Capital Markets
The combined operating revenue topped $62bn in 2Q25, 13% ahead of the strong 2Q24. Year-to-date, American banks outperformed in Banking and Equities, while European banks reported impressive revenue gains in FICC.
Partly as a result of (thus far targeted) cost-cutting measures, European banks grew their pre-tax profits faster than Americans; the aggregate pre-tax profit for the whole peer groups advanced 19% y/y in 1H25. The US regulators’ review of supplementary leverage ratio (SLR) is driven by the US administration’s desire to lower US Treasuries yields and regulators’ aiming to boost the liquidity in the bond markets. GSIBs welcomed the review, pointing out that exempting USTs from SLR could indeed strengthen the resilience of the financial system without compromising safety. The bank’s appetite for USTs will depend on banks’ individual business model, but there is little doubt that banks with large treasury trading operations – for which SLR is arguably a more significant constraint than CET1 – would be the early beneficiaries. In the meantime, all 22 US majors passed The Fed’s latest stress test.
Commercial Banking & Treasury Services
In the US, asset repricing and lower deposit costs boosted loan volumes to the post-2Q20 record. In Europe, the demand for corporate loans also grew, driven by a decline in lending rates. Banks are optimistic regarding the 2H25; however, global uncertainty and ongoing trade tensions are damping enthusiasm. Credit standards in corporate lending remain broadly unchanged, though there was some tightening in Germany and easing in Italy. Demand for trade finance remained strong in 2Q25, driven by ongoing supply chain disruptions and economic and geopolitical uncertainty. In the US, receivables financing and invoice discounting are the fastest growing segment. Efforts to digitise processes continue.
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