Notes from Stanislas de Bazelaire, Partner, on Fitch Ratings’ annual conference on Spanish banks, held in Madrid on 22 October 2026.
Is Spain’s economic outperformance relative to the eurozone sustainable?
Immigration-driven employment growth, rather than productivity gains, has been a key driver of Spain’s economic expansion since 2022, as Fitch Ratings highlighted at its annual Spanish banking conference in Madrid. GDP per capita growth has lagged headline GDP growth as a result, and has been broadly in line with the eurozone. Against a backdrop of persistent housing shortages, this outperformance may prove difficult to sustain. These structural weaknesses also explain Spain’s relatively low A3 sovereign rating at Moody’s, three notches below that of France.
On the positive side, high savings rates and strong exports have supported substantial private-sector deleveraging and a reduction in net external debt, with both roughly halving since the global financial crisis. This was the main driver of S&P’s upgrade of Spain to A+ in September 2025, on a par with France.
This matters for Spain’s public finances. Strong nominal GDP growth has supported a gradual decline in public debt to GDP, despite limited fiscal consolidation amid political fragmentation. If growth were to disappoint and deficits were to widen in the absence of active fiscal consolidation, the public debt trajectory could reverse and put pressure on Spain’s sovereign rating at Fitch.
What does this mean for Spanish banks’ credit ratings?
In short, Spain’s banking cycle may be approaching the peak of its expansionary phase. Loan growth has peaked for both households and companies after two and a half years of acceleration. Spanish banks enter this potential turn in the cycle with strong financial fundamentals, making rating downgrades unlikely in the near term, but the scope for further upgrades is likely to be limited.
Our thanks to Erwin Van Lumich and Fernando Sánchez García-Yanes of Fitch Ratings for organising an insightful event.
If you would like to discuss what the turn in the cycle means for your bank’s rating headroom, we would be glad to talk it through. Arrange a free, strictly confidential initial consultation via our contact page.