Europe’s largest banks are witnessing shrinking or stagnant revenues even as several lenders continue to post higher profits, according to a report by GlobalData, highlighting growing pressure on the region’s banking sector after the global interest rate boom.
The report found that 12 of the top 20 lenders across Europe, the Middle East and Africa (EMEA) recorded year-on-year declines in revenue in 2025, although many still managed to improve net income through restructuring, tighter cost controls and stronger performance in select business segments.
“Slowing loan growth, softer dealmaking activity and mounting geopolitical risks weighed on performance. While several banks continued to deliver double-digit profit growth, revenue momentum weakened across much of Western Europe,” Murthy Grandhi, Company Profiles Analyst at GlobalData, said.
France-based BNP Paribas remained the region’s largest lender by revenue despite a decline in top-line earnings. The bank, however, reported higher net income, supported by resilient corporate and investment banking operations and disciplined cost management.
HSBC Holdings also posted lower revenue and profit as weakening trade flows across Asia and continued stress in China’s property market weighed on business activity. The report noted that lenders which benefited significantly from higher global interest rates over the past three years are now seeing margin expansion moderate.
Spanish, UK Banks Show Resilience
Spanish lenders continued to outperform several European peers. Banco Santander reported strong profit growth despite flat revenue, aided by robust operations in Latin America and improved efficiency. BBVA also benefited from stronger earnings in Mexico, where higher rates and loan expansion supported margins.
In the UK, banks gained from resilient consumer spending and improved lending spreads. Lloyds Banking Group reported higher revenue driven by mortgage repricing, while NatWest Group and Barclays also recorded healthy profit gains.
French lender Societe Generale posted one of the sharpest profit recoveries following restructuring measures and reduced exposure to weaker-performing businesses, although revenue continued to decline.
Swiss banking major UBS remained focused on integrating Credit Suisse operations. Revenue fell during the year, but profits improved as restructuring and cost synergies started contributing to earnings.
Deutsche Bank more than doubled net income on lower litigation costs and stronger fixed-income trading, though weak industrial activity in Germany continued to constrain growth, the report said.
Russian Lenders Diverge From Regional Trend
Russian banks stood apart from broader regional trends. Sberbank recorded sharp growth in both revenue and earnings, supported by high interest rates and wartime economic conditions under capital controls.
“However, these are ruble-denominated businesses in a wartime economy under capital controls, with benchmark rates above 16 per cent,” Grandhi said.
The report added that VTB Bank also posted strong revenue growth, although profitability remained weak due to heavy losses linked to sanctions imposed after 2022.
GlobalData warned that EMEA lenders are likely to face tougher operating conditions ahead as geopolitical tensions, volatile energy prices and expected European Central Bank rate cuts pressure margins.
“Banks are likely to respond by accelerating digitization, cutting costs, and expanding wealth management and fee-based businesses. Diversified, fee-heavy groups like UBS, Santander and BBVA may prove more resilient than domestic lenders,” Grandhi added. |
