Spanish lender Sabadell said Thursday its fourth-quarter net profit fell 7.5% from the same period last year after its British unit TSB lost 6 million euros ($6.55 million).

In the final quarter of 2022, TSB booked a £48.65 million penalty for a botched migration of its IT platform in 2018, which locked the accounts of millions of its customers.

At the group level, Sabadell posted a net profit of €149 million in the October-December period, which clearly exceeded the €95 million forecast by analysts polled by Reuters, thanks to higher loan revenue and lower costs.

For years, banks across Europe have been squeezed by interest rates at record lows, but the situation is starting to change as rising rates are boosting financial margins.

Sabadell's fourth-quarter net interest income rose 24.8% year-on-year to €1.08 billion, versus analysts' forecast of €1.02 billion.

In terms of shareholder remuneration, Sabadell said the board of directors has agreed to increase the "payout" or percentage of profits allocated to dividends to 50% of profits for the current year, up from 31.8% last year.

(Edited in Spanish by Tomás Cobos)