Corporate Finance 2025: How US Banks Lead on Revenue as Europe Scrambles to Catch Up

The recent CIB performance data through mid-2025, especially as synthesized in the Eurogroup Consulting / Consultancy.eu study, show a bifurcation: while revenue across the peer set is broadly up, the ability of banks to control costs and scale efficiently is now the major differentiator between winners and laggards. For banks like Citi, Goldman Sachs, Deutsche Bank and Barclays, positive jaws ratios combined with cost-to-income (C/I) ratios at or near 60% translate into meaningful margin expansion and superior returns on capital. [1]

In contrast, institutions with elevated cost bases (e.g. Morgan Stanley’s C/I ~68% or UBS ~81%) are confronting pressure from both cost inflation and less robust topline acceleration. These banks appear more exposed to rate volatility, weakening equity markets, and less favourable mix shifts—for example, fewer megadeals and IPOs in Europe. [1][3]

The gap in deal- and fee-driven revenue between the U.S. and Europe remains pronounced. U.S. M&A and ECM markets continue to dominate global fee pools with substantial activity, led by megadeals, whereas Europe is growing more slowly and is oriented around mid-market transactions. IPO proceeds in Europe (notably ~$19.4 billion in 2025) remain far below both pre-rate-hike norms and U.S. equivalents. However, Europe is showing nascent signs of improvement in H2 2025 and developing a strong pipeline. [3][4]

AI and generative AI are key strategic levers now, especially for cost control, operational efficiency, and compliance automation. These initiatives are still maturing for revenue leverage, but anticipated impact is material—estimates include up to 25% cost savings in operations, risk, compliance and customer service. [1][5]

Open risks remain. Interest rate volatility and credit spread instability could derail refinancing and DCM strength. Equity market softness and investor caution may delay IPO/EQM recovery. Political and regulatory uncertainty, especially in Europe under tariff pressures and fragmented regulation, also pose headwinds. The degree to which European banks can catch up in fee pools depends heavily on the timing and scale of IPO revival, cross-border private equity exit demand, and structural reform—including digitisation and scale consolidation. [1][3]

Strategically, the keys for banking boards and executive leadership will be: prioritising cost discipline while preserving revenue momentum; playing offence in market segments and geographies where deal pipelines and regulatory tailwinds exist (e.g. UK listing reforms, sustainable infrastructure, healthcare, fintech); accelerating AI and automation deployment; and considering consolidation or portfolio rationalisation where structural inefficiencies persist. Investor expectations will likely reward banks that clearly articulate efficient growth paths, not just topline strength.