In the 12 months between Q2 2020 and Q2 2021, the global banking sector's market cap has surged 39.62%, adding €2.1tn ($2.5tn, £1.8tn) from €5.3tn to €7.4tn.
New data from Finbold has shown that on the path to recovery, the market cap slightly declined in 2020 Q3 to €5.2tn before gaining 17.3% the next quarter.
As a critical player in the economy, the banking sector was significantly impacted by the coronavirus pandemic, recording losses under critical metrics like a market cap. However, the industry is on a course for recovery.
During Q1 2021, the market stood at €7.3tn. Before the pandemic hit, the sector recorded the highest market cap as of 2019 Q4 at €7.6trn, which plunged by 35.5% to €4.9trn during 2020 Q1.
Elsewhere, among the Western European banks, Spain's BBVA bank recorded the highest total shareholder return rate at 19.7% between April 2021 – July 2021, followed by Société Générale from France at 13.8%, while Banco Santander, also from Spain, ranks third at 12.1%.
Unicredit (UCG.MI) from Italy registered a return of 11.9%, followed by Sweden's Nordea Bank (NDA-SE.ST) at 11.7%.
United Kingdom's Barclays (BARC.L) is the worst performer with a TSR of -8%. Other banks with poor returns include UK’s Standard Chartered (STAN.L) (-7.7%), UK’s HSBC Holdings (HSBA.L) (-1.4%), Credit Suisse (CS) (-1.1%) and UBS Group (-1%).
The sector's recovery has also been accelerated by other factors like the increased adoption of pre-pandemic trends like digitalisation and sustainability, said Finbold.
Digitisation of operations has been backed by consumers who are willing to conduct transactions online.
At the same time, the digital shift has presented a competitive factor in the sector, with institutions that had established online presence benefiting the most.
The focus will now, however, be on whether the banks will sustain the growth, especially in the absence of government support.