NEW YORK–The international coronavirus pandemic has had little effect on the market values of the world’s leading banks.
New analysis shows the top 25 global banks picked up from where they left off in Q4 2020 and reported 15.6% growth in their aggregate market values in Q1 2021, according to GlobalData.
The analysis found the aggregate market cap of the banks increased to $3.8 trillion from $3.3 trillion in Q4 2020, with all reporting quarter-on-quarter (q-o-q) growth in their market values. In addition, 15 of the banks posted more than 15% growth, of which 10 were U.S. banking giants, the company said.
“In light of the recent stress test results, the Federal Reserve’s decision to allow larger U.S. banks to carry out limited share repurchases and divided payouts in Q1 2021 acted as catalysts for the growth,” said Parth Vala, company profiles analyst at GlobalData. “Further, all the limits imposed are expected to be lifted by Q2 2021 for most of the U.S. banks.”
According to GlobalData, the most notable performers to report growth of more than 20% were Wells Fargo, Bank of America, Goldman Sachs, Charles Schwab, Mitsubishi UFJ, and Truist Financial.
‘A Big Relief’
“Wells Fargo has been suffering from the assets cap imposed by the Fed since its fake-accounts scandal, which has been hindering its growth,” said Vala. “However, the Fed’s acceptance of its proposal to overhaul its risk management and governance model - the second of the four steps required before the imposed asset cap can be lifted - came as a big relief and brought cheers from the market.
“Bank of America’s 27.3% q-o-q growth in market value is likely attributed to better-than-expected earnings results; the authorization of a $25bn stock repurchase plan, including $2.9bn in Q1 2021; and the prospect of a possible lifting of all limits on dividend payout and share buybacks by the Fed by Q2 2021,” Vala continued.
Compared to its U.S. counter parts, the top Chinese banks have reported slightly moderate growths in their market caps as they have taken a hit in profitability as a policy measure to facilitate cheap loans to small businesses to support them in the time of crisis, GlobalData said.