Spanish Banks Post Record €20.2 Billion H1 Profit, Defying Expectations

Record Half-Year for Spain’s Big Six Lenders

Spain’s six largest listed banks reported combined net profits of €20,164 million for the first half of 2026, an 18% jump from a year earlier and a new record that handily beat analyst forecasts. The surge was driven by a broad-based expansion of commercial activity, a recovery in net interest income as the European Central Bank began raising rates again, and robust fee generation.

Santander topped the table with €8,973 million, boosted by a one-off gain from the sale of its Polish unit and restructuring costs from the TSB acquisition. Even without those extraordinary items, underlying profit rose 15% to €7,328 million. BBVA followed with €6,051 million, an 11% increase, largely thanks to a strong performance in Mexico, which contributed 44% of group earnings and more than offset persistent inflation challenges in Turkey. Bankinter increased profits 12% to €605 million, while CaixaBank and Unicaja posted record results with gains of 8.5% and 7.1%, respectively. Sabadell was the only bank to miss year-on-year growth, with profit dipping 0.5% to €971 million, including a gain from TSB’s disposal; stripping that out, underlying profit fell 14% due to a weak first quarter following BBVA’s takeover bid.

Total revenues across the group climbed 9% to €65,470 million, helped by a 9% rise in net interest income as the ECB’s rate-cutting cycle ended and it began tightening again amid higher energy prices. Commission income also grew, with Bankinter and BBVA seeing the strongest increases at 16% and 14% respectively. CaixaBank, despite record earnings, saw its shares drop 7% on results day after it left medium-term guidance unchanged, disappointing investors who had expected an upgrade.

What Drove the Profit Surge — and Where the Next Challenges Lie

Interest Income Revival, but Not All Banks Benefit Equally

The end of the ECB’s rate-cutting cycle and the start of fresh hikes have breathed new life into lending margins. BBVA recorded the sharpest jump in net interest income, up 20%, while Santander posted a solid 7% rise. CaixaBank, Bankinter, and Unicaja saw more modest improvements, and Sabadell suffered a 2% decline, reflecting its lingering post-takeover hangover. All bank chiefs expect the momentum to build in the second half as monetary policy tightens further, but the variability shows that the rate tailwind is not a uniform boost—it favours those with the right loan mix and geographic exposure.

BBVA’s Mexican Engine and Turkish Headwinds

Mexico remains the crown jewel of BBVA’s portfolio, generating 44% of profit and allowing the bank to raise its full-year return-on-equity target to 21%. The strong performance more than compensated for Turkey, where inflation stubbornly hovers around 30%, squeezing margins and asset quality. That asymmetric reliance is a strategic double-edged sword: it powers current earnings but leaves BBVA exposed to any Mexican macro or political shock.

Sabadell’s Post-OPA ‘Valley’ and the Road Ahead

Sabadell’s disappointing first half reflects what new CEO Marc Armengol called a “valley” after the distraction of BBVA’s failed bid. Underlying profit excluding the TSB gain dropped 14%, showing that client and employee uncertainty took a real toll. Armengol insists the worst is over and that the bank remains on track for a 16% return by 2027, but regaining momentum will require a convincing commercial rebound and a clear strategic identity in a market where larger rivals are pulling ahead.

The Mortgage Investigation That Casts a Shadow

All the big bank CEOs dodged questions during results presentations about their mortgage strategies, a sensitive subject after the national competition authority (CNMC) opened an investigation into possible anti-competitive practices in that market. The probe could lead to fines, forced changes in pricing behaviour, or reputational damage just as banks are hoping to capitalise on recovering credit demand. Even if the investigation takes months, it injects regulatory uncertainty into a key profit driver.

What the Results Mean for Investors, Lenders, and Borrowers

• For investors: Santander’s CET1 capital ratio improved by 1 percentage point to 14%, giving it extra capacity for shareholder returns or bolt-on deals. BBVA’s upwardly revised guidance signals management confidence, though exposure to Mexican risk merits monitoring.
• For competitors and lenders: CaixaBank’s addition of over 1.1 million clients in 12 months shows aggressive market-share gains—rivals may need to respond with sharper pricing or digital offerings to prevent further erosion.
• For mortgage holders and borrowers: The CNMC probe could, over time, lead to more transparent or competitive mortgage pricing, but the immediate effect is uncertainty. If ECB rate hikes continue as expected, borrowing costs will rise regardless, so locking in fixed-rate terms ahead of further tightening may be prudent.
• For Sabadell stakeholders: The next two quarters are critical: the bank must demonstrate that its underlying revenue engine is mending after the OPA disruption and that cost discipline can lift profitability toward the promised 16% target.