The aggregate market capitalization (MCap) of the top 25 global banks went up by 4% to $4.27 trillion quarter-on-quarter (QoQ) during the third quarter (Q3) ended 30 September 2024. This growth was fueled by interest rate cuts from several central banks, including the US Federal Reserve and the European Central Bank, alongside stronger-than-expected US economic performance, according to GlobalData, a leading data and analytics company.

Royal Bank of Canada (RBC) and Bank Central Asia (BCA) stocks recorded over 15% growth, while Charles Schwab saw a decline of nearly 12% in market value. JPMorgan Chase retained its position as the most valuable bank for the tenth consecutive quarter, reflecting resilient performance amidst evolving economic landscapes.

Murthy Grandhi, Company Profiles Analyst at GlobalData, comments: “The third quarter of 2024 concluded with healthy returns across most major asset classes, despite periods of market turbulence. Early August saw stocks come under pressure, driven by weaker US economic data, an interest rate hike by the Bank of Japan, and thin summer trading volumes. However, the Federal Reserve’s much-anticipated rate cuts in September, combined with a softer stance from Japanese policymakers and fresh stimulus measures in China, helped ease investor concerns and fuel a strong stock market rally by the end of the quarter.”

As inflation eased and economic activity remained subdued, several other Western central banks followed suit in cutting rates. The European Central Bank implemented its second-rate reduction in September, lowering interest rates to 3.5%. Similarly, the Bank of England commenced its own easing cycle, introducing a 25-basis point cut during its August meeting.”

In Q3 2024, RBC’s stock value surged 17.2%, driven by a 17% increase in earnings from its personal and commercial banking segment, which reached CAD2.49 billion ($1.80 billion), including a CAD198 million boost from its CAD13.5 billion acquisition of HSBC’s domestic operations. RBC’s overall profit rose 16% to CAD4.5 billion, surpassing expectations. Similarly, BCA’s market value climbed 15.1%, ending the quarter with a market cap of $83.3 billion, fueled by strong quarterly results and optimism about future performance.

JPMorgan Chase reinforced its global leadership with a 22% rise in net revenue to $50.2 billion, largely driven by a 41% increase in net interest income and gains from Visa shares.

Meanwhile, Charles Schwab’s market cap fell to $118.6 billion due to reduced interest revenue and regulatory scrutiny, partly linked to its cash sweep program financing the 2020 TD Ameritrade acquisition.

Overall, for the nine months ended Sept 2024, Wells Fargo lost $13 billion in market value due to persistent regulatory challenges stemming from past scandals and inconsistent earnings performance. The bank is working to lift a $1.95 trillion asset cap imposed by the Federal Reserve. Recent assessments revealed insufficient safeguards against money laundering has limited its ability to expand in deposit intake and trading.

Grandhi concludes: “As the Fed begins its easing cycle, Q4 2024 market focus will shift to the US elections, with the outcome likely to have an impact on the country’s fiscal policy, debt, and trade, especially tariffs. Potential policy changes could stoke inflation, while escalating geopolitical risks may hit consumer confidence and trigger market selloffs, driving investors toward safer assets amidst global uncertainty.”