European banks growth potential is drawing investor attention. Deutsche Bank and OneSavings Bank are leading the sector, according to RBC Capital Markets. Both received “Outperform” ratings. Analysts believe they can deliver strong shareholder value in the coming years. Each bank has unique strengths that make them attractive choices for investors.
Deutsche Bank (XETRA:DBK GR) has a market capitalization of $59.6 billion. It trades at 0.93x book value with 10.7x 2025 estimated earnings. The bank could benefit from Germany’s fiscal expansion and increased defense spending across Europe. RBC Capital Markets estimates these measures could add 0.5% to German GDP annually over the next decade. This environment supports Deutsche Bank, which has 42% of its corporate and retail loans in Germany.
The bank also has internal improvement opportunities, especially in its Private Bank segment. Management plans to double pre-tax profit relative to risk-weighted assets (RWA) from 2024 levels. Digitization and branch optimization may help Private Bank returns rise from 6.7% in 2024 to mid-teens in the coming years. This could add two percentage points to group return on tangible equity (ROTE). The bank’s target of 12% ROTE beyond 2025 seems increasingly attainable. Recently, Deutsche Bank appointed Lisa McGeough to lead its Americas region, starting in early 2026.
OneSavings Bank (LSE:OSB LN) also shows strong growth potential. Its market capitalization is $2.0 billion, trading at 0.9x book value and 6.9x 2025 estimated earnings. The bank offers a 6.5% dividend yield. Analysts expect it to deliver the largest dividend and total shareholder return across RBC coverage in FY26. OneSavings Bank’s buy-to-let business generates steady cash flow. Following the near-final Basel 3.1 rules announced in September 2024, the bank should have sufficient capital to enhance shareholder returns.
RBC analysts believe 18 months of clean results could trigger a significant re-rating. OneSavings Bank currently trades at a discount to its peers. The Bank of England’s MREL asset threshold increase may exempt the bank from certain requirements. This change could add roughly 10% upside to net profit forecasts. Management maintains conservative FY25 guidance, including low-single-digit loan growth and a net interest margin around 225 basis points.
Both banks face risks, including regulatory changes, competition, and broader economic uncertainty. However, their fundamentals are strong. Overall, European banks growth potential remains robust. Deutsche Bank and OneSavings Bank appear well-positioned for investors seeking exposure to the European financial sector.