The market capitalization of the top banks worldwide is yet to return to how it was before the arrival of the pandemic. According to the research data published by Comprar Acciones, the top 25 banks globally shed a collective $0.1 trillion in market cap during Q3 2020.
The banks experienced a 3.7% decline in the three-month period, going from a cumulative $2.7 trillion down to $2.6 trillion. It is noteworthy that 14 of these banks had moderate market cap growth over the period. However, their gains were offset by the declines that the remaining 11 experienced.
The top bank by market cap for that quarter was JP Morgan Chase with $293.4 billion, having grown by 2.4% Quarter-over-Quarter (QoQ). ICBC came in second with $255.0 billion and a QoQ growth of 2.7%. In the third spot was Bank of America, which grew by 1.3% to $208.7 billion.
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Charles Schwab registered the highest QoQ growth of 7.5%, driving its market cap to $46.7 billion. The growth drove it up by eight spots from position 31 in Q2 2020 to position 23 in Q3 2020.
China Merchants Bank which sat in the seventh spot was the only other bank to post growth surpassing 5%. It grew by 6.8% to reach $136.2 billion. On the other hand, China Construction Bank saw the highest decline, shedding a massive 19.2% QoQ. Its market cap fell to $180.8 billion, and it dropped from third to fourth position on the chart.
HSBC had the second-highest drop, plummeting 19.1% to a market cap of $79.0 billion. It moved down three spots, from position 11 to 14. Citigroup Inc. also posted a double-digit decline of 15.6% to $89.7 billion, dropping two spots from position eight to 10.
Three banks dropped out of the top 25 during the period. These were BNP Paribas, which had an 8.3% market decline, PT Bank Central Asia with 9.4% and Itau Unibanco with 37.6%. Itau Unibanco’s performance was attributed to the devaluation of the Brazilian Real, which is the worst-performing currency in 2020 according to Global Data.
The three dropouts were replaced by Charles Schwab, PNC Financial (+4.5%) and Qatar National Bank (+4%).
Bank of America’s ECM Revenue Surges 147% YoY in Q3 2020
Looking into the results of top investment banks for Q3 2020 reveals an interesting insight. While most business areas experienced rollercoaster rides during the period, Equity Capital Markets (ECM) flourished throughout.
According to its earnings report, Bank of America’s global investment bank which includes ECM reported having its second-best quarter ever. That was as a result of a 147% rise in equity underwriting fees. For Goldman Sachs, ECM revenue was up by almost 134% YoY in Q3 2020.
A Fitch Ratings report showed that during Q2 2020, revenue from capital markets at the top 5 US banks surged 63% to reach $44.9 billion. It resulted from the central bank stimulus, which triggered a rise in the issuance of debt and equity.
Debt and equity revenues for the period shot up by 57% and 85% respectively. Goldman Sachs posted an 81% upsurge in capital markets while for Morgan Stanley, there was a 63% spike.
Global ECM issuance during Q2 2020 hit a five-year high due to record activity levels. Compared to Q2 2019, there was a 78% surge in issuance according to S&P Global.
In total, global issuance amounted to $364 billion at the end of the period. The figure nearly tripled from $104 billion in Q1 2020 to $260 billion in Q2 2020.
