Large European banks maintained strong financial performance in 2024

Large European banks maintained strong financial performance in 2024, supported by an improving macroeconomic environment, resilient operating models, and strategic adaptations to shifting market conditions. That is according to analysis by Eurogroup Consulting.

For its study, Eurogroup Consulting analysed the results of the 22 largest European banks to assess financial performance and developments in the sector. This includes banks such as Barclays, Deutsche Bank, UBS, BNP Paribas, ING, HSBC, and Santander.

The researchers found that top-line growth for group revenues remained positive, with the sample of studied banks recording robust growth in both income and net income, with the compound annual growth rate for the period 2022-2024 at 7.6% for revenue and 14.9% for net income.

Larger banks, those with revenues greater than €30 billion, drove most of these gains recording 7.4% revenue growth, compared to 5.0% for banks with revenues of less than €20 billion.

Revenue growth was driven by a combination of higher net interest income, expansion in corporate and investment banking, and increased fee-based income, said Eurogroup Consulting.

“Many institutions benefited from the higher interest rate environment, which boosted their earnings from loans and deposits. Banks such as Standard Chartered, ING, and NatWest reported steady net interest income growth, while others, including BNP Paribas and Deutsche Bank, saw a greater share of revenue gains from wholesale banking,” noted the authors.

The growth in digital banking and payments further supported revenues, with ING and NatWest gaining millions of new mobile banking customers, leading to higher transaction volumes and cross-sell opportunities.

In terms of banking segments, Eurogroup Consulting differentiates between three domains: Retail, Wholesale, and Asset & Wealth Management. In 2024, wholesale banking managed to grow faster than the other banking segments.

Revenue and Cost performance

The positive revenue growth translated to a positive jaws ratio for most of the banks in the panel of 22 banks, and at the same time, most banks managed to curb their costs – meaning that their C/I ratio improved. A positive jaws ratio and a relatively low C/I ratio demonstrates positive cost management and revenue generation dynamics while a negative jaws ratio and relatively high C/I ratio signals deteriorating efficiencies.

“With the exception of a few outliers, there was a positive relationship between Jaws and the C/I ratio in 2024,” said Eurogroup Consulting. “This relationship suggests that several banks have high starting cost bases, or revenue growth is derived from lower margin banking activities, or profitability gains have only gradually begun to be realised after one-off restructuring or transformation costs.”

Outlook

Looking ahead into 2025, the research noted that evolving macroeconomic conditions, a shifting operating environment, inflation and interest rates, and competitive dynamics will continue to shape the path of the banking sector. With a robust financial foundation, the European banking sector is across the board in good shape to navigate these developments.