Author: Susanne Toren | Source: Finanz und Wirtschaft | Publication Date: 24.10.2025 | Summary Reading Time: 3 minutes
Executive Summary
The three-year banking rally with a 70% price gain since the end of 2022 remains intact despite credit defaults at two US regional banks. US major banks recorded 23% profit growth in the third quarter, while European banks with 11% profit growth remain Europe's most profitable sector. The rally could continue into its fourth year due to flourishing investment banking, high interest margins, and AI-induced cost savings.
Core Theme & Context
Credit defaults at US regional banks Zions Bancorp and Western Alliance initially triggered concerns about an end to the banking rally that has been ongoing since 2022. However, unlike the regional banking crisis of 2023, these are isolated individual cases in niche areas that do not affect the robust growth of major banks.
Key Facts & Figures
• Banking Rally Performance: +70% since end of 2022 (MSCI World Financials) • US Banking Sector Q3 2025: Profit growth of 23% • European Banks Q3: Profit of €60 billion (+11%) • IPO Volume USA 2025: $33 billion raised • Projected Profit Growth 2026: USA 14%, Europe 12% • Stock Price Losses After Regional Bank News: JPMorgan -4%, Goldman Sachs up to -4% • Stoxx Europe 600 Financials 2025: +33% annual performance
Stakeholders & Affected Parties
Directly Affected: US major banks (JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley), European banks (UniCredit, Barclays, HSBC, Banco Santander, DNB)
Industries: Investment banking, trading business, mortgage and lending business
Markets: US and European financial markets, M&A activities, IPO market
Opportunities & Risks
Opportunities: • Investment banking flourishing through rising M&A activity and IPO volumes • High interest margins remain due to steep yield curve • AI-induced cost savings sustainably improve profitability • Regulatory relief expected in the US
Risks: • Further write-downs possible in commercial real estate and structurally weak industrial sectors • Valuation no longer favorable: European banking sector with P/E ratio above 16 • Systematic risks at regional banks still not fully addressed
Action Relevance
Time-Critical Aspects: The earnings season for European banks has begun and shows consistently positive surprises. Analysts continuously revise earnings estimates upward (+4.2% for 2025/26 over the last six months).
Investment Implication: Banks remain the only European sector with consistent profits since 2022 and the largest profit contribution to the Stoxx Europe 600.
Fact Check
✅ All central figures and facts are supported by the original source and stem from current quarterly reports of the mentioned banks as well as market analyses by Deutsche Bank and DekaBank.
Sources
Primary Source: • Aktien: Unbeirrt geht die Hausse der Banken in die nächste Runde - Finanz und Wirtschaft
Additional Sources: • Die M&A-Welle hat die USA nun doch erreicht - Finanz und Wirtschaft • Quarterly Reports: UniCredit, Barclays, Morgan Stanley (Q3 2025) • Market Analyses: Deutsche Bank, DekaBank
Verification Status: ✅ Facts checked on 24.10.2025