Spanish Banks Thrive with Record Profits in 2025 Amidst Low-Interest Rates

In a remarkable turn of events, major Spanish banks including Santander, BBVA, CaixaBank, Sabadell, Unicaja, and Bankinter have collectively achieved a staggering net profit of 34 billion euros in 2025, reflecting a 70% increase from 2024's earnings of 31.7 billion euros. This impressive profit surge was attributed to resilient revenue streams that withstood a challenging low-interest rate environment while maintaining robust commercial activity. The six banks listed on Spain's Ibex 35 index made significant strides in containing costs through effective digitalization strategies, which have led to an improved efficiency ratio across the board. This financial resilience has solidified profitability levels not witnessed in years, allowing banks to accelerate shareholder remuneration. Banco Santander, under the leadership of Ana Botín, outshone its peers by recording a record net profit of 14.1 billion euros in 2025, marking a 12% rise from the previous year and a 16% increase when considering constant euros. The bank's revenue growth was underscored by a notable increase in net commissions, which reached a historic 13.66 billion euros, up by 5%. Its return on tangible equity (RoTE) was reported at 16.5%, excluding Additional Tier 1 capital. In conjunction with these results, Santander announced the acquisition of American Webster Bank for approximately 12.2 billion dollars (10.3 billion euros), with ambitions to elevate profitability to 20% by the end of 2028. Furthermore, the bank initiated a significant share buyback program amounting to 5 billion euros, part of a commitment to execute purchase programs totaling 10 billion euros based on its results and surplus capital. On the other hand, BBVA concluded 2025 with record profits amounting to 10.51 billion euros, an impressive 45% increase compared to the previous year. This increase followed a year marked by a failed takeover bid for Banco Sabadell. The bank showcased a remarkable profitability of 19.3%, accompanied by a 41% growth in its gross margin, totaling 36.93 billion euros. The interest margin rose by 4% to reach 26.28 billion euros, while net commissions soared by 28% to 8.21 billion euros. CaixaBank also reported a profitable year, announcing net profits of 5.89 billion euros in 2025, an 18% increase over 2024. This achievement was primarily attributed to robust growth in business endeavors, with profitability standing at 17.5%. Although the interest margin saw a decrease of 3.9% to 10.67 billion euros, the bank signaled positive trends in the latter half of the year, with gross margin growth of 25% to 16.27 billion euros. Conversely, Banco Sabadell saw its net profit shrink to 1.775 billion euros, reflecting a 28% decrease mainly due to extraordinary impacts of 109 million euros recorded in 2024. Without this extraordinary effect, profits would have increased by 34%. The group’s overall profitability ended the year at 14.3%, with forecasts indicating a rise to 14.5% in 2026, excluding TSB, its UK subsidiary, which is set to be integrated into Banco Santander. Sabadell's banking revenues, consisting of interest margins and net commissions, fell by 25% to 6.221 billion euros, resulting from a 37% decline in interest margin, down to 4.837 billion euros. However, net commissions rose by 2%, reaching 1.384 billion euros, bolstered by revenue from asset management and insurance. Bankinter reported a net attributable profit of 1.09 billion euros for the year 2025, which is a significant increase of 14.4% compared to the prior year's earnings. The bank's gross margin increased by 5% to 3.047 billion euros, although its interest margin contracted by 18% to 2.237 billion euros. The RoTE reached an impressive 20%, with an improved efficiency ratio of 36.09%. Meanwhile, Unicaja’s performance also showed positive growth, achieving a net profit of 632 million euros in 2025, compared to 573 million euros the previous year, translating to a 10.3% increase. The interest margin closed at 1.495 billion euros, up by 1%, while the gross margin rose by 26% to 2.095 billion euros. Unicaja also announced plans to increase its shareholder payout from 60% to 70%, with a potential additional allocation of 25% of its profits for shareholder remuneration through 2026 and 2027, aiming for a 95% payout. In conclusion, 2025 has proven to be exceptionally fruitful for the Spanish banking sector, demonstrating resilience and adaptability in a low-interest-rate landscape while ensuring profitability and shareholder rewards. Related Sources: • Source 1 • Source 2