European banks remain resilient while investing in AI and sustainability
Amsterdam, September 15, 2025. In a persistently challenging environment marked by economic uncertainty, regulatory change, and geopolitical tensions, the BearingPoint Banking Study 2025 finds the European banking sector to be both resilient and forward-looking. The study of 163 institutions across Europe shows that banks strengthened their liquidity compared to the previous year, stabilized or even increased net profits, and are accelerating investment in technologies such as AI while making sustainability a strategic priority.
The results show that European banks are not only withstanding today’s challenges but are also setting the course for the future. This is a positive signal for the entire European economy.
Robert Bosch, Partner and Global Leader Banking & Capital Markets at BearingPoint
More capital, higher profits, stable earnings
The average total capital ratio rose to 23.5 percent in 2024, up from 23 percent in 2023 and 22 percent in 2022. Institutions were able to strengthen their equity capital, with prior-year profits enabling a 4.7 percent increase in 2024. Germany (+15.4 percent) and Mediterranean countries (+11.7 percent) stand out in particular.
Earnings also remain stable. Many banks maintained or expanded net profits despite rising costs, with fee and commission income becoming an increasingly important complement to net interest income, again.
Strong liquidity position and stable profits show stress resilience
The eighth BearingPoint study shows that banks were able to improve their liquidity indicators further. The average liquidity coverage ratio (LCR) rose to 230 percent, indicating the sector’s stability. The difference between large and small banks is striking: while large banks operate with an LCR of 167 percent, smaller institutions take a more conservative approach with values of up to 270 percent. Structurally, banks are also succeeding in using stable refinancing sources. The net stable funding ratio (NSFR) averaged 146 percent in 2024, rising – like the LCR – for the third year in a row (2023: 144.5 percent, 2022: 143.9 percent).
Investments and innovation
After years of implementing cost-cutting measures and efficiency improvements necessitated by the low-interest-rate environment, banks are now investing heavily, particularly in IT infrastructure. Artificial intelligence is gaining momentum: For example, Deutsche Bank’s AI-based fraud detection system achieves 97 percent accuracy and has reduced document processing time by 40 percent.
Agentic AI is emerging as a key development, operating autonomously within defined parameters. Forecasts suggest that by 2030, a significant share of financial interactions in developed economies will be carried out by agent-based systems capable of making complex financial decisions, assessing risks, and developing individual financial strategies.
Sustainability as a strategic advantage
Another sign of change in the industry is the growing importance of sustainability. The green asset ratio (GAR), a required disclosure since 2024, shows that sustainability is no longer a niche issue. However, a bank’s sustainability performance is only partially reflected in the GAR.
Sustainability is not only a regulatory requirement but also a strategic advantage. Banks that actively manage ESG risks and promote sustainable financing are positioning themselves for the future.
Alexander Beck, Partner at BearingPoint and co-author of the study
Cost-income pressures and non-performing loans
However, the study also reveals less positive trends: the cost-income ratio (CIR), a key indicator of profitability, deteriorated in 2024, rising slightly to 53.5 percent (+0.8 percentage points), driven mainly by higher personnel and IT costs.
Non-performing loans (NPLs) also rose slightly across Europe (+1.1 percent compared to 2023). Germany saw the sharpest increase (+24.9 percent), primarily due to a surge in corporate insolvencies and rising defaults in commercial real estate.
Regulatory challenges and macroeconomic risks
New regulatory requirements, such as the Digital Operational Resilience Act (DORA) and CRR III, have now moved from years of preparation into implementation, presenting challenges for the industry.
In a world of rising demands on capital, sustainability, and technology, the key question is: will Europe’s banks actively shape the regulatory agenda or be shaped by it? The market shows so far: smaller financial institutions still have to catch up with requirements from existing regulations, while larger companies, especially with group structures, face challenges in managing their ICT third-party providers across the group.
Alexander Beck, Partner at BearingPoint
In addition, macroeconomic uncertainties and geopolitical crises are driving up risk-weighted assets (RWAs) and risk provisions. European banks recorded a moderate increase of 1.3 percent in 2024 compared with the previous year. Ongoing geopolitical uncertainties still leave banks with no room to cut risks from their balance sheets – but a first recovery can already be observed (RWA growth from 2022 to 2023 was still 4.3 percent up).
Our analysis shows: the European banking sector is remarkably resilient, with stable balance sheets, despite geopolitical uncertainties. Institutions are strengthening their capital base by investing specifically in future technologies, such as AI and cloud, and increasing their earnings through commission income. At the same time, higher liquidity ratios ensure stress resistance. However, rising IT and personnel costs and growing risks from insolvencies and NPLs call for clear strategic responses – especially from German banks.
Robert Bosch, Partner and Global Leader Banking & Capital Markets at BearingPoint
About the study
The BearingPoint Banking Study 2025 is based on the analysis of the annual reports of 163 European banks over the past three years (2022 to 2024). All institutions are supervised by the European Central Bank (ECB) or a national supervisory authority. In total, the aggregated balance sheet of the banks surveyed amounted to around €40 trillion in 2024, covering financial institutions in the eurozone as well as other EU member states and non-EU countries such as the United Kingdom, Switzerland, and Norway. The complete study is available for download here.
About BearingPoint
BearingPoint is an independent management and technology consultancy with European roots and a global reach that transforms businesses using technology intelligently. The firm operates across three core units: Consulting, Products, and Capital. Its Consulting services focus on selected areas, combining business and technology expertise with profound industry knowledge. The Products unit provides IP-driven solutions and managed services for business-critical processes. Capital delivers deal advisory and transaction services. In addition to its core operations, BearingPoint runs two joint ventures: Arcwide, a JV with IFS, which specializes in business transformation based on IFS technology, and BearingPoint North America, a JV with ABeam, which is dedicated to consulting excellence and business transformation built on SAP.
BearingPoint serves many of the world’s leading companies and organizations. Together with its strategic alliance partner ABeam Consulting, the firm brings together 15,000 professionals and supports clients in over 70 countries, delivering seamless business transformation with sustainable impact.
BearingPoint is a certified B Corporation, driven by a strong sense of purpose – today and into the future.
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