More profitable than it has been for ten years

Frankfurt The interest rate hikes by the central banks and progress in cutting costs are driving earnings at international banks to long-term highs. German banks are likely to achieve a return on equity of 5.3 percent in 2022, according to the Global Banking Annual Review of the management consultancy McKinsey. This is the highest value in ten years.

In an international comparison, the financial institutions still perform poorly. Globally, banks’ return on equity is likely to have risen to between 11.5 and 12.5 percent, equivalent to $345 billion in additional revenue. International banks were last more profitable in 2007 and thus before the outbreak of the global financial crisis.

Part of this profitability gap between Germany and the rest of the world can be traced back to the precautionary policy of many German savings banks and banks of putting part of their profits into reserves.