Europe’s leading banks are catching up with US competition

The ten largest European banks in terms of total assets increased their net profits by 80 percent to 75 billion euros in the first half of the year. This is by far the highest value in the past ten years, writes the consulting firm EY. On the one hand, the jump in profits was driven by interest rate increases by the central banks. The major Swiss bank UBS also made a significant contribution to this, earning the equivalent of 27.4 billion euros from the takeover of its competitor Credit Suisse (after 2.1 billion euros in the previous year). This meant that Europe’s major banks caught up with US competitors: their profits grew by seven percent to the equivalent of 82 billion euros.

In terms of profitability, Europe’s banks overtook their US competitors for the first time in ten years: the return on equity (RoE) was 15.5 percent as of June 30, an increase of 5.9 percent. This development can also be attributed to UBS’s greatly improved results. The ten US banks achieved 12.6 percent RoE. The return on equity puts the profit in relation to the equity capital invested.

The best earner among all 20 banks analyzed was UBS, ahead of the US bank JPMorgan Chase (equivalent to 24.8 billion euros).
US banks are still worth more on the stock market: their market capitalization is 1.15 trillion euros. For Europe’s banks it was 522.5 billion euros.