European Banks Outpace US Competition in Interest Income, Narrowing the Market Capitalization Gap

European Banks Experience Increased Interest Income Thanks to Competition from US Banks

The net profit of the ten largest banks in Europe, based on total assets, increased by 29 percent last year, totaling almost 100 billion euros. This marked the highest value in the past decade. In comparison, the ten largest US institutions saw a four percent increase in net profit, amounting to around 146 billion euros.

The major Swiss bank UBS followed closely behind the US bank JPMorgan Chase in terms of consolidated earnings. EY partner Ralf Eckert noted that European banks significantly closed the gap with their US counterparts in key metrics, particularly benefiting from the increase and normalization of interest rates. For the first time in a full year, major European banks were able to match the profitability of their US competitors, with a return on equity of 10.9 percent.

Despite this progress made by European banks, US institutions still hold a significant lead on the stock market as of December 31st, 2023. The total market capitalization of the ten US banks was 1.32 trillion euros compared to 551.6 billion euros for the ten European banks. The market value of US banks continued to rise in the current year further widening the gap between them and their European counterparts.

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