zeb.market flash (Issue 19 – October 2016)

K e y  t o p i c s

I. State of the banking industry

  • Global top 100 banks increased their market capitalization by +6.5% and achieved the second highest TSR performance among all industry sectors (+9.9%) in Q3 2016
  • European banking sector with strong quarter-over-quarter performance (+15%) after a weak first half of 2016—several large European institutions still with disastrous P/B ratios far below 1.0x

II. Economic environment and key banking drivers

  • Economic environment for Western Europe still mainly influenced by economic uncertainty due to Brexit vote as well as persistent structural problems of the European banking sector
  • ECB’s expansive monetary policy pushed down the long end of the European money and capital market rates
  • Profitability of global and European banks improved in Q2 2016, but with huge differences across the sector

III. Special topic: analysis of the ECB’s asset purchasing program

  • Between October 2014 and September 2016, the ECB purchased a total of EUR 1.29 tr of marketable assets leading to an increase in its balance sheet by +63% to over EUR 3.3 tr
  • Decreasing yields, lower market liquidity as well as negative impacts on the banking sector are becoming more and more observable

Feel free to contact us!

Author Dr. Dirk Holländer

Dr. Dirk Holländer

Senior Partner Office Frankfurt

Volker Abel

Senior Manager zeb
Dr. Ekkehardt Bauer / author BankingHub

Dr. Ekkehardt Bauer

Senior Manager Office Münster

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