30 Jul 2021
Posted in Uncategorised
Building further on the spectacular Q1 2021, the top 25 global banks continued to maintain growth momentum in market values in Q2 2021 says GlobalData
The aggregate market cap of the global top 25 banks* increased to $3.8 trillion, reflecting an increase of 3.3% over Q1 2021 with 17 players reporting growth over the previous quarter says GlobalData, a leading data analytics and research company.
The most impressive performers were Morgan Stanley, Wells Fargo, Goldman Sachs, Commonwealth Bank of Australia, Al Rajhi Banking & Investment, Charles Schwab, and Royal Bank of Canada, which reported growth of more than 10%.
Investment banking and capital market services giants Morgan Stanley, Goldman Sachs and Charles Schwab have all beaten revenue and profit expectations of the Wall street in Q1 2021 as they reported substantial improvement in their investment banking and trading related businesses over the past one year. Boom in SPAC-issuance and significantly greater activities in fixed income and stock markets have enabled these companies’ market value to soar.
With progress on eventually ending the Fed’s limit on its asset size and better than expected Q1 2021 results enabled Wells Fargo to post a growth rate of 15.9% in its market value. The bank reported a q-o-q growth of about 58% in its net profits and about 1% growth in its revenues, beating analysts’ expectations. As a result, its ROE and ROA improved to 10.6% and 0.99% from 6.4% and 0.62% in the previous quarter.
Commonwealth Bank of Australia touched the share price of AU$100 in May 2021 for the first time as it outperformed its peers. The bank’s net profit almost doubled to AU$2.4bn in 31 March 2021 from AU$1.2bn in 31 March 2020. This was mostly on the account of growing business loans and home loans along with lesser loan loss impairments as the country continued to recover from COVID-19-induced recession.
Al Rajhi Banking & Investment is the new entrant in the top 25 list in Q2 2021 as it posted an impressive growth of 12.3% in its market value over the previous quarter. The bank reported net profit of SAR3.3bn, reflecting a year-on-year (y-o-y) growth of 40%, which was helped by growth in special commissions and administrative fees and lesser depreciation and amortization, and impairment charges.
Share price of Royal Bank of Canada rose as the bank reported improvement in results of the quarter ended 30 April 2021. Its net profit grew 4% q-o-q and 171% y-o-y, based mostly on decline in loan loss provisions. Except Investor & Treasury Services, all the business segments reported improvement their profitability.
On the other end of the growth spectrum with declines of more than 5% in market values were Chinese banking giants. The commercial banks reported a profit of CNY614.3 billion in Q1 2021, a meagre growth of 2.4% y-o-y. On top of this, the central bank has asked the top banks to curb their loan growth for the rest of the 2021 and keep it at the same level of previous year to restrict bubble risk, which was seen at elevated levels in the first two months of 2021.
* Top 25 banks by MCap