List of Europe's financially best performing banks

09 June 2020 Consultancy.eu

Having analysed the financial metrics of Europe’s largest banks, Roland Berger has created a list of what it believes to be the continent’s top performing banks.

Across the banking landscape, the researchers found that 2019 was a relatively good year. 17 of Europe’s 20 largest banks increased their capital position (CET1 ratio), while 13 and 14 banks respectively improved their OPEX-to-assets ratio and leverage ratio. Here are the region five leading performers: 

1. KBC

According to the analysis, Belgium’s KBC is Europe’s financially most solid bank, performs exceptionally well on the metrics of risk-adjusted CIR, leverage ratio, CET1 ratio and ROE – all performing 20% above the average of the banks assessed.

With 38,000 staff and around 11 million customers worldwide, the majority of which are in Belgium, Ireland and Central Eastern Europe, KBC is the 18th largest bank in Europe by market capitalisation. The bank was founded in 1889 as the Catholic Volksbank van Leuven, and a string of domestic and international acquisitions and mergers has developed the bank into its current form.

List of Europe's financially best performing banks

2. ABN AMRO

For the second year in a row, ABN AMRO has been named Europe’s second most financially robust bank by Roland Berger. The bank has a strong capital position in particular, with a CET1 ratio of 18%, way above the average of 14.3%, and a relatively solid ROE rate of 9.4%. 

The Amsterdam headquartered bank is the third-largest bank in the Netherlands behind ING and Rabobank , and is currently still partly state-owned following the bank’s nationalisation by the Dutch government after the collapse of its parent Fortis. In 2015, ABN AMRO was relisted as a public company again, but the government still holds a stake.

ABN AMRO has around 18,000 employees and is currently led by former PwC partner Robert Swaak.

3. ING

Labelled one of the most consistent performers in the annual list of top performing banks, the Netherlands’ largest bank ING scores well on its OPEX-to-assets ratio (1.2% compared to the average of 1.4%) and risk-adjusted CIR (60.2% compared to the average 71.4%).

With total assets of US$1.1 trillion, ING ranks among the top 30 largest banks globally, and the top ten in the list of largest European companies by revenue. The financial services group has banking activities in the segments of retail banking, direct banking, commercial banking, investment banking, wholesale banking, private banking and asset and wealth management. 

4. Rabobank

Another Benelux-based bank to rank in Europe’s top financial performers, Rabobank managed to improve its position in the ranking from 6th place in 2018 to 4th place last year. The financial institution stands out for a strong leverage ratio in particular (5.7% compared to the average 4.5%), and above average performance across other metrics. Meanwhile, the bank benefited from a deteriorated performance of Danske.

The Utrecht-headquartered bank is organised as a cooperative, with a central organisation steering a federation of local credit unions. In the Netherlands the bank serves all client segments, and internationally food and agribusiness constitute its primary focus. Rabobank employs around 40,000 employees. 

5. HSBC

Number five on the list HSBC is Europe’s largest bank by asset base, ahead of French banks BNP Paribas and Crédit Agricole. The British multinational bank was established in London by the Hongkong and Shanghai Banking Corporation, and today has operations in over 60 countries serving to the tune of 40 million customers.

In Roland Berger’s list, HSBC has seen its performance improve over the past two years. 

Other top performers

The top 10 of best performing banks is rounded off by RBS, BBVA, Danske, Barclays and CreditAgricole. German giant Deutsche Bank and Swiss giant UBS rank notably low in the list, underperforming their peers on a range of financial metrics. 

Covid-19’s impact on banking

With their deep insights in banking financial performance, Roland Berger has – not surprisingly – issued a blunt warning to banking executives to not take Covid-19’s impact too lightly. While they can build on much stronger buffers as compared to the previous crisis of 2008, the impact of Covid-19 will be “huge”, including pressures on profitability, liquidity and solvability.

Notably, the crisis will also increase the loan loss provisions banks have to take to curb the losses they will face from non-performing loans and assets. Many banks in Europe already faced a high percentage of non-performing loans (NLPs), in particular in Greece, Cyprus, Bulgaria, Hungary, Ireland, Italy, Portugal and Slovenia, and this percentage is only expected to increase in the coming months. 

As seen in other markets, the winners in Europe’s banking landscape will be “those that turn Covid-19 into an opportunity to accelerate their digital ambitions,” said Mark de Jonge, a partner at Roland Berger. “On the one hand to meet the accelerated growth in client demand for digital solutions, and on the other hand to seize the opportunity to make their operating models more efficient.”