Diversify Your Portfolio with These 3 International Banks

International banking stocks are a solid investment option when the domestic market reflects uncertainty. They help diversify one’s portfolio, given that local macroeconomic factors don’t necessarily influence their performance. They also present a wide range of opportunities that are unavailable to domestic bank stocks.

The prolonged low interest rate environment in the United States threatens the domestic banking sector. But their own country-specific factors could drive the performance of many international banking stocks in the near term.

So, we think it could be wise to diversify one’s portfolio by adding a few high-quality international banking stocks. Banco Santander, S.A. (SAN), UBS Group AG (UBS), and Barclays PLC (BCS) meet that quality and could be solid bets considering their fundamental strength.

Banco Santander, S.A. (SAN)

Headquartered in Madrid, Spain, SAN operates through 11,236 branches and provides retail and commercial banking products and services to individuals, small- and medium-sized enterprises, and large companies worldwide. In addition, it offers demand and time deposits and current and savings accounts.

On July 15, 2021, SAN announced that Santander Holdings USA, the bank’s U.S. holding company, had agreed to acquire Amherst Pierpont Securities by acquiring its parent holding company, Pierpont Capital Holdings LLC. Ana Botín, SAN’s Group executive chairman, said, “This acquisition is consistent with our customer-focused strategy and our commitment to profitable growth in the USA.”

SAN’s total income increased 6% year-over-year to €11.30 billion ($13.25 billion) for its  fiscal second quarter, ended June 30, 2021. The company’s net operating income grew 7% year-over-year to €6.05 billion ($7.08 billion), while its profit before tax increased 102% year-over-year to $3.81 billion ($4.47 billion). Also, its underlying profit came in at $2.07 billion ($2.42 billion), up 35% year-over-year.

Analysts expect SAN’s EPS and revenue to increase 17.7% and 2.5%, respectively,  year-over-year to $0.47 and $54.61 billion in its fiscal year 2022. The stock has leapt  75.6% over the past year to close yesterday’s trading session at $3.40.

SAN’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

The stock has a B grade for Stability and Sentiment. Within the Foreign Banks industry, SAN is ranked #5 of 98 stocks. Click here to see the additional POWR Ratings for SAN (Value, Growth, Quality, and Momentum).

UBS Group AG (UBS)

Based in Zurich, Switzerland, UBS provides financial advice and solutions to private, institutional, and corporate clients worldwide. It operates through four divisions: Global Wealth Management; Personal & Corporate Banking; Asset Management; and Investment Bank.

UBS SuMi TRUST Wealth Management Co., Ltd. announced on August 10 that it had launched operations in Tokyo, Osaka, and Nagoya. Victor Chang, President and Representative Director of the company, said, “We are convinced that the legacy clients of UBS and SMTH, as well as an enormous market of untapped wealthy individuals, will place considerable value on this unique service portfolio.”

UBS’ operating income increased 21.2% year-over-year to $8.98 billion for its fiscal second quarter, ended June 30, 2021. The company’s operating profit grew 63.9% year-over-year to $2.59 billion, while its net profit increased 62.8% to $2 billion. Also, its EPS came in at $0.55, up 66.7% year-over-year.

For fiscal year 2022, analysts expect UBS’ EPS to increase 3.3% year-over-year to $1.67. In addition, the company’s revenue is expected to increase 1.9% year-over-year to $33.82 billion in fiscal 2021. The stock has soared 27.9% in price over the past year to close yesterday’s trading session at $15.39.

It’s no surprise that UBS has an overall B rating, which equates to a Buy in our POWR Rating system. The stock also has a B grade for Value, Momentum, Stability, and Sentiment.

Click here to see UBS’ ratings for Growth and Quality as well. UBS is ranked #8 in the same industry.

Barclays PLC (BCS)

BCS provides various financial products and services operating through Barclays UK and Barclays International divisions. The London-based company offers financial services, such as retail banking, credit cards, wholesale banking, investment banking, and wealth management services.

BCS announced a partnership with Simply Business on August 18. The partnership is expected to enable small businesses, including BCS’ one million business customers, to obtain a business insurance quote via Barclays.co.uk or over the phone. It is expected to help the consumers choose from a panel of well-known insurers, tailoring policies to suit their needs.

BCS’ net operating income increased 67.2% year-over-year to £6.21 billion ($6.89 billion) for its fiscal second quarter ended June 30, 2021. The company’s profit before tax grew 618.7% year-over-year to £2.58 billion ($2.83 billion), while its attributable profit came in at £2.11 billion ($2.01 billion), representing a 2,242.2% year-over-year increase. Also, its EPS was 12.3p, up 2,360% year-over-year.

The company’s EPS is expected to increase 230.4% year-over-year to $1.74 in its fiscal year 2021. In addition, BCS’ revenue is expected to increase 4% year-over-year to $7.06 billion for the quarter ending September 30, 2021. Over the past nine months, the stock has rallied 93.6% to close yesterday’s trading session at $9.72.

BCS’ POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to a Buy in our proprietary rating system. In addition, it has a B grade for Growth, Momentum, Stability, Sentiment, and Value.

Click here to see the additional POWR Rating for BCS (Quality). Again, BCS is ranked #1 in the same industry.

SAN shares were trading at $3.40 per share on Tuesday afternoon, down $0.00 (0.00%). Year-to-date, SAN has gained 11.48%, versus a 16.96% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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