This paper contributes to the current literature dealing with the drivers of bank business model changes by analyzing the relationship between fee and commission income share and banks' performance in terms of profitability, risk and risk-adjusted profitability in the European Union. We apply System Generalized Method of Moments on a unique data set of 329 EU banks in 2005-2014 period. We did not find any diversification benefits by increasing the fee income share based on which we conclude that increase in fee income share observed during last years in EU banks was driven mainly by external factors like increased competition rather than by internal reasons. As expected higher reliance on equity financing and better quality of provided loans enhance banks' performance. Finally, bank business strategy and macroeconomic factors are crucial in the determination of banks' performance.