Global banking sector inches towards pre-pandemic height as market cap jumped 20% to hit €7.7tn

Zainab Iwayemi

Data by StockApps has shown that the market capitalization of the global banking sector jumped by nearly 20 percent since December, hitting €7.3 trillion in the first quarter of 2021. The development follows economic recovery from the COVID-19 which was accelerated in the first half of 2021, leading the banks’ market cap of global banks to almost completely recover and reach pre-pandemic levels.

According to BankingHub data, the market capitalization of the global banking sector floated around €7.3 trillion. This figure rose to €7.6 trillion in the fourth quarter of 2019 in spite of the global economic downturn and geopolitical tensions. However, the COVID-19 outbreak forced the lowest quarterly value since the 2008 financial crisis in the sector.

Statistics show that the first quarter of 2020 witnessed market cap slumped to €4.9 trillion, signifying a 31 percent decrease year-on-year.  In the following months after floating around €5.2 trillion, the figure recovered to €6.1 trillion in Q4 2020, a 20 percent drop year-over-year.

The improving economic outlook alongside ongoing expansive monetary policies worldwide continued to drive global capital markets to new heights as global top 100 banks emerged as one of the winners in Q1 2021 while the global banking sector hit €7.3trn from €6.1trn in December. This represents a massive 48 percent increase in a year compared to the same period in 2020

Consequently, data by BankingHub shows that in Q1 2021, global bank shares made up for the 2020 losses. The Total Shareholder Return, TSR of the global top 100 banks outperformed the market, growing by 16.8 percent quarter-over-quarter and depicting the best TSR across all industry sectors while the energy sector ranked second with a TSR of 9.4 percent between January and March and basic materials, industrial sector, and real estate market followed with 7.1 percent, 6.2 percent, and 5.1 percent, respectively.

While, the global world sang a song of recovery during the first quarter, Nigeria appears to have joined, backing the world to produce a melody that soothes the banking industry. Many Nigerian banks during the period reported significant improvement in banking activities even though many are yet to return to pandemic level.