BarcelonaBanks operating in Spain, both native and foreign entities, are strengthening their solvency and are reaching their maximum profitability levels, according to the latest data from the Bank of Spain.
According to the historical series, the profitability obtained by the sector is, with 14.43%, near its highest since 2015, only surpassed by the record in the first quarter of 2021 when Bankia’s integration into CaixaBank shot the average performance of Spanish entities at 14.66%. By the beginning of 2021 the profitability of the Banking on Heritage (ROE), which reveals the return of the capital received by shareholders, returned to the positive field after experiencing negative rates as a result of the COVID-19 crisis.
At the same time, the total capital ratios of the credit institutions operating in Spain increased in the first quarter, which shows the consolidation of the solvency of the sector. The Ordinary Level 1 Capital Ratio (CET1), which includes cash and shares, was at 13.66%, while the Tier 1 ratio, which is made up of ordinary shares and reserves, and also adding preferred stakes and hybrid instruments, reached 15.15%. Finally, the total capital ratio rose to 17.73%.
Record results
This evolution has coincided with a record period of record results despite the decrease in interest rates by the European Central Bank (BCE) since June last year. The trend has remained during the first half of this year. The six main entities (Santander, BBVA, CaixaBank, Sabadell, Bankinter and Unicaja) achieved joint benefits of 17,086 million, which is an increase of 8.5% over the same period in the previous year.
By volume, it was Santander that won the most during this period, with 6,833 million and a 13%increase. The Sabadell, on which the BBVA has maintained an OPA since May 2024, led the percentage increase, with 23.3%, to 975 million. The BBVA won by June 5,447 million, with an increase of 9%; CaixaBank, 2,951 million (+10.3%); Bankinter, 765.6 million (+7%), and unicaja, 338 million (+15%).
The data of the Bank of Spain show that the Credit-Diposit ratio increased the first quarter of this year compared to the previous quarter and was 95.53%. However, it was a reduction of 1.41 percentage points since 96.94% registered in the first three months of 2024. Regarding the liquidity, the ratio of liquidity coverage of the total credit entities decreased and stood at 171.33% in the first quarter compared to 178.68% of the previous quarter. This decrease in the ratio has been due to the decrease of 1.98% of the liquidity mattress (numerator) and the increase of 2.22% of the net output of liquidity (denominator).
The dubious loan ratio excluded cash balances in central banks and other deposits in view of credit institutions decreased to 2.86% in the first quarter of 2025, compared to 2.91% in the previous quarter. The relationship between special surveillance loans (phase 2) and total loans decreased and stood at 6.06% in the first quarter (compared to 6.29% in the preceding quarter). It also fell compared to the same quarter of the previous year, when it was 6.81%.
Key Financial Performance Indicators for Spanish Banks (Q1 2025 vs.Q1 2024)
To provide a clearer picture of the financial health of Spanish banks,we’ve compiled the following table to summarize key metrics,comparing the first quarter of 2025 with the same period in 2024. This analysis leverages the data provided by the Bank of Spain to offer a comparative perspective on the performance of the sector. This data underscores the resilience of Spanish banking and its ability to navigate economic challenges.
| Metric | Q1 2024 (%) | Q1 2025 (%) | Change (Percentage Points) | Notes |
| :—————————————– | :———- | :———- | :————————— | :———————————————————————– |
| Return on equity (ROE) | Data Not Available from original text for this quarter | 14.43 | Data Not Available from original text for this quarter | Reflects profitability; near highest since 2015. |
| CET1 Capital Ratio | Data Not Available from original text for this quarter | 13.66 | Data Not Available from original text for this quarter | measures the financial strength of a bank.|
| Tier 1 Capital Ratio | Data Not Available from original text for this quarter | 15.15 | Data Not Available from original text for this quarter | Measures the financial strength of a bank. |
| Total Capital Ratio | Data Not Available from original text for this quarter | 17.73 | Data Not Available from original text for this quarter | Indicates overall solvency. |
| Credit-Deposit Ratio | 96.94 | 95.53 | -1.41 | Reflects the proportion of loans to deposits within the banking system.|
| Liquidity Coverage Ratio (LCR) | 178.68 | 171.33 | -7.35 | Measures a bank’s ability to meet short-term obligations. |
| Non-Performing Loan Ratio | 2.91 | 2.86 | -0.05 | Represents the percentage of loans past due or in default. |
| Special Surveillance Loans Ratio (Phase 2) | 6.29 | 6.06 | -0.23 | |
Note: Data Not Available from original text for the ROE, CET1, Tier 1, and Total Capital ratios in Q1 2024 are due to the nature of comparative analysis, as they depend on the data available in the quarter comparison. All data is based on Bank of Spain reports.
SEO-Friendly FAQ: Your Questions Answered
To provide a comprehensive understanding of the Spanish banking sector’s performance, we’ve included this FAQ, designed to enhance readability and address common queries.
Q: What is driving the high profitability of Spanish banks?
A: The sector’s profitability, with a ROE of 14.43%, is underpinned by a combination of factors, including the recovery from the COVID-19 crisis, increased efficiency, and strategic adaptations to the economic environment.This is consistent with a trend that began in 2021, demonstrating sustained recovery.
Q: What are capital ratios, and why are they crucial?
A: Capital ratios, such as the CET1, Tier 1, and Total Capital ratios, are measures of a bank’s financial strength and solvency. They assess the proportion of a bank’s capital relative to its assets, indicating the bank’s ability to absorb losses.Increased ratios, as observed in Q1 2025, signal a stronger and more resilient banking system.
Q: What is the significance of the credit-deposit ratio?
A: The credit-deposit ratio reflects the proportion of loans against the deposits. This ratio shows how much of the banks’ deposits are being used for lending. A decrease in the credit-deposit ratio indicates that banks hold more liquidity, possibly for future lending.
Q: How does the European Central Bank’s (ECB) interest rate policy impact Spanish banks?
A: The ECB’s decisions on interest rates influence the profitability of Spanish banks. Despite recent decreases in interest rates, the banking sector in Spain has demonstrated notable resilience, achieving high profits.
Q: What are non-performing loans, and why is their ratio critically important?
A: The non-performing loan ratio represents the percentage of loans that are past due or in default, providing insight into the risk profile and health of the banking system. A decrease in the non-performing loan ratio, as witnessed in Q1 2025, indicates that Spanish banks are improving their asset quality and risk management.
