Global banking market capitalisation slumps by over 30 per cent amid pandemic

The market capitalisation of the global banking market dropped by 30.32 per cent between the final quarter of 2019 and the second quarter of 2020, according to data from Buy Shares.

The data show the market cap during the last quarter of 2019 was USD8.97 trillion while during the second quarter of 2020, the figure stood at USD6.25 trillion.

The biggest plunge in the market capitalisation was recorded in the middle of the coronavirus pandemic between the fourth quarter of 2019 and the first quarter of 2020 at 91.3 per cent.

Notably, the market cap recorded in the first quarter of 2020 at USD5.78 trillion was lowest since the first quarter of 2016.

Elsewhere, the highest cap was registered during the fourth quarter of 2017 at USD9.32 trillion.

The pandemic has impacted most lending facilities' profitability especially with many bad loans being written off. 

“Despite mitigation measures in place, the pandemic has raised the credit risk for most banks. The economic uncertainty resulting from the health crisis has a meaningful impact on the real economy, and a slump in economic activity raises banks' loan losses,” reads the report.

The research also took an overview of the highest and lowest Total Shareholder Return (TSR) performance among Western European banks as of April 2020 to June 2020.

The data shows that Dutch-based ING GROEP had the highest returns at 29.6 per cent. Only five top Western European banks had positive returns.

Meanwhile, HSBC Holdings had the worst returns at -16.7 per cent while Standard Chartered registered returns of -1.3 per cent.