Top 25 global banks see 11.1% QoQ growth in MCap during Q4 2023, reveals GlobalData

The aggregate market capitalization (MCap) of the top 25 global banks grew by 11.1% to $3.61 trillion quarter-on-quarter (QoQ) during the fourth quarter (Q4) ended on 31 December 2023, benefiting from the recovery in risk appetite brought about by expectations over interest rate cuts, according to GlobalData, a leading data analytics and research company.

Murthy Grandhi, Company Profiles Analyst at GlobalData, comments: “Since November 2023, the market has started factoring in the cessation of interest rate hikes by the US Federal Reserve, along with potential rate reductions in 2024. Easing concerns over interest rate hikes have consequently retriggered the risk appetite of investors, resulting in a notable surge in the value of US bank stocks.”

Al Rajhi Banking

Al Rajhi Banking experienced a 28.1% growth in its stock value due to its robust business and funding profiles, profitability, and sound asset quality. During Q3 2023, the bank achieved a 6.6% year-on-year (YoY) expansion in mortgage loans. Furthermore, corporate financing increased by 23.9%, while SME financing grew by 27.2% year-on-year. This growth on the balance sheet, coupled with efficient operations and enhanced credit quality, sustained the bank's upward momentum in its stock price.

Charles Schwab

Charles Schwab, a securities broker-dealer, witnessed a remarkable 26.2% surge in its market capitalization to $125.4 billion by December 31, 2023. This increase was driven by the successful integration of legacy TD Ameritrade brokerage accounts into the company, which holds the promise of substantial long-term cost savings. Additionally, Charles Schwab's total client assets in November 2023 stood at $8.18 trillion, marking a 7% rise from October 2023 and a 12% increase from November 2022 levels.

Grandhi continues: “During Q3 2023, JPMorgan Chase solidified its position as the leading bank, with a surge in revenue of 21.9% to $39.9 billion compared to Q3 2022. This growth was primarily driven by the boost in net interest income resulting from the acquisition of First Republic Bank.”

Chinese Big Four banks

The market value of China’s top four banks - ICBC, Bank of China, Agricultural Bank of China, and China Construction Bank - experienced growth in the range of 4%-8%.

Grandhi adds: “All these banks reported positive financial results in the third quarter of 2023. Yet, it is notable that ICBC, Agricultural Bank of China, and Bank of China registered a decline in their loan-to-deposit ratios during this period, driven by faster deposit growth compared to loans, with China Construction Bank being an exception, registering a positive ratio. Additionally, these prominent banks experienced a decrease in their capital ratios over the quarter in comparison to the previous year, with reductions ranging from 22 percentage points to 95 percentage points in their CET1 ratios.”

China Merchants Bank experienced a 13.8% fall in its market capitalization to $96.9 billion from the previous quarter. This decline was primarily attributed to reduced yields on interest-earning assets due to multiple downward adjustments in the loan prime rate. Additionally, inadequate effective credit demands contributed to this decrease. Simultaneously, the prevailing low market interest rates led to a decline in the yields of marketized assets, such as bond investments and discounted bills.

For the year 2024, GlobalData foresees a bounce back in the global banking sector influenced by various factors. These include the possibility of policymakers in major economies pausing interest rate increases and a more moderated expansion of net interest margins compared to earlier projections.