Spain

Spain's banking system is concentrated and dominated by three large groups: Santander, BBVA and CaixaBank. The five largest credit institutions held 67.4% of sector assets in 2025, according to ECB structural indicators, and 184 credit institutions were registered in August 2026. Banco Sabadell and Bankinter complete the listed tier. Santander and BBVA operate large international franchises, while CaixaBank's business is predominantly domestic. Resident banks' assets reached €3.43tn in August 2026, and the sector's consolidated balance sheet grew 4.7% in 2025.

International earnings are a defining feature. BBVA reported 2025 net attributable profit of €10,511m, of which €5,264m came from Mexico against €4,175m from Spain, and a CET1 ratio of 12.70%. CaixaBank, the largest domestic lender, earned €5,891m with a 17.5% return on tangible equity and a 12.6% CET1 ratio. Sector net interest income fell in 2025 as the 2024–25 ECB rate cuts passed through, although the decline moderated during the year and was offset by higher fees and other operating income.

Banco de España's Spring 2026 Financial Stability Report shows consolidated sector profit up 6% in 2025, a return on equity of 14.3% and a return on assets of 0.95%. The CET1 ratio rose 0.5 points to 13.9%, still below the European average, and the leverage ratio held at 5.7%. Credit quality improved: the NPL ratio on domestic lending fell to 2.8% and the stage 2 ratio to 5.8%, while lending to households, firms and the self-employed grew 3.6%, up from 0.8% in 2024.

Key risks are margin compression, sector taxation and geopolitics. Spain levies a tax on banks' net interest income and net fees and commissions; BBVA alone accrued about €149m for it in the first half of 2026. Banco de España notes that net interest income will increasingly depend on the monetary policy response to energy-driven inflation, and that non-recurring gains from hyperinflation adjustments in Argentina and Türkiye flattered 2025 earnings. Direct exposure to the Middle East is limited.