As economic enterprises and suppliers, banks have always pursued profitability; however, banks’ profitability may be affected by specific risks and bank health. This paper used the panel data quantile regression to estimate the effect of bank health on profitability in 20 banks and credit institutions listed in Tehran Stock Exchange within the 2009–2022 period. The results revealed that bank health affects the conditional profitability of banks’ profitability, and there is a significant positive relationship between Z-score and Return of Total Asset (ROA). An increase in Z-score, which shows bank health, raises banks’ profitability. On average, when EOA rises, credit facilities require a greater part of the banking assets and profitability. In addition, Equity to Asset Ratio (EOA) decreases toward the right side of the profitability distribution showing that constant decrease in the capital requirements lowers bank health and profitability. Non performing loans (NPL) and service charges have a significant negative effect on bank health and profitability, and an increase in the quality of assets and a decrease in the expenses raise banking risks. The policy implications of this paper suggest that bank managers, policymakers, and economic experts should develop clear and specific policies for lending and timely repayment of loan installments by customers to manage credit risk and prevent liquidity crises. Also, to manage operational risk, each bank should maintain an appropriate level of prudential capital to prevent bank failure.