After years of restructuring and retrenching, the capital markets businesses of Europe’s big banks finally look to be on the road to recovery, Morningstar DBRS Inc. says.
In fiscal 2025, the big European banks — a group that includes Deutsche Bank AG, UBS Group AG, Barclays PLC and BNP Paribas SA — posted record capital markets revenues, driven by a boost in sales and trading activity, DBRS said in a report published Tuesday.
For the fourth quarter of 2025, the banks’ aggregate capital markets revenues were up by 11% on a year-over-year basis, amid elevated market volatility that boosted trading, which saw 15% revenue growth.
This growth was tempered by a decline in investment banking revenues, down 4% in aggregate, year over year.
For the full year, the banks’ capital markets revenues were also up 11% in aggregate from 2024, and they came in 31% higher than they were back in 2023, the report noted.
“In our view, these record 2025 results signal the beginning of a comeback for European banks, following many years of restructuring and nearly two decades after the global financial crisis,” said Maria Rivas, senior vice-president and sector lead of European financial institution ratings at Morningstar DBRS, in a release on Tuesday.
Compared with the big Wall Street banks, the European banks generated similar growth in their capital markets businesses in 2025, although they lagged the U.S. banks in equity trading and investment banking, DBRS noted.
“In our view, this continues to highlight the structural challenges European banks face in competing with large U.S. institutions, particularly within [investment banking],” the report said, noting that the big Wall Street firms continue to hold an edge over the European giants in the global rankings.
Looking ahead, DBRS said it expects the big European banks to continue generating strong results in capital markets this year — possibly matching the record level of 2025 — bolstered by ongoing market volatility.
“Against the uncertain global economic and geopolitical backdrop, we expect market volatility to remain elevated, which could continue to support [trading] revenues across the [big European banks] through increased client activity,” Rivas said.
“However, we expect advisory deals to pause and [investment banking] revenues across equity and debt underwriting to remain subdued, until greater clarity emerges around the duration of the conflict and its broader implications for energy prices, and European and global economic growth,” she added.