KPMG: The profitability of EU banks – Hard work or a lost cause?

The low profitability of many European banks has become a constant feature since the financial crisis. Low profitability among European banks reflects a range of factors that vary across countries and across banks, including the weak economic environment in Europe, stubbornly low net interest margins, high levels of non‑performing loans, high cost to income ratios, the impact of regulatory reform, and – for some banks – a business model that relied too heavily on the good times continuing without serious interruption.

This paper analyses five drivers of bank profitability and their combined impact on banks and the overall economy.