Banks: Why Germany's banks are lagging behind despite progress in European comparison
Domestic banks are more stable and efficient than before the financial crisis. However, problem loans are growing faster than in any other major European market.
Germany's banks have become more resilient over the past decade, with improved capital, liquidity, and risk quality since the financial and sovereign debt crisis. However, a new study by Bearingpoint finds that they still lag behind in terms of profitability, with a return on equity of 8.6% in 2025, compared to 10.4% across Europe.
German banks have improved their efficiency, with a cost-income ratio of 54.8%, but they struggle with non-performing loans, which increased by 87% between 2019 and 2025, mainly in commercial real estate and specialized mortgage lenders. The study warns that the coming years will be a reality check for the industry, with success depending on efficiency, data capabilities, and diversified earnings.
Written by urgent.news from Handelsblatt's report — not a translation of it. Machine-written — may contain errors; check the original before relying on it.
