The year 2020 was a challenging year for the European banking sector, with many of Europe’s largest financial institutions coping much worse with the crisis than their US peers. However, the last few months have witnessed a significant recovery, with the market cap of Europe’s largest banks reaching almost pre-pandemic levels.
According to data presented by Buy Shares, the combined market capitalization of the largest banks in Europe jumped by almost 30% in the last six months reaching $438.6bn in May.
Market Cap of Europe’s Largest Bank Up by 20% in 2021
As the economic recovery from the COVID-19 accelerated in the first half of 2021, global banks’ market cap almost completely recovered and reached pre-pandemic levels. In the first quarter of the year, the market capitalization of the global banking sector hit €7.3trn, a massive 48% increase YoY.
Also, global bank shares made up for the 2020 losses. The total shareholder return of the global top 100 banks outperformed the market, growing by 16.8% quarter-over-quarter, the best TSR across all industry sectors. The TSR of Western European banks increased by 18.2% year-over-year.
The positive trend continued in the last two months. Statistics show the market cap of Europe’s largest bank, HSBC, increased by 20% since December, rising from $107.2bn to $128.7bn last week.
Also, in the first quarter of 2021, the London-based financial giant reported a pre-tax profit of $5.8bn, a 79% increase YoY, beating the analyst expectation of $3.3bn. Reported revenue was nearly $13bn, 5% less compared to the same period a year ago, reflecting the low interest rate environment.
PNB Paribas, the second-largest bank in Europe, witnessed a 27% market cap increase in this period. In December, the combined value of shares of the French financial giant stood at $66.4bn. Statistics show this figure jumped to $84.8bn last week.
ING Group the Top Performer Among European Banks
The combined value of shares of Europe’s third-largest bank by assets and the largest financial institution in Switzerland, UBS, rose by 12% since the beginning of the year, growing from $50.1bn to $56.3 billion last six months. The largest Spanish bank, Banco Santander SA, witnessed a much more significant increase, with its market cap growing by 36% in this period.
However, the YCharts data revealed that ING Group witnessed the biggest market cap increase in 2021. Between December and May, the market cap of the Dutch financial institution jumped by 42% to $52.5bn.
Also, ING Group was the top performer among the European banks, with a TSR of 38.4% in the first quarter of the year. Société Générale, Swedish SEB Group, and Barclays followed with 31.1%, 30.8%, and 27.5%, respectively.
After suffering significant losses in 2020, Britain’s biggest high street lender, Lloyds Banking Group, started recovering this year. In the three months of 2021, the Group recorded a profit before tax of £1,76bn compared to £404 million in the same period in 2020, largely reflecting the improved economic outlook for the United Kingdom. Also, the market cap of the sixth-largest bank in Europe increased by 39% since December, reaching $48.3bn last week.