Moody's Investors Service said it was keeping a "negative" outlook on the Spanish banking industry, imposed since 2008.
The banks' balance sheets were strewn with red ink after a 2008 property crash, forcing the government to prop them up with €42 billion ($54 billion) in rescue loans offered last year by its eurozone partners.
Nevertheless, their prospects remain bleak.
"Over the next 12–18 months, we believe that the banks will continue to operate in a recessionary economy, burdened by high levels of non-performing assets that are expected to significantly deteriorate further across all asset classes," Moody's said in a report.
This in turn would put pressure on banks' profits and capital levels, the rating agency said.
In addition, Spanish banks are unable to obtain market financing in normal conditions, forcing them to lean on the European Central Bank. The banks have "sizeable" holdings of Spanish government bonds, which are rated just above junk-bond status by Moody's.
"Improved bank capital levels, partly because of current recapitalization efforts, do not fully offset these sources of rating pressure, especially if the economy does not improve notably during 2013," the agency said.
"This results in an ongoing negative outlook for the domestic Spanish banking system."
Moody's said the eurozone's rescue loan, which is financing the recapitalization of troubled Spanish banks, demonstrated that Spain was unable to fund such support itself.
The sovereign debt and banking crisis in Cyprus, where depositors and senior bondholders had to share in the cost of the bailout, now raises a doubt over how much protection senior creditors would have if Spain hit serious trouble, Moody's said.
"The bail-in of senior bondholders and depositors in Cyprus suggests that when banking system support needs to come from multi-lateral sources because the sovereign cannot raise the funds itself, multi-lateral lenders may be more inclined to seek burden sharing with both junior and senior creditors," it said.
"Hence, the likelihood of senior creditor support in cases where banking distress is likely to occur concurrently with sovereign distress may now be lower than previously assumed."
Non-performing loans for the Spanish banking system fell to 10.4 percent of total loans at end-December 2012, from 11.4 percent the previous month but only because banks' problematic real-estate linked assets were transferred to a new "bad bank", Sareb, the agency said.
"Excluding transfers to Sareb, problem loans remain on an upward trend that Moody's expects will continue," Moody's said.
The credit rating agency foresaw "weak" profits for Spanish banks over the next 12–18 months.
The Spanish Banking Association, which groups almost all significant deposit banks operating in the country, has predicted profits this year after its members reported a net loss of €1.65 billion in 2012.
Banks' bottom lines were weighed down by nearly €43 billion in write-downs last year on the value of their exposure to the Spanish property sector.
The banks boosted their rock-solid core capital to 10.5 percent of total assets in 2012, however, from 9.8 percent a year earlier and just 6.1 percent at the end of 2007.