Developed market banks across the Asia-Pacific region recorded an average return on equity (ROE) of 11.4% in FY2025—an increase from 10.6% in FY2022—though performance lagged behind international peers, according to Fitch Ratings data. By comparison, European banks outpaced APAC institutions as average ROE climbed to 11.9% in FY2025 from 8.9% in FY2022, while North American banks achieved a 12.8% average ROE over the same period.

Despite trailing on profitability metrics, APAC developed market banks demonstrated superior ratings stability. As of July 2026, 90% of Fitch-rated banks in APAC developed markets held a Stable outlook, compared to 88% in Western Europe and 86% in North America. Furthermore, Japanese banks maintained an “Improving” outlook for 2026, supported by favorable reflationary dynamics and ongoing upward policy rate trajectories.

Fitch projects average bank ROE levels to remain largely steady over the next two years. While elevated interest rates will continue to bolster net interest margins, these gains will be countered by persistent inflation and sluggish economic growth, which pose risks to borrower affordability and credit quality. However, banks in certain jurisdictions—such as the United States—may experience structural advantages from financial deregulation and lower capital requirement mandates.

Click here for more on Banking