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Highlights
- Global banking sector's market cap goes up by 39.62% from Q2 2020 to Q2 2021, as per Finbold data.
- Being a critical economic sector, its market cap fell during the pandemic.
- UK’s worst performer was Barclays with a TSR of -8%.
Banking sector, which is one of the highly critical players in the economy, was substantially influenced by the coronavirus pandemic while recording losses under crucial metrics such as market capitalisation. Nevertheless, the banking industry is currently on a recovery path.
According to the latest data from Finbold, the market capitalisation of the global banking sector has grown by 39.62% in the 12 months between Q2 2020 and Q2 2021, adding €2.1 trillion (US $2.48 trillion) and thus going up from €5.3 trillion to €7.4 trillion. The Finbold data suggests that the market cap went down slightly in 2020 Q3 to €5.2 trillion on the path to recovery but gained 17.3% in the next quarter.
Prior to the pandemic hitting the banking sector, it reached a record high market cap of €7.6 trillion as of 2019 Q4, which fell down by 35.5% to €4.9 trillion during 2020 Q1. But in one year the market cap stood at €7.3 trillion during Q1 2021.
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Considering the Western European banks, between April 2021 and July 2021, the BBVA Bank of Spain recorded the highest total shareholder return rate at 19.7%. France’s Société Générale followed it with a total shareholder return rate at 13.8%. Banco Santander, also from Spain, held the third position in terms of total shareholder return rate at 12.1%. Italy’s Unicredit recorded a return of 11.9%, which was followed by 11.7% of Sweden's Nordea Bank.
The worst performer in the United Kingdom was Barclays with a TSR of -8%. Some other bank which with low returns comprise of UK’s Standard Chartered with a TSR of -7.7%, UK’s HSBC Holdings with a TSR of -1.4%, Credit Suisse with a TSR of -1.1, and UBS Group with a TSR -1%.
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According to Finbold, the recovery of the banking sector has been hastened with the support of other factors, which include the adoption and endorsement of pre-pandemic trends like sustainability and digitalisation. Online transactions have seen a tremendous increase during the pandemic, and thus digitisation of operations has been strongly supported by consumers. As the online transactions have suddenly surged, the institutions and organisations which had an established online presence have had a competitive edge in the market witnessing a digital shift.
Summing up
With a positively growing market cap, banks are on the track of recovery but the major point to consider here is whether this recovery and growth can potentially be sustained by banks, especially in the absence of the necessary government support.
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