APAC banks’ average returns outpaced by European peers

Japanese banks’ outlook for 2026 remains improving, said Fitch Ratings.

APAC developed market banks’ return on equity (ROE) rose 11.4% in FY2025, improving from its 10.6% ROE in FY2022—but slower than the average ROE of its European and North American peers, according to data from Fitch Ratings.

European banks average ROE improved to 11.9% in FY2025, from 8.9% in FY2022, outpacing APAC banks. North American banks logged an average ROE of 12.8% in FY2025.

APAC developed market banks logged the most ‘stable’ outlooks, however, with 90% of all APAC developed market banks rated by Fitch holding it, compared to 88% in western Europe and 86% in North America as of July 2026.

Fitch said that Japanese banks outlook for 2026 remains “improving.”

“[We] expect reflationary dynamics and the upward trend in policy rates to support performance,” the credit rating company said.

Fitch does not see major shifts in average banks’ ROE over the next two years.

“Banks will benefit from the lift to [net interest margins] from higher interest rates, but this effect will be counterbalanced by persistent inflation and subdued growth, which will weigh on borrower affordability and banks’ credit quality,” Fitch said.

Banks in some jurisdictions, including in the US, may enjoy tailwinds from deregulation and subsequent lowering of capital levels, Fitch said.