European Banking Performance | March 2026

Explore our new study European Banking Performance

Resilient performance in 2025 despite a less supportive macro backdrop:

Inflation moderated and policy rates broadly plateaued following late-2024 cuts, reducing the tailwind from higher rates. Nonetheless, investor sentiment remained strong, with European banks significantly outperforming the broader European equity market.

Revenue growth increasingly offset by cost pressures:

Total revenues across our panel reached €641.8 bn (+4.7% vs. FY23), driven primarily by investment banking. However, pre-tax profit rose by only +2.5% to €236.8 bn, indicating that profitability is becoming less cyclical and more reliant on structural levers.

Operational efficiency as a key differentiator:

Performance dispersion remains wide, with “jaws effects” ranging from +11.5% to -12%. The average jaws effect across our panel has deteriorated significantly, and scale alone is no longer a guarantee of superior performance.

Diverging capital allocation strategies:

The sector is splitting between banks prioritizing capital returns (c.€15.8 bn in share buybacks announced for 2026 by eight banks in our panel) and those pursuing consolidation through M&A, reflecting either confidence in the resilience of their business model or the need for strategic transformation.

2026 outlook | sustainability and differentiation:

Winners will be those able to convert recent performance into durable structural improvements, strengthening top-line momentum, delivering productivity gains, and maintaining disciplined risk and ESG management.

Download the full study conducted by our Partner Matthieu Prieuret in collaboration with our consultants Dillon Oppon-Ferguson et Thomas Trenel.

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Matthieu Prieuret

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