COVID-19 Erodes 30% of Global Banking Market Capitalisation

The COVID-19 pandemic has erased 30 percent from global banking market capitalisation this year, according to the latest report.

The report revealed that the market capitalisation of the global banking market capital declined by 30.32 percent between the fourth quarter of 2019 and the second quarter of 2020.

A break down of the report showed market capitalisation was $8.97 trillion in the final quarter of 2019 before it dropped to $6.25 trillion in the second quarter of 2020.

The report noted that the first quarter of 2020 experienced the lowest market capital in five years.

The largest drop in market capitalisation was recorded in the middle of the COVID-19 pandemic in the first quarter, hence the reason why the quarter experienced the largest decline.

The market capitalisation declined to $5.78 trillion in the quarter, the lowest since the first quarter of 2016. The largest market capital was recorded in Q4 2017 when it expanded to $9.32 trillion.

COVID-19 has impacted the profitability of global lending facilities, especially with many bad loans being written off.

The report noted that “Despite mitigation measures in place, the pandemic has raised the credit risk for most banks. The economic uncertainty resulting from the health crisis has a meaningful impact on the real economy, and a slump in economic activity raises banks’ loan losses.”