Global banking sector: 40% growth in 12 months after the losses due to pandemic

The banking sector was significantly impacted by the pandemic, recording losses under critical metrics like a market cap. However, the industry is on a recovery course positing positive growth in market cap.

According to data acquired by Finbold, in just 12 months between Q2 2020 and Q2 2021, the global banking sector’s market cap has surged 39.62%, adding €2.1 trillion from €5.3 trillion to €7.4 trillion. On the path to recovery, the market cap slightly plunged in 2020 Q3 to €5.2 trillion before gaining 17.3% the next quarter.

During Q1 2021, the market stood at €7.3 trillion. Before the pandemic hit, the sector recorded the highest market cap as of 2019 Q4 at €7.6, which plunged by 35.5% to €4.9 during 2020 Q1.

Elsewhere, among the Western European banks, Spain’s BBVA bank recorded the highest total shareholder return rate at 19.7% between April 2021 – July 2021, followed by Société Générale from France at 13.8%, while Banco Santander, also from Spain, ranks third at 12.1%.

Unicredit from Italy registered a return of 11.9%, followed by Sweden’s Nordea Bank at 11.7%.

United Kingdom’s Barclays is the worst performer with a TSR of -8%. Other banks with poor returns include UK’s Standard Chartered (-7.7%), UK’s HSBC Holdings (-1.4%), Credit Suisse (-1.1%) and UBS Group (-1%).

Digital shift helps the banking sector to recover

The report explains some of the drivers behind the sector’s recovery. According to the research report, the sector’s recovery has also been accelerated by other factors like the increased adoption of pre-pandemic trends like digitalization and sustainability. Digitization of operations has been backed by consumers who are willing to conduct transactions online. At the same time, the digital shift has presented a competitive factor in the sector, with institutions that had established online presence benefiting the most.

The focus will be on whether the banks will sustain the growth, especially in the absence of government support.

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