Europe’s private banks are approaching a turning point after years of high profits. Although the sector reached a record profit pool of €29,2 billion in 2025, growth is losing significant momentum. Falling interest margins, weaker wealth growth in Europe and technological change driven by artificial intelligence are increasingly weighing on institutions. These are the findings of a new McKinsey study.
Slower Growth
After a strong 22 percent jump in profits in 2023, growth slowed to four percent in 2024 and six percent in 2025. At the same time, revenue margins declined to 73 basis points of assets under management, while costs continued to rise. The cost-income ratio improved only slightly in recent years, reaching 67 percent.
McKinsey identifies three developments as the main structural challenges: Europe’s comparatively weak wealth growth, the upcoming generational wealth transfer and the rapid progress of artificial intelligence.
While private financial wealth in Europe is expected to grow by 4,8 percent annually until 2030, McKinsey forecasts growth of 7,7 percent in the Asia-Pacific region. In addition, around €2,4 trillion in assets will be transferred to the next generation by 2030 – a process that, according to the study, could put 10 to 15 percent of the pre-tax profit of a typical mid-sized wealth manager at risk.
