European banks they keep the vast majority of the profits they make from raising interest rates, posting record gains in a decade. Contributors, on the other hand, benefit significantly less. Bloomberg came to this conclusion with reference to the chief financial officer of the German bank Commerzbank.

“So far, the positive impact has not been passed on to clients, savers,” said Bettina Orlop, speaking on a conference call with analysts on Thursday. While Commerzbank is likely to raise deposit rates as competition in this area intensifies, the most likely scenario is that the share of the increase going to the depositor will be below 30%.

Commerzbank’s comments follow those of other major eurozone financial institutions such as UniCredit, Santander, Intesa Sanpaolo and Deutsche Bank. All of the institutions in question stated that they are currently only passing on to their clients a fraction of the profits they earn from deposits following the European Central Bank’s rate hike. The increase in interest rates is the main factor that pushed banks to increase their net interest income. In some cases, this exceeded levels that existed even before the global financial crisis of 2007–2009. It also drove European bank stocks higher, with the Bloomberg Europe 500 Banks and Financial Services index up 17% since the start of 2023.

Commerzbank is “on cloud nine,” Berenberg analysts led by Michael Christodoulou said after the bank’s shares surged more than 11% on Thursday following an upward revision to its 2023 outlook. Analysts note that only a small part of this profit for savers serves as a bait for investors. Although banks have been criticized for this practice, they say they have already begun raising deposit rates for their customers, especially term deposits. They add that the current situation is the opposite of what prevailed for at least a decade, when negative official interest rates cost them no way to pass their costs on to clients. This would mean that the depositor would have to lose some of the money he kept in the bank.