The aggregate market capitalisation of the top 25 global banks increased by 3.8% to $3.3 trillion quarter-on-quarter (QoQ) during the second quarter of 2023, according to London-based data analytics and research firm GlobalData.   

The growth indicates a potential recovery in the markets and inflation brought under control.   

JPMorgan Chase topped the chart with market capitalisation at $425 billion as of June 2023, rising 10.8% QoQ. 

Industrial and Commercial Bank of China Limited and Bank of America ranked second and third with a market cap of $239.4 billion (+1.8%) and $228.6 billion (-0.1%). 

The only Middle East and North Africa region bank to feature in the list was Saudi Arabia’s Al Rajhi Banking & Investment Corp., which saw its market cap falling 0.6% QoQ to $77.8 billion. 

“The US Federal Reserve’s decision to pause the interest rate hike in June was seen by investors as a sign that the central bank is not as concerned about inflation as it was previously,” said Murthy Grandhi, Company Profiles Analyst at GlobalData.    

“This, along with signs of US inflation cooling, a brighter outlook for the Eurozone economy, and China’s stronger-than-expected economic recovery, boosted investor sentiment,” he added. 

The two banks to report the highest percentage rise in the market cap were Mitsubishi UFJ and HSBC Holdings. The former rose 15.1% QoQ to $93.3 billion, while the latter gained 14.3% QoQ to $155.4 billion. 

China Merchants Bank market capitalisation witnessed a decline of 9.7% to $114 billion, primarily due to a 1.5% fall in operating income during the first quarter of 2023 compared to the same period in 2022.  

UBS Group faced a market cap decline of 6.6% QoQ to $69.7 billion due to weak Q1 2023 results and the acquisition of Credit Suisse Group, Grandhi said. 

He added that there is a potential for a modest recovery in the global banking sector in the upcoming quarters.   

A potential pause in interest rate hikes by policymakers and a smaller-than-expected expansion of net interest margins will support recovery, Grandhi stated. 

(Editing by Seban Scaria seban.scaria@lseg.com)