European Banks Post Record Trading Profits in 2025
European Banks Deliver Record Trading Profits Amid Market Volatility: A Boon or a Concern?
May 2025
Brian Weakliam
The record-breaking trading revenues reported by Europe’s largest investment banks in Q1 2025 mark a significant milestone, as market volatility provided fertile ground for traders to capitalize on swings across sectors. UBS, BNP Paribas, Société Générale, Barclays, and Deutsche Bank collectively achieved over €13 billion in trading revenues, the highest since at least 2015.
This surge in trading profits raises important questions that are pivotal to understanding the broader implications of such results for the economy and society.
Is it good that banks make trading profits?
While trading profits contribute to banks’ financial health, making them more resilient, the source of those profits warrants careful scrutiny. High profitability enables banks to invest in innovation, strengthen their balance sheets, and offer improved shareholder returns. However, too much reliance on trading revenues shifts the focus away from their more traditional roles, like lending, which directly fuels broader economic growth.
Whose money is the bank trading?
Banks engage in both “proprietary trading”, investing their own capital, and client-driven trading, where the activity involves executing trades on behalf of clients, such as corporations, institutional investors, or high-net-worth individuals. Recent regulations, like Europe’s MiFID II and the Volcker Rule in the US, aim to limit excessive risk-taking with a bank’s own funds, which could expose the financial system to systemic risk.
Is the profit being generated from trading with their customers?
While banks’ trading operations often thrive on serving customer needs, including hedging and investment-related services, some profits come from market-making, the process of providing liquidity to financial markets. This benefits the market ecosystem but raises concerns when outsized profits suggest excessive risk-taking or diminished direct benefits to their customers.
Are the banks genuinely trading on their own right?
European banks have reported that much of their Q1 performance was driven by client activity, although volatility induced by economic unpredictability, particularly linked to recent policy shifts like US tariffs, amplified opportunities. Sergi Ermotti of UBS, for example, emphasized how increased market activity tied to geopolitical and economic events contributed to what he described as “quite exceptional” results.
Is banks generating trading profits good for the economy?
The answer lies in balance. While trading profitability demonstrates banking sector strength and resilience, overly aggressive trading strategies could divert banks’ focus from essential services like funding businesses and supporting sustainable economic growth. Furthermore, rapid market gains often signal underlying instability, which, if unchecked, can harm long-term economic prospects.
Final Thoughts
The recent trading revenues reflect banks’ ability to adapt to volatile conditions and harness market activity effectively, but it also emphasizes the need for accountability. As stakeholders, we should assess whether these profits create broader economic value or increase systemic vulnerabilities.
Banks must strive for an equilibrium where their trading divisions complement, not overshadow, their core mission as facilitators of economic development. While the current profits showcase opportunity amid uncertainty, ensuring long-term financial stability requires vigilance, responsibility, and transparency across all aspects of trading activities.
