European banks are leaning on technology and AI to accelerate customer acquisition and reduce costs.

European bank Q1 2025 earnings

2025 focus of European banks

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Barclays, Banco Santander lean on digital

Barclays reported Q1 income of 7.7 billion pounds ($10.2 billion), up 11% year over year, and operating costs of $5.7 billion, a 7% YoY increase.

Non-interest income from its U.K. Corporate Bank dropped 10%, but the British bank expects segment growth through continued investment in digital and lending.

“You should expect an increase in investment costs in the quarters to come to support adviser growth, product development and digital capabilities,” Chief Executive C.S. Venkatakrishnan said on April 30 during the bank’s earnings call.

Banco Santander reported Q1 total income of $17.6 billion, up 3.1% YoY. The $1.9 trillion bank’s operating expenses were $7.3 billion, a 0.9% decrease from the previous year. Digital customers grew 9% YoY during the quarter to 60.7 million, according to the Madrid-based bank’s earnings release.

The bank is closing 18 of its physical branches in the Northeastern U.S., according to April 29 and May 1 filings with the Office of the Comptroller of the Currency.

Banco during the quarter completed the integration in Chile of Gravity, the bank’s in-house, cloud-native digital banking platform, CEO Hector Grisi said during the April 30 earnings call.

“Going forward, we expect that our global platform rollout and improvements in the consumer and customer experience will drive additional customer growth and lower cost in euros,” he said.

HSBC, Deutsche Bank save with tech

HSBC and Deutsche Bank reported cost reductions through digital initiatives.

London-based HSBC’s Q1 revenues were $17.6 billion, a 15% YoY decline, with operating expenses flat at $8.1 billion.

The $3 trillion bank attributed the revenue drop to the 2024 sale of its Canada and Argentina businesses, which offset technology investment. HSBC is focusing on expanding its Hong Kong and United Kingdom markets with an emphasis on digital capabilities.

Deutsche Bank in Q1 reported net revenues of $9.6 billion, a 10% YoY increase, and noninterest expenses of $5.9 billion, a 2% decrease from the previous year’s period.

The $1.4 trillion bank also reported a 43% year-over-year surge in profits for its Private Bank segment, posting $553.8 million, which CEO Christian Sewing said during the April 29 earnings call was largely due to the bank’s digitalization efforts.

“We continue to transform our personal banking operations by reducing branches and moving to digital channels, resulting in a planned reduction of almost 2,000 FTEs,” Sewing said.

NatWest, Lloyds tap AI for growth

NatWest reported $5.3 billion in total income in Q1, up 14.5% YoY, and $2.6 billion in operating expenses, down 3.6% YoY.

Edinburgh, U.K.-based NatWest is using AI and tech partnerships to simplify its operations, CEO Paul Thwaite said on the $940.7 billion bank’s May 2 earnings call.

“We are the first U.K.-headquartered bank to collaborate with OpenAI in order to meet customer needs faster and increase productivity,” Thwaite said.

While simplifying operations, NatWest added 1 million new customer accounts through its acquisition of Sainsbury’s Bank. The $3.3 billion deal, announced last summer, was completed on May 1 and will generate new income at low cost through NatWest’s digital platform and support long-term growth, Thwaite said.

Lloyds Bank is also focused on AI and lending. The London-based bank reported Q1 net income of $5.8 billion, up 4% YoY, with risk-weighted assets rising 24.8%, driven by automated lending, William Chalmers, executive director and chief financial officer, said during the $1.1 trillion Lloyds’ May 1 earnings call.

Lloyds, which posted a 5% annual increase in operating costs to $3.4 billion, is also expanding its digital and generative AI efforts, with 12 new AI use cases being rolled out by the end of June, according to its earnings release.

Editor’s note: All figures have been converted to USD.