Banks’ market value in times of COVID-19

Banks’ market value in times of COVID-19

Fecha: julio 2020

Ángel Berges, Marta Alberni y Diego Aires, A.F.I.

Valoración bursátil, Banca, Saneamiento, COVID-19, Recuperación

SEFO, Spanish and International Economic & Financial Outlook, V. 9 N.º 4

COVID-19 issued a substantial blow to banks’ share prices across the globe but especially in Europe. Notably, this occurred in the context of a three-year-long sector valuation slump despite an improvement in banks’ capital and liquidity levels. Analysis of banks’ equity prices and COVID-19 incidents shows the intensity of the equity market contractions sustained by the national banking systems is somewhat correlated with the incidence of the pandemic. Looking more deeply at the impact, data show these market corrections have sharply eroded banks’ priceto- book ratios. However, the industry has broadly seen a recovery since the lows of March, due to fiscal and monetary stimulus, the possibility of a vaccine, and effectiveness of lockdown measurements. Interestingly, those banks that have made the greatest loss provisions have also been the institutions to perform most strongly during the recovery.

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