Spanish Banks Report Strong Results in Q1 2025 Despite Pressure on Net Interest Income

Morningstar DBRS released a commentary discussing the Q1 2025 results of eight Spanish banks: Santander, BBVA, Caixabank, Kutxabank, Banco de Sabadell, Bankinter, Abanca, and Grupo Cooperativo Cajamar.

Key highlights include:
-- Spanish banks reported an average return on equity of 16.6% in Q1 2025, almost stable year over year (YOY) on a like-for-like basis.
-- Net interest income, which represented 65% of total operating income in Q1 2025, decreased by around 3% YOY because of lower interest rates.
-- Spanish banks' asset quality remained strong and even slightly improved in Q1 2025 versus F2024. Capitalisation remained sound in our view.

"The Spanish banks continued to report strong profitability in Q1 2025, mainly supported by resilient core revenues generation, top-notch efficiency, and manageable cost of risk", said Mario De Cicco, Vice President, Global Insurance and Pension Ratings. "Higher pressure on net interest income because of lower interest rates has been offset by increasing net fees and commissions, leading to overall stable core operating revenues in Q1 2025".