All but one of Asia-Pacific’s 20 largest banks reported market capitalization growth in the quarter ended March 31. continuing the momentum of the previous quarter, as the economic recovery from the COVID-19 pandemic persisted across the region.
Industrial and Commercial Bank of China Ltd. retained its top spot in the rankings in the quarter after posting 10.93% quarter-over-quarter growth in market capitalization to $ 290.24 billion, according to data compiled by S&P Global Market Intelligence. China Construction Bank Corp., China Merchants Bank Co. Ltd., Agricultural Bank of China Ltd. and Bank of China Ltd. saw their market capitalization grow by 11.32%, 17.13%, 8.27% and 6.66%, respectively, and maintained their positions on the list.
Postal Savings Bank of China Co. Ltd. recorded the highest gain with an increase of 32.59% and climbed to eighth place with a market cap of $ 79.81 billion.
Chinese bank stock prices rose in the quarter in the midst of improvement feelings for the country’s economic recovery, as well as the profits, margins and ready growth in 2021. Chinese bank stocks struggled for most of 2020 amid an economic slowdown and uncertainties related to the pandemic. Things started to improve later in the year, as markets and businesses gradually began to open after months of lockdowns to contain the virus.
The increases in banks’ stocks were broadly in line with the performance of their stock markets in the first quarter. The Hang Seng index rose 4.21%, the S & P / ASX 200 rose 3.09%, and that of Japan The TOPIX index climbed 8.27% during the quarter. The SSE Composite Index, meanwhile, fell 0.90% to 3,441.91 at the March 31 close from 3,473.07 at the end of 2020.
“Bank stock prices have performed well, supported by rising bond yields and inflation expectations,” said Rui Wen Lim, Equity Research Analyst at DBS Bank. “We remain optimistic about the longer-term outlook for Asian bank stocks as banks remain key proxies for the economic recovery amid a steepening yield curve. “
Lim also expects better loan growth for Asian banks thanks to the resumption of economic activities and the investments underway to diversify supply chains. In the short term however, “we remain vigilant on the extent of restructured loans that require extension and we expect banks to continue to recognize weak credits as non-performing loans,” added the analyst.
Japanese companies Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. saw market capitalization growth of 29.73% and 25.69%, respectively, while Australia’s Westpac Banking Corp. and Australia and New Zealand Banking Group Ltd. were among the banks that recorded more than a 20% quarterly increase in their market capitalization during the quarter.
Indonesia PT Bank Central Asia Tbk, meanwhile, was the only lender on the list to see its market cap shrink, falling 8.20% to $ 52.61 billion.