ROE of the banking industry in the EU Q2 2024, by country

The return on equity (ROE) of European banking sectors showed significant disparities in the second quarter of 2024, with Cyprus leading at 22.1 percent and Liechtenstein trailing at 5.8 percent. This wide range reflects the diverse financial landscapes across the continent, influenced by factors such as market conditions, regulatory environments, and economic stability. While ROE is a crucial indicator of banking efficiency, it's important to consider it alongside other metrics for a comprehensive view of the industry's health.

Digital transformation reshaping European banking

The banking sector in Europe is undergoing a digital revolution, with online banking penetration reaching impressive levels. Norway leads with a 96.85 percent penetration rate, closely followed by Denmark at 96.22 percent. This shift towards digital banking is not only changing how traditional banks operate but also paving the way for the rise of digital-only banks. Neobanks like Revolut have seen rapid growth, with the UK-based fintech reaching 40 million users by March 2024, highlighting the increasing consumer preference for digital financial services.

Consolidation and asset growth in European banking

Despite the high number of banks operating in Europe, with 4,886 institutions in the EU as of May 2024, the industry is dominated by a few large players. HSBC Holdings leads European banks with total assets exceeding 2.9 trillion U.S. dollars in 2023, followed closely by BNP Paribas SA with over 2.8 trillion U.S. dollars. This concentration of assets among top banks, coupled with the ongoing digital transformation, suggests a trend towards consolidation in the European banking sector, potentially impacting future ROE figures across the continent.