Financial institutions are crucial players in the Bhutanese economy. However, little to no research has been conducted on the determinants of the performance of financial institutions in Bhutan to date, especially the COVID-19 pandemic (Yangchen et al., 2022). This research aims to address this gap by studying the impact of COVID-19, financial variables, and macroeconomic factors on the profitability of financial institutions in Bhutan. The panel data is collected from seven leading financial institutions (five commercial banks and two insurance companies) in Bhutan from 2018 to 2022. Random effects generalized least squares (GLS) regression was employed to conduct the empirical analysis focusing on dependent profitability indicators namely return on assets (ROA), return on equity (ROE), and net profit margin (NPM) and indicators of both financial and macroeconomic independent variables. The empirical results showed that Bhutanese financial institutions were resilient and were not significantly affected by COVID-19. The findings also revealed that non-performing loans (NPLs) and cost-to-income ratio (CIR) have a significant negative impact on the profitability of financial institutions in Bhutan, similar to previous research (Bhowmik & Sarker, 2024). The capital adequacy ratio (CAR) has a mixed relationship with profitability. Additionally, earnings per share (EPS) and statutory liquidity ratio (SLR) are found to have a marginal impact on profitability. On the other hand, asset size (LnTA), gross domestic product (GDP) growth rate, and inflation rate (INFL) are found to have insignificant effects on the profitability of financial institutions. The findings from this research provide useful recommendations and strategies to improve the profitability of financial institutions in Bhutan.