The Bank of Spain reported that credit institutions operating in Spain maintained favorable solvency, liquidity, asset quality and profitability in the second quarter of 2026. The Common Equity Tier 1 ratio stood at 14.11%, up from 13.75% a year earlier, while the liquidity coverage ratio rose to 171.07%, well above the 100% regulatory requirement. The bad loan ratio fell to a series low of 2.53%, and annualized return on equity reached 16.05%. Total capital remained close to historical highs at 18.3%, although modest declines in solvency and leverage ratios from the previous quarter reflected growth in exposures and risk weighted assets that outpaced eligible capital. The leverage ratio declined by 0.14 percentage points to 5.60% but remained above its post-pandemic average. Asset quality also improved beyond the headline bad loan measure, with the share of Stage 2 loans falling to 5.69% from 5.83% in the previous quarter, while the cost of risk was broadly stable at 1.03%. Excluding nonrecurring gains recorded in the first quarter, return on equity increased from 14.78% in March to 16.05% in June.
Bank of Spain reports record low 2.53% bad loan ratio alongside elevated capital, liquidity and profitability
The Bank of Spain reported elevated capital, liquidity and profitability across credit institutions operating in Spain in the second quarter of 2026. The bad loan ratio reached a record low of 2.53%, while the Common Equity Tier 1 ratio was 14.11% and the liquidity coverage ratio stood at 171.07%. Annualized return on equity reached 16.05%.