The frenzied trading around the COVID-19 crisis helped the world’s largest investment banks boost their trading and investment banking revenues and better position themselves in times of economic uncertainty. However, not all major bank stocks performed the same in times of crisis.
According to data presented by Stock Apps, the market capitalization of JP Morgan, as the world’s leading investment bank, dropped by $23bn amid the COVID-19 crisis, while Goldman Sachs grew by $12bn year-over-year.
Market capitalization of Goldman Sachs and JP Morgan Chase from January 2020 to January 2021 (in billion U.S.dollars)
JP Morgan’s Stocks Started Recovering Six Months After the COVID-19 Crash
An investment bank’s key role is to help companies and governments raise capital from investors, like pension funds or other money managers. The banks take the role of the underwriter, making sure bonds or stocks are competitively priced and sold. Investment bankers also help clients manage mergers and acquisitions.
In January 2020, the market capitalization of the world’s largest investment bank, JP Morgan, stood at $427.8bn, revealed the MacroTrends data. However, this figure plunged by 42% to $244.6bn after the COVID-19 crash in March.
Statistics show the combined value of shares of the US multinational investment bank remained deep below the pre-COVID-19 level by the end of the third quarter of 2020. In December 2020 it rose to $383.2bn, still 14% less than the same period a year before. The MacroTrends data show JP Morgan’s market cap stood at around $405bn last week, a $21.8bn increase in a month, still a 5% drop year-over-year.
Goldman Sachs has also witnessed its market cap plunge amid the COVID-19 crisis, with the figure falling from $87.9bn in January to $48.3bn in March 2020. However, statistics indicate the combined value of stocks of the world’s second-largest investment bank quickly bounced back, reaching $73.6bn by the end of the second quarter of 2020.
After slipping to $69.4bn in September, Goldman Sachs` market cap surged to $91.1bn in December, a 31% jump in three months. The increasing trend continued in 2021, with the combined value of shares of the US megabank rising by another $9.1bn in January.
JP Morgan and Goldman Sachs Generated 17% of Global Investment Banking Revenue in 2020
The year 2020 witnessed a boost in investment banking revenues as the world’s largest banks focused on trading and investment activities amid unprecedented stock market volatility.
Analyzed by regions, Asian banks witnessed the most significant growth, with their investment banking profits rising by 27% year-over-year to $13bn in 2020, revealed the Wall Street Journal and Dealogic data.
The US investment banking market increased by 24% in a year and hit $49.3bn in revenue. European investment banks followed with a 12% year-on-year growth to $18.6bn in revenue.
As a market leader, JP Morgan gained a 9.1% market share in 2020, a 0.2% increase year-on-year. The US giant’s total investment banking revenue rose by $1.6bn to nearly $8.5bn last year.
Goldman Sachs Group hit $7.6bn in investment banking revenue in 2020 and an 8.3% market share, compared to 7.5% in 2019. Statistics show the New York-based financial giant increased its investment banking profits by more than $1.8bn year-on-year.