Banks Grew Larger During The Pandemic, With U.S. And Chinese Banks Dominant

Big U.S. and Chinese banks got bigger during the pandemic, and they dominate the top of the world’s largest public companies list. Half of the 10 largest companies on the Forbes Global 2000 list, and eight of the top 20 companies, are banks based in the United States or China.

In recent months, banking activity in the world’s two largest economies has been strong as the U.S. and China rebound from the pandemic. The Chinese economy grew by 18.3% in the first quarter of 2021, while the U.S. is seeing vaccination rates climb and the federal government unleash enormous amounts of fiscal stimulus. 

With $4.9 trillion in assets, The Industrial and Commercial Bank of China remains the biggest public company on Earth. JPMorgan Chase JPM , the biggest American bank, is now the world’s second-biggest public company. China Construction Bank, Bank of America BAC and Agricultural Bank of China are also among the world’s 10 biggest publicly traded companies. 

When the pandemic began last year, it was unclear that these big global banks would sail through the crisis. With public health measures shutting down huge swaths of the global economy, banks and the financial system faced their most serious test since the 2008 financial crisis. 

“The last time the banks were under a lot of pressure was during the financial crisis and the financial system kind of fell apart,” says Eric Compton, a senior equity analyst at Morningstar. “Now that we’re finally coming out of the pandemic, the story for the banks has really been that credit losses have not been that bad and government support has been enough. The financial system persevered through what otherwise could have been a fairly difficult environment.”

Not only did the banks weather the storm, they played a prominent role in the economic recovery. In the U.S., for example, the banks distributed the PPP loans the federal government provided for small businesses. Their trading businesses and dealmaking advisory groups fueled their earnings, while their reserves ballooned. 

“It’s almost been a year where the banks, many of which underperformed last crisis, overperformed this crisis,” Compton adds. “They were the dogs of the last crisis and now they’ve shined through this crisis.”

Outside of the U.S. and China, France’s BNP Paribas was the top European bank and lands at No. 30 on the Global 2000 list, up 12 slots from 2020. Other countries with banks in the top 100 include Canada’s RBC, and the U.K.’s HSBC. The largest Russian bank, Sberbank Russia, made a quantum leap from No. 402 last year to No. 51 in 2021. Mitsubishi Financial Group SBFG was the largest Japanese bank at No. 52. In total, There are 289 banks on the 2021 Global 2000 list.

Forbes compiles our Global 2000 list using data from FactSet Research to screen for the biggest public companies in four metrics: sales, profits, assets and market value. Our market value calculation is as of April 16, 2021, closing prices and includes all common shares outstanding. 

James Shanahan, a senior equity research analyst at Edward Jones, noted that wealth management and capital markets were the strongest business lines for the big banks. He recalled that in the second quarter of 2020 the banks benefited from significant corporate debt and equity issuance that generated a lot of fee income. The big banks with high-performing fee oriented businesses were able to manage slowing loan growth, declining loan balances, and overall pressure on net interest margins.

“The banks that did particularly well during the pandemic were JPMorgan, Morgan Stanley MS and Bank of America. Banks like that had significant capital markets franchises and were benefiting from strong institutional securities trading and investment banking activities, including underwriting debt, equities and securities,” Shanahan says. 

JPMorgan chief Jamie Dimon recently took a victory lap after the bank’s stock price nearly doubled to $160 since hitting a low of $83.50 a year ago at the nadir of the Covid-19 sell off.

“Within days of realizing that Covid-19 was a global pandemic that would virtually close down large parts of the world’s economies, the U.S. government moved with unprecedented speed,” Dimon wrote in his annual letter to shareholders. “Fortunately, banks were part of the solution– unlike in the Great Recession. And unlike the Great Recession, the U.S. economy was actually in good shape going into the Covid-19 recession.”

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