- Mitsubishi UFJ, BNP Paribas and JPMorgan Chase gained over 25%
- Al Rajhi Banking lost more than 5%
- China’s Big Four banks lost between 3-8% in MCap262
The aggregate market capitalization (MCap) of the global top 25 global banks grew by 11.3% to $3.3 trillion quarter-on-quarter (QoQ) during the fourth quarter (Q4) ended on 31 December 2022. This reflects that the markets are stabilized despite the rising global inflation and volatility, says GlobalData, a leading data analytics and research company.
Murthy Grandhi, Company Profiles Analyst at GlobalData, comments: “Companies that gained the most during Q4 include Mitsubishi UFJ, BNP Paribas and JPMorgan Chase. Al Rajhi Banking and Bank Central Asia witnessed drop in MCap.”
Mitsubishi UFJ reported gross profit of JPY2.3 trillion in H1 FY2023 (30 September 2022) over JPY1.9 trillion in H1 FY2022 due to increase of lending spread and an improvement of overseas interest income of lending and deposit during the period when interest rates in US rose. It reported a lower net profit of JPY231 billion because of losses related to the sale of MUFG Union Bank.
Strong growth in revenues by all divisions helped BNP Paribas to report 8% growth to €12.3 billion for Q3 2022. The European Central Bank has become more critical of the bank’s risk profile, which resulted in increased capital requirements for the bank starting 2023. The banking giant must keep its common equity tier one (CET1) capital ratio at 9.56% of its risk weighted assets compared to 9.27% previously.
Positive Q3 2022 results fuelled the share prices of JPMorgan Chase, which resulted in 28.2% rise in MCap. The bank reported a net revenue of $32.7 billion, reflecting a 10% rise on the back of a 52% increase in principal transactions revenue reflecting higher revenue in fixed income markets, as higher volatility propelled a strong performance in the macro businesses.
Grandhi comments: “Al Rajhi Banking’s MCap fell by 7.5% to $80 billion primarily because of negative market sentiments like global economic downturn and rising interest rates by the US Federal Reserve.”
China’s Big Four banks
China’s Big Four banks—ICBC, Bank of China, Agricultural Bank of China, and China Construction Bank—lost between 3-8% in MCap owing to shrinking Chinese exports and imports, feeble domestic and global demand, property slump, and COVID19-led production disruptions, which badly impacted the overall economic activity in the country.
Grandhi concludes: “The global banking industry may face increased interest rates, inflation, and lower economic growth in 2023. GlobalData expects net interest income to keep growing, however a slowdown in the housing market could exert strain on the industry’s top line. The industry is also expected to be affected by the continuing slowdown across major economies such as US, China and many European countries, primarily because of inflation pressures, higher interest rates orchestrated by central banks to rein in on price pressures, and the impact of the prolonged Russia-Ukraine war.”