Spanish Banks' H1 2025 Results Signal a Robust F2025 Despite Geopolitical Challenges and Lower Rates

Morningstar DBRS has released a commentary discussing the H1 2025 results on Spanish banks (Banco Santander, BBVA, Caixabank, Banco de Sabadell, Bankinter, Abanca Corporación Bancaria, Grupo Cooperativo Cajamar y Kutxabank).

-- Spanish banks continue their momentum with another quarter of strong results, pointing to another year of high profits.
-- Most Spanish banks reported an improvement in asset quality QOQ despite the overall increase in activity on the back of the resilient domestic economy, consolidating a declining trend since YE2023.
-- Spanish banks performed well in the 2025 EU-wide stress test, with a reported average capital depletion under the stress test's adverse scenario of 185 basis points, well below the European average.

"Overall profitability was supported by robust lending volume growth, increasing net fees, and contained net cost of risk on the back of a strong and resilient Spanish economy despite the current geopolitical situation." said María Jesús Parra, Vice President, European Financial Institution Ratings. "We expect another strong year of high profitability driven by strong credit growth, high operating efficiency, lower banking levies, and modest net cost of risk."