40

2000
K Ita G ly re ec H e ol la Po nd rtu ga l U G

2002

2004

2006 Germany France

2008

2010

Sp a er in m an Be y lg Sw iu m ed en Au st ria Ire la n Fr d an ce

Spain United States

Spanish companies are gradually refocusing their exports on markets with greater growth potential
Sources: Goldman Sachs and COMTRADE *Note: Index of price elasticity of exports (Goldman Sachs). Indicates how skewed a country exports are towards price inelastic goods. The higher the score on the index, the smaller the impact on export performance related to price changes. A higher score indicates that non-price factors dominate exports.

12

2. Liquidity and funding

13

The challenging environment in Europe increases concerns

Corporate Bond Holdings of US Primary Dealers (USD bn) ECB: Public Debt holdings under the security market program ( bn)
160 140 120 100 80 60 40 20 0 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11

Financial CDS 5Y in Europe

(basis points)
600 500 400 300 200 100 0 2007 Senior

Stock exchange
(Jan11 = 100)
120

100

80

60

2008 2009 Subordinated

2010

2011

Jan-11

Mar-11

May-11

Jul-11

Sep-11

US (S&P500) Spain (IBEX)

Germany (DAX) Brazil (BOVESPA)

Sources: Morgan Stanley, ECB and Bloomberg

14

 but we think concerns for Spain are overdone

Core capital of Spanish financial institutions (%)
9%

Loan to deposit ratio for Spanish financial institutions (%)

136%

134%

8%

132%

130%

7%
128%

6%

126%

124%

5%
1Q 0 2Q 7 0 3Q 7 0 4Q 7 0 1Q 7 08 2Q 0 3Q 8 0 4Q 8 0 1Q 8 09 2Q 0 3Q 9 0 4Q 9 0 1Q 9 10 2Q 1 3Q 0 1 4Q 0 1 1Q 0 11 2Q 11

122%

Ju l-0 7 Ja n08 Ju l-0 8 Ja n09

Ja n07

Ju l-0 9 Ja n10 Ju l-1 0 Ja n11

*Data for the largest Spanish banking groups Sources: companies information and Bank of Spain

Ju l-1 1

15

 in light of fundamentals

ECB and central banks net liquidity provision for European financial institutions (as % of total assets)

ECB net liquidity provision and total assets in the European context ( bn and %)
ECB and central as % of banks total liquidity liquidity provision provision

14 12

25

20 10 8 6 4 5 2 0 2007 0 2008 2009 2010 2011 15

Total domestic assets

as % of total domestic assets

10

Germany France Italy Spain Greece Portugal Ireland Total

58 29 85 81 112 46 154 596

10% 5% 14% 14% 19% 8% 26%

8,001 7,979 3,848 3,553 502 570 1,377 32,154

25% 25% 12% 11% 2% 2% 4%

Ireland Germany Greece (rhs)

Portugal Italy

Spain France

Source: ECB, July & August 2011 data

16

Competition for deposits is strong

Deposits in Spanish financial institutions ( bn) Deposits interest rates evolution
(%)

1,500 1,450 1,400 1,350 1,300 1,250

4.5 4 3.5 3 2.5 2

1,200 1,150 1,100 1,050 1,000 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

1.5 1 0.5 0 Dec-09 Spain

Jun-10 Greece

Dec-10 Italy

Jun-11 Portugal
17

Source: Bank of Spain

 but BS has managed to increase its deposit base in the last quarters
BS deposits evolution
( m)

BS deposit market share

(%)

55,000

2010 + 6.3bn (excl. BG)

2011 YTD + 1.6bn

3.8 3.6 3.4 3.2

50,000

45,000

2009 + 2.0bn

3 2.8

40,000
2.6

35,000

2.4 2.2

30,000
4Q08 1Q09 2Q09 3Q09 4Q091Q0102Q10 3Q10 4Q10 1Q11 2Q11

2
Ju n07 O ct -0 7 Fe b08 Ju n08 O ct -0 8 Fe b09 Ju n09 O ct -0 9 Fe b10 Ju n10 O ct -1 0 Fe b11 Ju n11

Total Deposits

Acquisition BG

New Deposits

Source: Bank of Spain

18

Most of our deposit base has maturities over one year

BS back book deposits by maturity
(%)

BS deposit base by segment

(%)

48%

Other sectors 5%

Public sector 3%

Individuals 43%

37%

SMEs and Corporates 41%

7% 9%
Term deposit over 12 months Term deposit 12 months Term deposit 6 months Term deposit 3 months

Retailers and self-employed 8%

19

 giving us more margin to actively manage spreads

Front book spreads
Product Credits Loans Mortgages to individuals Leasing Commercial loans Confirming Forfaiting Total loans Term deposit 1 month Term deposit 3 months Term deposit 6 months Term deposit 12 months Term deposit 18 months Term deposit 2 years Term deposits 3 years Deposits
In basis points

Back book spreads

jun-10 Jun-10 jun-11 Jun-11 Var YoY

jun-10 Jun-10

jun-11 Jun-11

Var YoY

233 156 81 161 242 184 263 168 104 157 220 210 194 219 198 182

264 247 116 206 290 225 225 230 86 103 107 109 160 176 179 116

+31 +91 +35 +45 +48 +41 -38 +62 -18 -54 -113 -101 -34 -43 -19 -66

174 156 74 97 267 168 183 134 86 99 121 165 163 160 89 149

223 194 78 113 309 237 215 157 69 69 113 160 191 204 134 157

+49 +38 +4 +16 +42 +69 +32 +23 -17 -30 -8 -5 +28 +44 +45 +8
20

3. Commercial activity

21

Attracting new clients

Monthly new individual customers
Target 2011: 290,000 new customers

Monthly new company customers

Target 2011: 50,000 new customers

30,000

7,000

25,000

6,000 5,000

20,000
4,000

15,000
3,000

10,000
2,000

5,000

1,000

0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 2011

0 Jan Feb Mar Apr May Jun Jul

2010

Aug Sep Oct Nov Dec

2011

Performance in line with CREA targets

22

 and growing market shares in individuals

Total sight deposits Transactionality1
Jun. 10

Jun. 10

2,94%

3.88%

+57 bps
Jun. 11 3.51% Jun. 11

+41 bps
4.29%

Payrolls

Credit card invoicing (quarterly)

Jun. 10

2.06%

Jun. 10

2.74%

+46 bps
Jun. 11 2.52%

+46 bps
Jun. 11 3.20%

Including cheques, transfers, SEPA transfers, receivables and promissory notes

23

 and companies

Companies sight deposits

5.43%

ICO loans (public subsidy loans)

Jun. 10 6.73%

Jun. 10

+145 bps
Jun. 11 6.88% Jun. 11

+417 bps
10.90%

Commercial lending

Export documentary credit

Jun. 10

7.52%

Jun. 10

23.50%

+200 bps
Jun. 11 9,52% Jun. 11 23.52%

+2 bps

24

 holding up volumes in a difficult environment

BS customer funds evolution
% Var. % Var. YoY 1 YoY proforma 23.9%
30.0% 16.1%

Jun-10 Dec-10 Jun-11 On-balance sheet customer funds2

Fix-term deposits Sight deposits

41,212 49,374
24,191 16,021 30,092 18,285

51,055
31,456 18,600

10.7%
15.7% 3.8%

Off-balance sheet funds

Mutual funds Pension funds Third party insurance products

17,908 18,834
8,532 2,777 5,434 8,853 3,016 5,727

18,563
8,613 2,903 5,691

3.7%
0.9% 4.6% 4.7%

-2.1%
-6.8% -6.6% 4.4%

Gross loans to customers ex repos

1 2

65,356 73,058

72,309

10.6%

-0.8%

Including BG in 2010 Excluding repos, including preference shares and mandatory convertible bond placed in the retail network

Euros in million

25

4. Asset quality and real estate

26

Slow negative trend persists

NPL ratio of Banco Sabadell vs. the system (%)

10.00%

Real estate over total loans

(%)

4.50% 4.00%
8.00%

4.28%

3.50% 3.00%
6.00%

3.43%

2.50% 2.00%
4.00%

1.50% 1.00%
2.00%

0.50% 0.00%
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Ju 10 n11

System NPL
Source: Bank of Spain and annual reports

BS NPL

1Q 0 2Q 7 0 3Q 7 0 4Q 7 0 1Q 7 0 2Q 8 0 3Q 8 0 4Q 8 0 1Q 8 0 2Q 9 0 3Q 9 0 4Q 9 0 1Q 9 1 2Q 0 1 3Q 0 1 4Q 0 1 1Q 0 11

0.00%

System

BS 27

 but manageable at the provisioning level

BS pre-provision profit and cost of risk evolution
( m)

2008 Pre-provision profit Total provisions Extraordinary items Net profit Cost of risk (bps)
* Including tax recoveries of 99.1 m Euros in million

2009 1.325,5 -837,7 83,6 522,5 129

2010 1.136,3 -968,1 296,1 380,0 133

jun-11 659,1 -545,5 102,8 * 165,4 151

1.114,6 -879,7 650,7 673,8 136

Resilient pre-provision result has allowed for significant provisions to be taken through the P&L
28

Adopting a more global approach to managing RE risk

RE risk arising from credit and asset exposures

RE Credit portfolio

RE Assets on and off BS Ramping up sales effort of RE assets on banks balance sheet Solvia sales force gives incentives to sell off balance sheet RE assets

70-80 new hires of real estate professionals Regional credit risk officers working side by side with RE professionals to evaluate risk and advising customers

29

 to better manage RE risk and assets

Real Estate Unit

Control and Reporting

Real Estate Development

Real Estate Administration

Real Estate Projects

Development and value improvement

Real Estate Operations

Real Estate Management

Marketing and sales of assets

Coordinating regional areas Local management of Real Estate assets

Commercial activity

Marketing and Distribution channels

Coordinate marketing activities

Regional Operations
Catalonia Madrid Levante South and Canary islands North Asturias - Len

30

67% of the portfolio is first residence

BS real estate portfolio breakdown
( m)

Finished Land under property development

Land

Total

% in Barcelona / Madrid

1st residence 2nd residence Industrial Commercial Hotels Other Gross portfolio Provisions Net portfolio

922 168 151 117 80 22 1,459 320 1,139

966 123 36 204 35 2 1,366 443 923

537 37 143 45 13 1 776 269 507

2,424 328 330 366 128 25

67% 9% 9% 10% 4% 1%

42%

72% 64%

3,601 100% 1,032 2,569 29%

48%

31

Real estate assets are sold at prices in line with current book value
BS real estate asset sales evolution
( m and %)

2009 Sales price Pre-provision cost

1

2010 1Q11 2Q11 174 228 24% 23% 1% 48 67 27% 29% -1% 71 95 25% 23% 2%

42 55 23% 12% 11%

Discount to pre-provision costs Provisions built up % of sales price not covered by provisions

Sales target for 2011: 400 million2

1 2

Including acquisition, development, and any transaction costs related to the sale of the asset Pre-provision cost

32

Top 10 real estate assets

Gross value 233.8 128.8 107.5 95.3 70.8 63.6 62.4 53.9 52.4 51.0 919.4 Commercial phase 48% already sold Finishing construction 32% already sold Planning finalised1 Planning started Planning finalised Planning started Initial sale process Planning started Sale in process2 Estimated exit date 1H2012 1H2012 2H2012 2012-2015 2H2012 1H2012 1H2012

City 1 Madrid 2 Madrid

Name of project Pozuelo de Alarcn - Mistral, 2 Av. Amrica 115

Type of asset Finished prop. Land under dev. Finished prop. Land under dev. Land Land under dev. Land Finished prop. Land Land

Use 1st residence Commercial 1st residence 1st residence 1st residence 1st residence 1st residence other 1st res. & comm. industrial

Depr. 45.1 37.0 18.5 29.3 19.6 42.1 16.8 7.5 11.3 5.1 232.3

Cov. 19% 29% 17% 31% 28% 66% 27% 14% 22% 10% 25%

3 Barcelona Illa del Mar 4 Barcelona Marina Sector 10 5 Barcelona Cerdanyola del Valls: El bosc 6 Barcelona Meridiana Sud 7 Madrid 8 Valencia Alcorcn: Retamar de la Huerta Canet d'en Berenguer

9 Barcelona Cerdanyola del Valls 10 Madrid TOTAL Getafe: Carpetania II

Local authorities currently reviewing urbanisation process In the process of being acquired by the local government of Madrid Euros in million
2

Top 10 assets represent 25% of total portfolio. High quality assets in large Spanish cities with adequate provisions
33

Outlook 2011-2012

Lower volumes Better net interest income due to lower rates than forecasted Satisfactory fees evolution Provisioning behaviour according to expectations

34

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