The COVID-19 pandemic has hit the European banking system hard, with many of the largest banks coping much worse with the crisis than their US peers. While the US financial giants managed to boost their investment banking and trading revenues and better position themselves in times of economic uncertainty, major European banks all reported huge losses in 2020, causing their market cap to plunge deep below 2019 levels.
According to data presented by Buy Shares, the combined market capitalization of HSBC Holdings, Lloyds Banking Group and Barclays, as the three largest UK banks, hit $184bn last week, almost a $75 drop year-over-year.
Europe’s Largest Bank HSBC Lost $46.4B in Market Capitalization
Europe’s largest bank by assets, HSBC, has suffered significant losses amid the COVID-19 crisis. The Group’s earnings report revealed revenues for the nine months of 2020 amounted to $38.7bn, a 9% drop in a year, primarily due to the progressive impact of interest rate reductions across its global businesses. Reported profit after tax plunged by 62% to $5.2bn between January and September 2020.
In December 2019, the market capitalization of the London-headquartered financial giant stood at $160.1bn, revealed Yahoo Finance data. During the next three months, this figure dropped to $114bn.
The noticeable decreasing trend continued in the following months, with the market capitalization falling to $78.9bn in September, a 50% plunge since the beginning of 2020. Statistics indicate the combined value of HSBC’s stocks stood at $113.8bn last week, a $46.4bn drop in a year.
Lloyds Banking Group Witnessed the Biggest Market Cap Plunge
The Yahoo Finance data revealed that Lloyds Banking Group, as the second-largest bank in the United Kingdom, witnessed the most significant drop in the market capitalization amid the COVID-19 crisis, with the figure falling from $57.4bn in December 2019 to $34.8bn last week, almost a 40% plunge in a year.
After putting aside £2.4bn for bad debts, Britain’s biggest high street lender reported a loss of £676 million in the second quarter of 2020. The negative trend continued in the third quarter of 2020, with the net profit plunging by 19% YoY to £3.4bn. The Group’s earnings report revealed that the net profit in the nine months of 2020 amounted to £10.8bn, 17% less than the same period in 2019.
Barclays lost almost $5.5bn in market capitalization amid the COVID-19 crisis. In December 2019, the combined value of stocks of the UK’s third-largest bank by assets stood at $40.8bn. Statistics show this figure dropped by 13%, landing at $35.3bn last week.