Recently published figures on domestic banking business in Spain from 2025 show that while profitability is maintained at a healthy level, the nature of interest types has translated into result sheet.
Thus, if the return on capital (ROE, in English abbreviation) was 14.1% in 2024, it dropped to 13.3% in 2025. In absolute terms, the benefit (the result of the exercise) decreased by 1.3% to 32,584 million euros.
Meanwhile, the 12-month Euribor in 2024 will be 3.27% and in 2025 it fell by more than one percentage point to 2.22%. If I produce according to the benchmark type of the ECB (marginal deposit facility), which managed to reach 4% in 2024, I will continue to reach 3% until the end of the year and follow it to 2% in 2025.
In this context, the margin at the intermediary that is a bank increased from 1.40% of assets in 2024 (the peak 20 years ago) to 1.25% in 2025. This is the reason for the interest margin, which explains the higher average revenue margin in 2025.
Gross margin, which includes other common products in the interest margin, including those that include dividends, commissions and premiums on twenty assets, fell even more. This current gross margin lost 19 basis points in 2025, from 2.53% to 2.34%.
In the case of commissions, there was a slight decrease in asset weight as they increased by 4.5% due to a 4.9% increase in assets. Por su parte dividends paid by the bank decreased by 11% and they are the component that explains that, in addition, total net income other than the number of interests increased by only 0.9%, in a way that lost its weight in assets (from 1.14% to 1.09%).
Another outcome score scale reveals the raw materials of deployment, among those that separate personnel. In 2025, the bank implemented cost containment efforts that resulted in cost containment efforts for the active unit.
They also reduced allocations to worse financial assets (16% in cases), so both the reduction in average costs and lower provisioning needs were able to partially (but not fully) offset the decline in gross margin, with net margin (the result of exploitation) increasing from 1.32% to 1.21%.
Allowance for impairment due to financial asset impairment has turned negative, supporting profitability. This effect combined with the impact of taxes and other concepts (as atypical) assumes a benefit rate of 1.3%, which in 2025 is, as you said, at 32,584 million euros, which is the ratio of assets (ROA) is 1.06% (1.13% in 2024).
As the average expense ratio was lower than the gross margin (for active unit), the efficiency of bank management was affected and the operating efficiency ratio fell from 38.4% to 40.8%. What this increase in ratio means is this In a Spanish bank, you get 2.4 euros or more than 100 euros in net income.
However, it is a small ratio (i.e. greater management efficiency) compared to our European competition. The efficiency indicator of the Spanish bank in 2025 (for consolidated units, and thus including the business of branches abroad, so that the comparison is homogeneous with a European bank) is therefore 42.5%, 11 points lower than the EU-27 (53.3%) and clearly lower than that of German, French and Italian banks.
Until 2025, it is good to be aware of the risk of a loan default fee. It settled in cash at 3.25% and ended at 2.69% in December by a combination of depository entities. This form has returned to the level I was at in October 2008.
In this context, with improving asset quality, it is understood that losses due to the deterioration of financial assets will decrease by 16.8% in 2025, which will contribute positively to the development of revenues.
In short, the analysis of the scorecard shows that the decline in profits that occurred from 2024 to 2025 was mainly due to the ratio of interest margins, which remained at 1.76 percentage points (pp) to ROE (which, as we saw, fell by 0.78 pp). También remained income the development of income differentiated by the number of interests with a negative contribution of 0.49 pp.
On the other hand, the elements that contributed positively to profitability are the development of gas exploitation (contributing 0.55 pp), the least necessary health needs (0.39 pp) and other miscellaneous results (0.55 pp), in the context we note the number of types of interests and the cost of morosidad.
Breakdown of the change in financial income (ROE) from 2024 to 2025.
However, the stagnation that accompanies an energy shock implies a deterioration in asset quality with an increase in arrears, less lending activity and also a loss of asset value for the immediate type. This is a second macroeconomic path of impact that will undoubtedly highlight profitability in the context of greater financial instability.
The key is during the conflict. The truth is that the Spanish bank is part of a solid position with sufficient capital levels face adverse scenarios and also test the tests you have taken before.
*** Joaquín Maudos is Professor of Economics at the University of Valencia, Deputy Director of Ivie and Associate of CUNEF.
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