Spanish banking profitability rose to 17.33% in the first quarter of 2026, up from 14.43% in the previous quarter, according to the Bank of Spain. The increase is attributed to non-recurring extraordinary results, such as Santander's capital gain from the sale of its business in Poland.
The Bank of Spain published its supervisory statistics for the first quarter of 2026 on Monday, confirming a new leap in the profitability of the Spanish banking sector. The return on equity (ROE) stood at 17.33%, well above the 14.43% recorded in the previous quarter.
The supervisor explains that this increase has been supported by the impact of certain non-recurring extraordinary results. Without these effects, the profitability of the entire sector would have been around 14.78%, a level more in line with the trend of recent quarters.
Among these extraordinary gains, the operation of Banco Santander stands out, which achieved a net profit of €5.455 billion in the first quarter, 60.3% more than in the same period of 2025, thanks to the capital gain generated by the sale of its business in Poland.
Profitability by groups of entities
By groups, significant entities — the large banks — reached a profitability of 18.16%, while less significant entities remained at 9.81%. The difference reflects the greater ability of the large banks to generate extraordinary income and optimise costs.
Capital ratios also improved. The common equity tier 1 (CET1) ratio stood at 14.26%; the Tier 1 ratio at 15.75%; and the total capital ratio at 18.36%. According to the Bank of Spain, these levels not only exceed pre-pandemic averages but also represent post-pandemic highs. Specifically, the total capital ratio is four percentage points higher than the level recorded in 2015, when it stood at 14.29%.
The supervisor highlights that, both in significant and less significant entities, the capital ratios are at historic highs and above the average since 2022. In significant entities, the total capital ratio reached 18.01%; in less significant ones, it was 25.28%.
Credit quality and liquidity
The ratio of non-performing loans of all credit entities, excluding cash balances, slightly decreased to 2.61%, down from 2.62% in the previous quarter and 2.86% a year ago, reaching a new historic low. By groups, significant entities maintained their ratio at 2.77%, while less significant ones reduced it to 1.99%.
The relationship between special surveillance loans (phase 2) and total loans also improved, standing at 5.83% compared to 6.05% a year ago. However, the cost of risk slightly increased to 1.05% from 0.87% in the previous quarter, indicating a slight uptick in expected delinquency.
Regarding liquidity, the liquidity coverage ratio (LCR) for all entities decreased by 2.3 points to 169.54%, although it remains well above the regulatory requirement of 100%. Less significant entities maintain ratios above 300%, while significant ones are at 159.81%, about 14 points below their average since early 2022, although still comfortable.
The loan-to-deposit ratio increased to 96.09%, stable compared to the year before, suggesting that bank financing continues to support the real economy.
What it means for investors and customers
For bank shareholders, the high profitability reinforces the sector's appeal, although much of the boost is due to one-off events. Investors will need to pay attention to whether banks can maintain these levels without extraordinary gains.
For customers, the capital strength of the entities — with capital ratios at highs — is a guarantee of stability. However, the rise in the cost of risk and the slight decline in liquidity are variables to watch in the coming quarters. The Bank of Spain will continue to publish these statistics quarterly, with the next report corresponding to the second quarter of 2026.
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