Sabadell stock faces slower mortgage demand as BPCE ties deepen

Banco Sabadell is seeing a notable slowdown in mortgage demand as fewer Spanish home transactions weigh on new lending, CEO Marc Armengol said on Thursday, October 29, according to Europa Press.

The chief executive linked the change to a shortage of housing supply and rising prices. He said the bank has not yet seen an outright decline in mortgage lending, but the adjustment in demand is becoming visible as the gap between housing purchases and credit demand narrows.

Housing demand enters a slower phase

Sabadell's mortgage loan book reached 40.716 billion euros, an increase of 3.5 percent from a year earlier. New mortgage production rose 5 percent from the second quarter, but Armengol indicated that the current pace may weaken in the coming quarters as the property market adjusts.

The bank's explanation is that some buyers who previously purchased homes without financing have recently needed mortgages because prices increased. That temporary support for demand is now fading as the number of transactions declines. Armengol nevertheless expects the outstanding mortgage balance to continue growing, even if the flow of new loans slows.

For investors, the development creates a counterweight to Sabadell's shareholder-return story and the stronger recurring performance reported for the third quarter. A slower pipeline could limit future volume growth, while continued expansion of the loan book would support interest income and customer relationships. The balance between both effects will depend on housing activity, pricing and credit demand.

BPCE adds a strategic dimension

Armengol also welcomed French bank BPCE's entry into Sabadell's shareholder base. BPCE recently acquired 7 percent of the Spanish lender and committed not to exceed 9.99 percent. The two banks are studying cooperation in Spain, including corporate and investment banking, where Sabadell's customer base and infrastructure could complement BPCE's specialist capabilities.

Because Sabadell's board is already at its statutory maximum, the BPCE representative is most likely to replace a director whose term ends, Armengol said. He also ruled out a specific approach to Unicaja and said Sabadell remains focused on organic growth rather than a broad integration.

Sabadell stock traded at 3.78 euros on Lang & Schwarz at 11:41 CET on Tuesday, November 10.

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