# European Banks Trail U.S. Peers in Profitability and Market Valuations

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/47849
Published: 2026-11-03T17:03:08.000Z
Updated: 2026-11-03T17:03:08.000Z
Section: Regulation

> Europe remains more reliant on bank lending, while the U.S. financial system is more market-oriented. Deutsche Bundesbank President Joachim Nagel gave a keynote in Frankfurt on Oct. 21, 2026.

European banks generally lag U.S. peers in profitability and market valuations, while Europe’s bank-centered financial system contrasts with the deeper, more market-oriented capital markets that have helped U.S. institutions diversify.

European firms and households rely more heavily on bank intermediation, while U.S. finance leans more on markets.

European banks remain central to credit provision and financial inclusion, even as they have lost ground in investment banking and capital markets.

Their profitability improved temporarily in 2023, mainly because of favorable interest-rate conditions, but long-term returns on equity and assets remained below U.S. levels.

Deutsche Bundesbank President Joachim Nagel delivered a keynote in Frankfurt am Main on Oct. 21, 2026, at a conference marking the 40th anniversary of the International Bankers Forum.

Comparisons across regions require caution because institutional frameworks, business models, accounting standards and macroeconomic conditions differ.

Most European banks traded below book value, signaling concerns about long-term profitability and perceived risk.

U.S. banks have also benefited from a more favorable macroeconomic backdrop, while European banks have faced two successive crises and an extended period of very low interest rates.

Regulatory harmonization, capital-market development and integration are key steps for improving European banks’ competitiveness while preserving resilience.