Connect with us

Banking Sector

Combined Market Cap of Largest US Banks Jumped to Nearly $1.4T, an 80% Increase YoY

Published

on

bank

The largest banks in the United States reported blockbuster second-quarter results after the pandemic loan losses didn’t happen and the US economy began roaring back to life. Moreover, the banks’ stock also significantly recovered since the beginning of the year, rising high above the pre-pandemic levels.

According to data presented by BuyShares, the combined market cap of JP Morgan Chase, Bank of America, Wells Fargo, Morgan Stanley, and Citigroup, as the five largest banks in the United States, jumped to nearly $1.4trn last week, showing a massive 80% increase year-over-year.

Double-Digit Growth After Hard 2020

There are several reasons why the US banks have outperformed the analysts’ estimates and turned 2021 into a year of significant recovery. First, consumer spending in the country has climbed significantly, in some sectors even beyond pre-COVID-19 levels. Second, credit quality has also improved while savings and investments have risen. Moreover, a national vaccination roll-out has allowed Americans to get back to work and start spending again.

These circumstances had a major influence on banks’ profitability driving their stock price to new all-time highs. For example, according to YCharts data, the market cap of JP Morgan Chase, as the largest bank in the United States and globally, jumped by $205bn in the last year.

In September 2020, the combined value of shares of the US megabank stood at $293.5bn. Over the next six months, this figure jumped to $465bn and continued rising. Statistics show that JP Morgan Chase’s market cap hit nearly $500bn last week, a massive 70% increase compared to January figures.

Bank of America, as the second-largest bank by market cap, witnessed even bigger growth. Over the last twelve months, the combined value of shares of the US multinational investment bank surged by $153.8bn or 73%, reaching $362.5bn last week.

Still, that was nothing compared to the stock price growth of Wells Fargo, which market cap almost doubled in this period. In September 2020, the combined value of shares of the third-largest US bank stood at $97.2bn. Statistics show this figure surged by 98% since then and hit $193bn last week.

Morgan Stanley’s Market Cap Soared by 153% YoY, the Biggest Increase Among the Top Five Banks

Although far behind the top three US banks in terms of market cap, Morgan Stanley witnessed the biggest stock price growth last year. In September 2020, the combined value of shares of the New York-based financial services corporation stood at $74.5bn. By the end of the year, this figure jumped by 55% to $115.7bn.

However, 2021 witnessed even more impressive growth. Statistics show that over the last ten months, the market cap of the fourth-largest bank in the United States surged by another $73bn and hit over $188bn last week, revealing an impressive 153% increase year-over-year.

The YCharts data revealed that Citigroup witnessed a 54% market cap growth in this period, the smallest among the top five US banks. Between January and October, the combined value of shares of the US bank jumped by $51bn or 54%, reaching $144.3bn last week.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Banking Sector

CBN Governor Vows to Tackle High Inflation, Signals Prolonged High Interest Rates

Published

on

Central Bank of Nigeria - Investors King

The Governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Cardoso, has pledged to employ decisive measures, including maintaining high interest rates for as long as necessary.

This announcement comes amidst growing concerns over the country’s soaring inflation rates, which have posed significant economic challenges in recent times.

Speaking in an interview with the Financial Times, Cardoso emphasized the unwavering commitment of the Monetary Policy Committee (MPC) to take whatever steps are essential to rein in inflation.

He underscored the urgency of the situation, stating that there is “every indication” that the MPC is prepared to implement stringent measures to curb the upward trajectory of inflation.

“They will continue to do what has to be done to ensure that inflation comes down,” Cardoso affirmed, highlighting the determination of the CBN to confront the inflationary pressures gripping the economy.

The CBN’s proactive stance on inflation was evident from the outset of the year, with the MPC taking bold steps to tighten monetary policy.

The committee notably raised the benchmark lending rate by 400 basis points during its February meeting, further increasing it to 24.75% in March.

Looking ahead, the next MPC meeting, scheduled for May 20-21, will likely serve as a platform for further deliberations on monetary policy adjustments in response to evolving economic conditions.

Financial analysts have projected continued tightening measures by the MPC in light of stubbornly high inflation rates. Meristem Securities, for instance, anticipates a further uptick in headline inflation for April, underscoring the persistent inflationary pressures facing the economy.

Despite the necessity of maintaining high interest rates to address inflationary concerns, Cardoso acknowledged the potential drawbacks of such measures.

He expressed hope that the prolonged high rates would not dampen investment and production activities in the economy, recognizing the need for a delicate balance in monetary policy decisions.

“Hiking interest rates obviously has had a dampening effect on the foreign exchange market, so that has begun to moderate,” Cardoso remarked, highlighting the multifaceted impacts of monetary policy adjustments.

Addressing recent fluctuations in the value of the naira, Cardoso reassured investors of the central bank’s commitment to market stability.

He emphasized the importance of returning to orthodox monetary policies, signaling a departure from previous unconventional approaches to monetary management.

As the CBN governor charts a course towards stabilizing the economy and combating inflation, his steadfast resolve underscores the gravity of the challenges facing Nigeria’s monetary authorities.

In the face of daunting inflationary pressures, the commitment to decisive action offers a glimmer of hope for achieving stability and sustainable economic growth in the country.

Continue Reading

Banking Sector

NDIC Managing Director Reveals: Only 25% of Customers’ Deposits Insured

Published

on

Retail banking

The Managing Director and Chief Executive Officer of the Nigeria Deposit Insurance Corporation (NDIC), Bello Hassan, has revealed that a mere 25% of customers’ deposits are insured by the corporation.

This revelation has sparked concerns about the vulnerability of depositors’ funds and raised questions about the adequacy of regulatory safeguards in Nigeria’s banking sector.

Speaking on the sidelines of the 2024 Sensitisation Seminar for justices of the court of appeal in Lagos, themed ‘Building Strong Depositors Confidence in Banks and Other Financial Institutions through Adjudication,’ Hassan shed light on the limited coverage of deposit insurance for bank customers.

Hassan addressed recent concerns surrounding the hike in deposit insurance coverage and emphasized the need for periodic reviews to ensure adequacy and credibility.

He explained that the decision to increase deposit insurance limits was based on various factors, including the average deposit size, inflation impact, GDP per capita, and exchange rate fluctuations.

Despite the coverage extending to approximately 98% of depositors, Hassan underscored the critical gap between the number of depositors covered and the value of deposits insured.

He stressed that while nearly all depositors are accounted for, only a quarter of the total value of deposits is protected, leaving a significant portion of funds vulnerable to risk.

“The coverage is just 25% of the total value of the deposits,” Hassan affirmed, highlighting the disparity between the number of depositors covered and the actual value of deposits within the banking system.

Moreover, Hassan addressed concerns about moral hazard, emphasizing that the presence of uninsured deposits would incentivize banks to exercise market discipline and mitigate risks associated with reckless behavior.

“The quantum of deposits not covered will enable banks to exercise market discipline and eliminate the issue of moral hazards,” Hassan stated, suggesting that the lack of full coverage serves as a safeguard against irresponsible banking practices.

However, Hassan’s revelations have prompted calls for greater regulatory oversight and transparency within Nigeria’s financial institutions. Critics argue that the current level of deposit insurance falls short of providing adequate protection for depositors, especially in the event of bank failures or financial crises.

The disclosure comes amid ongoing efforts by regulatory authorities to bolster depositor confidence and strengthen the resilience of the banking sector. With concerns mounting over the stability of Nigeria’s financial system, stakeholders are urging for proactive measures to address vulnerabilities and enhance consumer protection.

Continue Reading

Banking Sector

Wema Bank Celebrates 79th Anniversary with Launch of CoopHub for Cooperative Societies

Published

on

wema bank - Investors King

Wema Bank, one of Nigeria’s leading financial institutions, has introduced a digital solution tailored for cooperative societies.

The innovative platform, named CoopHub, was developed to drive digital transformation and empower communities across Nigeria.

The unveiling of CoopHub took center stage at the bank’s anniversary celebration, held on Friday amidst much anticipation and excitement.

The launch of this pioneering platform underscores Wema Bank’s dedication to innovation and customer-centricity, aiming to revolutionize the operations of cooperative societies and address longstanding challenges within the sector.

At the heart of CoopHub lies a strategic vision to redefine the way cooperative societies function by providing tailored solutions that bridge the gaps inherent in traditional cooperative frameworks.

Designed to streamline operations, enhance communication, and promote financial inclusivity, CoopHub aims to empower cooperative societies and their members for optimal productivity and growth.

Moruf Oseni, the Managing Director/Chief Executive Officer of Wema Bank, emphasized the strategic importance of CoopHub in addressing the pain points faced by cooperative societies.

He highlighted challenges such as manual recordkeeping, limited access to loans, poor communication, insecurity, and other restrictions that CoopHub seeks to overcome. Oseni reaffirmed Wema Bank’s commitment to innovation and customer-centricity, stating that CoopHub represents a significant step forward in empowering communities across Nigeria.

Solomon Ayodele, Wema Bank’s Head of Innovation, elaborated on the transformative features of CoopHub, emphasizing its role in ushering cooperative societies into a new era of efficiency and transparency.

Ayodele highlighted features such as a digitized database for recordkeeping, user management capabilities for leaders, transparent overviews of contributions, seamless communication frameworks, and robust security measures, including a three-factor authentication system for withdrawals.

Ayodele urged cooperative societies to embrace CoopHub and experience the future of cooperative operations firsthand.

He emphasized the platform’s potential to eliminate conflicts, mistrust, and inefficiencies, offering a seamless and secure ecosystem for cooperative members to thrive.

The launch of CoopHub comes at a time when cooperative societies play a vital role in Nigeria’s socio-economic landscape.

According to the National Cooperative Financing Agency of Nigeria, over 30 million Nigerians belong to cooperative societies, highlighting the significant impact of these entities on community development and financial inclusion.

As Wema Bank embarks on its 79th year of operation, the introduction of CoopHub underscores the institution’s commitment to driving positive change and fostering sustainable growth within Nigeria’s cooperative sector.

With its innovative features and transformative capabilities, CoopHub promises to empower cooperative societies, enhance financial inclusivity, and catalyze socio-economic development across Nigeria.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending