The coronavirus outbreak 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 utilized the frenzied trading around the COVID-19 turmoil to boost their investment banking and trading revenues and to better position themselves in times of economic uncertainty, major European lending facilities all reported massive financial losses in the second quarter, causing their market cap to plunge below March levels.
According to data presented by StockApps.com, the market capitalization of Europe’s five largest banks dropped to $233.1bn in August, a 42% plunge since the beginning of the year.
Europe’s Largest Bank HSBC Lost $73.4bn in Market Capitalization
Last month, Europe’s largest bank by assets, HSBC, reported a 65% fall in pre-tax profits for the first half of 2020 to $4.3 billion, down from $12.41 billion reported a year ago. The revenue dropped by 9% to $26.7 billion during the same period.
In December 2019, the market capitalization of the London-headquartered financial giant stood at $161.5bn, revealed Statista and YCharts data. During the next three months, this figure dropped to $114bn in March.The noticeable decreasing trend continued in the following months, with the market capitalization falling to $88.1bn in August, a 45% plunge since the beginning of the year.
PNB Paribas, the second-largest bank in Europe, lost $19.7bn in market cap amid the coronavirus crisis, a 26% plunge in eight months. In January, the combined value of shares of the French financial giant stood at $74bn. Statistics show this figure stumbled to $54.3bn last month.
Lloyds Banking Group Witnessed the Biggest Market Cap Plunge
Since the beginning of the year, Europe’s third-largest bank by assets, Banco Santander SA, lost 49% of its market cap. Statistics show the Spanish bank had $66.97bn in market capitalization in December 2019. By the end of August, this figure dropped to $33.7bn.
However, the YCharts data revealed that Lloyds Banking Group witnessed the most significant drop in the market capitalization this year, with the figure falling from almost $58bn in December to $25.1bn in August, a 56% plunge in eight months. 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, down from a £1.3bn profit during the same period last year.
The Lloyds Bank chief executive officer, António Horta-Osório, said: “The outlook has clearly become more challenging since our first-quarter results, with the economic impact of lockdown considerably larger than expected at that time.”
Statistics show the market cap of ING Group, as the fifth-largest bank in Europe, dropped by 32% since the beginning of the year, with the combined value of bank`s shares falling from nearly $47bn in January to $31.8bn in August.