The eurozone’s top three lenders by market capitalisation — Italy’s Intesa Sanpaolo, Spain’s Santander and BNP Paribas in France — all posted record earnings in 2024, demonstrating the strength of the banking sector.
David Benamou, head of investments at Axiom Alternative Investments, said the planets were aligned for the industry last year.
A rise in commissions, higher loan margins and lower default risk all helped boost the bottom line.
Despite the overall lacklustre growth in the eurozone, certain business sectors were dynamic and the euphoric market reaction to Donald Trump’s re-election helped boost trading books.
Santander, which has a strong presence in Latin America as well as Europe, turned in results that make it the envy of its eurozone rivals.
The bank announced Wednesday a record net profit of 12.57 billion euros ($13.05 billion), an increase of 14 per cent from the previous year.
BNP Paribas followed with a four per cent increase in net profit to 11.7 billion euros while Intesa Sanpaolo posted a 12 per cent increase to 8.7 billion euros.
And they were not the only eurozone banks to post record results: Spain’s second-largest bank BBVA for the first time posted a net profit above 10 billion euros. Germany’s Commerzbank turned in a net profit of 2.68 billion euros.
Analysts at S&P believe the good times will continue.
‘European banks will continue to take advantage of benign credit conditions in 2025 to consolidate their financial and business positions, and to expand their ambitions,’ they said in a recent note.
Italy’s UniCredit, which publishes its results on February 11, is seeking to gobble up its Italian rival Banco BPM and Germany’s Commerzbank.
Meanwhile BNP Paribas has handed off its asset management business to insurer Axa.
‘If 2024 was a year of exceptional performance, 2025 promises to be a litmus test for the sector,’ said Mathieu Gosselin at consulting firm Bartle.
While Trump’s election boosted markets, the economic consequences of his return to the White House are hard to predict.
Beyond a trade war disrupting the global economy, Trump’s promised deregulation could further boost the competitiveness of US banks relative to their European peers that face tighter scrutiny.
Axiom’s Benamou said however that ‘I have the feeling that European regulators have decided to close the ‘financial stability’ chapter’ and instead be more pragmatic in efforts to ensure banks are solid enough to weather crises.
Meanwhile, banks are still dedicating a substantial part of their profits to rewarding shareholders, raising dividends and launching share buybacks: a little more than one million euros for BNP Paribas, two billion for Intesa and 10 billion for Santander in 2025 and 2026.
They have also put aside money to pay exceptional taxes imposed by their home countries.
Santander has put aside 335 million euros while BNP Paribas has said it expects an exceptional levy to amount to only several dozen million euros.
