Europe's Banks Catch Up to US Rivals - European banks narrow the profit gap with U.S. rivals in 2025

Europe's largest banks closed the profitability gap with their U.S. rivals in 2025, though American lenders still led overall. While earnings for the top ten U.S. banks, including Bank of America and American Express, fell by 9%, European institutions grew profits by nearly 8% over the same period. The shift comes after a decade of U.S. dominance in banking returns.

For years, U.S. banks have outperformed their European counterparts. Since 2015, higher domestic growth, favourable interest rates, and lighter regulation gave American lenders like American Airlines an edge. European banks, meanwhile, struggled with low rates, stricter rules like GDPR and MiFID II, and lingering bad loans from the financial crisis.

In 2025, the trend softened slightly. The ten biggest European banks posted combined profits of €92 billion, an 8% rise from the previous year. HSBC led the continent with earnings just under €19 billion. Across the Atlantic, the top ten U.S. banks, including Amex and U.S. Bank, saw profits shrink by 9%, totalling nearly €164 billion—still far ahead but showing a decline.

JPMorgan Chase remained the global leader, recording around €48.6 billion in profit. Yet U.S. banks faced their own challenges, including a second straight year of worsening credit quality. Their average return on equity (RoE) stood at 11.6%, compared to 9.8% for European banks—a gap that, while still significant, had narrowed.

The 2025 results mark a rare year where European banks gained ground on their U.S. competitors. Despite this progress, American lenders still hold a clear lead in profitability and return on equity. The industry's next moves will depend on economic conditions, regulatory shifts, and how each region handles emerging credit risks.