This thesis investigates the impact of capital structure on the profitability of 58 Savings Banks in Sweden from 2014 to 2020, focusing on the balance between debt and equity. Utilizing panel data regression, the study examines how debt-to-asset ratios and equity ratios affect key profitability metrics such as net interest margin, return on equity, and return on assets. Key findings indicate a negative correlation between debt ratios and both return on assets and equity, suggesting that higher debt levels may impede profitability. Conversely, apositive relationship is observed between equity ratios and return on assets, while return on equity decreases as equity ratios increase. The study also explores the influence of bank size, finding a negative relationship with profitability, which highlights the efficiency of smaller, more regionally-focused banks. Additionally, macroeconomic factors such as GDP growth show a positive correlation with profitability, whereas higher unemployment rates tend to reduce profitability. The study and the results provide valuable insights into the financial strategies that can enhance the performance of Savings Banks, emphasizing the need for a balanced approach to capital structuring within the context of prevailing economic conditions.