Spanish Banks Drive IBEX 35 to Record Highs

Spain’s IBEX 35 closed on Friday (16 May) above the 14,000-point mark for the first time since 2008, extending a 21.7% rally since January that outpaces the EuroStoxx 50’s 10.6% year-to-date gain.

The gains are largely driven by financial stocks, which represent 36.34% of the index. Santander [SAN.E], Bankinter [BKT.E], Caixabank [CABK.E], and BBVA [BBVA.E] have all notched strong double-digit advances so far this year.

While past performance is no guarantee of future results, traders may want to see what’s driving one of Spain’s most popular indices upwards.

Tailwinds for Spain’s Banking Stars

Banks are dominating the IBEX 35 rally. Santander is leading the pack with a 57.9% rise YTD. The bank reported a 14% increase in full-year 2024 profits versus 2023, followed by a record first quarter in 2025 — up 19% compared to 1Q24.

Bankinter ranks second, up 52.2% year-to-date. Its strong 2024 finish — with net profit up 12.8% — set the tone for a solid start to 2025. First quarter results released at the end of April showed a 34.5% jump in net income versus 1Q24.

BBVA comes in third, with shares up 43.4% so far this year. The bank posted a 22.7% jump in first-quarter profit compared to the same period in 2024. Its rally is also happening amid its hostile takeover bid for rival Sabadell.

Caixabank is so far the laggard among the big four, with a 45% YTD rise in share price. Still, the bank delivered a 46.2% increase in 1Q25 profit versus a year earlier, underscoring the sector-wide momentum. (Source: Cincodias)

BBVA-Sabadell Takeover Bid Enters Final Stage

BBVA’s bid for Sabadell has cleared antitrust scrutiny and now rests with the Ministry of Economy, which has just wrapped up a public consultation on the deal’s broader social, economic, and employment impact.

The ministry is expected to send its recommendation to the cabinet by Tuesday, 27 May. The cabinet will then have until the end of June to issue a final verdict — approving the deal, tightening the conditions, or blocking it altogether.

Under the current offer, Sabadell shareholders would receive one newly issued BBVA share plus EUR 0.70 in cash for every 5.3456 Sabadell shares they tender. (Source: BBVA)

Insurer Mapfre Also Shines 

Spain’s financial services rally isn’t just about the big banks — insurers are part of the story too. Mapfre [MAP.E] stands out as the top performer in the group, with shares up 40.8% YTD.

The company’s surge is underpinned by very positive earnings growth. Mapfre closed 2024 with a 29% increase in net profit versus the previous year, and kept up the pace in 1Q25, posting a 27.6% rise from the same period in 2024. 

Conclusion

The IBEX 35’s rally in 2025 has been driven largely by a resurgent financial sector, with banks and insurers delivering strong earnings and market outperformance. While the index has yet to reclaim its 2007 record, the gap is narrowing.

Investors are responding to robust 2024 results and a solid first quarter this year, but also to potential structural shifts with BBVA’s pending takeover of Sabadell. If completed, the deal would significantly expand BBVA’s size.

Whether the rally continues will depend on how these dynamics evolve in the weeks ahead.

*Past performance does not reflect future results.