(Ecofin Agency) - The stock market value of the top 100 banks listed on the world's financial markets fell by $1,440.6 billion between January 1 and July 21, 2020, according to data collected over the period. From New York to Tokyo, from Paris to Melbourne via Beijing, the stock market value of banks has declined. In total, 96% of them are down against only 4% up.
The American giants of the sector are the big losers. JP Morgan group is the one with the biggest loss in value (-$124 billion), followed by Wells Fargo (-$113.4 billion). When the potential losses of Bank of America and Citigroup were taken into account, the U.S. banking leaders collectively lost $390.8 billion in equity value over the period analyzed.
In comparison, the top four Chinese listed banks lost only $155.3 billion in equity value. The top four European listed banks lost $138.2 billion.
Banking stocks are among those that have lost the most value over this period marked by the covid-19. Investors have rightly anticipated that the lockdown measures decided to limit the spread of the coronavirus will impact profitability in the sector.
The first results of the first and especially the second quarter of 2020 have not disproved these assumptions. In the United States, where the first financial performance reports have been published, there have been double-digit falls in net profit margins and in some cases losses, mainly due to higher provisions for credit risks.
With a recovery that is much slower than expected by various analysts, there are now fears that the situation will continue and even worsen. S&P Global Ratings has placed 25% of the top 100 rated banks with a negative outlook, including the two largest French groups BNP Paribas and Société Générale.
On the other hand, things should improve in China, where growth is expected in 2020 and 2021, but this will depend on the trend of household debt in the country.