June 8, 2026

Valuation Insights: German vs European Banks

The latest edition of A&M Valuation Insights examines the evolving valuation landscape of German and European banks through September 2025, a period marked by significant momentum in bank stock performance. Driven by ECB rate cuts, strong first-half results, and robust stress-test outcomes, European and German banks generated total shareholder returns of 26.7% and 46.6% respectively — significantly outpacing the broader equity market.

Against this backdrop, P/B ratios reached record highs of 1.37x for European banks and 0.95x for German banks, while the implied cost of equity declined to 11.5% and 10.5% respectively. Notably, German bank P/E ratios rose above European peers for the first time since December 2020, reflecting meaningful cost reductions and capital structure improvements at major institutions. On the M&A front, European banking deal volume reached €37.1bn in the first nine months of 2025, with transaction multiples commanding a premium of +13% on a P/B basis over trading multiples.

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2025

H1 2025

The previous edition of A&M Valuation Insights – German vs. European Banks revealed a favorable turn in market dynamics: rate cuts and resilient stress test outcomes are lifting bank equities, compressing the cost of capital, and pushing price-to-book multiples to record levels.

For the first time since December 2020, German banks traded at higher price-to-earnings ratios than their European peers.

The report also highlights a nuanced profitability landscape, listed European banks outperform unlisted institutions overall, with Germany as the key exception where profitability remains broadly comparable.

Thought Leadership

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