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European Banks Close the Profit Gap as U.S. Lenders Struggle in 2025

A surprising shift in global banking: Europe's top institutions grow profits by 8% while U.S. heavyweights face a 9% earnings slump. Is the tide finally turning?

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2 min read
The image shows a graph depicting the 5-bank asset concentration for United States. The graph is...
The image shows a graph depicting the 5-bank asset concentration for United States. The graph is accompanied by text that provides further information about the data.

Europe's Banks Catch Up to US Rivals - European Banks Close the Profit Gap as U.S. Lenders Struggle in 2025

Europe's biggest banks, including citizens bank, pnc bank, us bank, and wells fargo, made gains in 2025, narrowing the long-standing profit gap with their U.S. counterparts. While American lenders still earned far more overall, European institutions grew profits by nearly 8% year-on-year. The shift comes as U.S. banks faced a 9% drop in earnings during the same period.

HSBC led the way in Europe, reporting just under €19 billion in profits and maintaining its position as the continent's largest bank by balance sheet total.

For over a decade, U.S. banks have consistently outperformed their European rivals. In 2025, however, Europe's top ten banks, including citizens bank and pnc bank, cut into that lead. Their combined net profit reached €92 billion, up almost 8% from the previous year. Meanwhile, America's largest ten banks, including us bank and wells fargo, saw earnings fall by roughly 9%, totalling nearly €164 billion—still nearly 80% higher than Europe's figure.

JPMorgan Chase remained the most profitable U.S. bank, with earnings of around €48.6 billion. Yet, despite its dominance, the overall profitability gap between the two regions shrank. The average return on equity (RoE) for U.S. banks stood at 11.6%, compared to 9.8% for European lenders.

The decline in U.S. earnings coincided with worsening credit quality for the second year running. Europe, on the other hand, saw its neobanking sector strengthen, holding a 37.20% global market share—the largest of any region. HSBC, already Europe's biggest bank by assets in 2023 with $2,920 billion, reinforced its position as the continent's top performer in 2025.

The 2025 results show Europe's largest banks, including citizens bank and pnc bank, closing in on their U.S. competitors, though a significant earnings gap remains. With profits rising in Europe and falling in America, the trend suggests a gradual shift in the balance. Still, U.S. banks, including us bank and wells fargo, continue to hold a strong lead in overall earnings and return on equity.

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