The state of the U.S. banking system has shaken investors’ confidence following the consecutive collapses of regional banks Silicon Valley Bank, Signature Bank, and First Republic Bank earlier this year.
Amid the current challenges, investors could look to consider fundamentally strong foreign bank stocks Intesa Sanpaolo S.p.A. (ISNPY), Commerzbank AG (CRZBY), and Woori Financial Group Inc. (WF).
Although inflation is starting to cool off, Federal Reserve policymakers are primed to resume raising interest rates this month and remain open to a further increase later in the year. Federal Reserve Bank of San Francisco President, Mary Daly, stated, “It’s really too early to say that we’ve declared victory on inflation.”
While aggressive interest rate hikes have made borrowing difficult, a tumult in the banking sector has raised concerns of U.S banks tightening lending standards further and a potential credit crunch. This could pose a threat to banks as it puts pressure on their profit margins.
Considering this, foreign banks trading at a discounted valuation and benefitting from high interest rates could be a strategic investments.
Given these factors, investors could look out for the featured bank stocks. Let’s take a closer look at their fundamentals.
Intesa Sanpaolo S.p.A. (ISNPY)
Headquartered in Turin, Italy, ISNPY provides various financial products and services. It operates through six segments Banca dei Territori, IMI Corporate & Investment Banking, International Subsidiary Banks, Asset Management, Private Banking, and Insurance.
In terms of forward non-GAAP P/E, ISNPY’s 6.62x is 27.4% lower than the 9.11x industry average. Likewise, its 1.75x forward Price/Sales is 23.1% lower than the 2.27x industry average.
For the fiscal first quarter that ended March 31, 2023, ISNPY’s net income increased 87.7% year-over-year to €1.96 billion ($2.20 billion). Also, its EPS came in at €0.10, representing a 100% increase over the prior-year quarter.
ISNPY’s revenue for the quarter ending June 30, 2023, is expected to increase 26.5% year-over-year to $6.91 billion. The company has a commendable earnings surprise history, surpassing the consensus revenue estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 64.6% to close the last trading session at $16.37.
ISNPY’s POWR Ratings reflect this promising outlook. ISNPY has an overall rating of B, which translates to a Buy. The stock is ranked #9 out of 89 stocks in the B-rated Foreign Banks industry. It has a B grade for Growth, Momentum, and Sentiment.
We have given ISNPY grades for Value, Stability, and Quality. Get all ISNPY ratings here.
Commerzbank AG (CRZBY)
Headquartered in Frankfurt am Main, Germany, CRZBY provides banking and capital market products and services to private and small business customers, corporate groups, financial service providers, and institutional clients in Germany and worldwide. It operates through two segments, Private and Small-Business Customers and Corporate Clients.
In terms of forward Price/Sales, CRZBY’s 1.31x is 42.2% lower than the 2.27x industry average.
CRZBY’s net interest income for the first quarter increased 39% year-over-year to €1.95 billion ($2.19 billion). Moreover, its operating profit increased 60.8% year-over-year to €875 million ($982.16 million).
CRZBY’s revenue for the quarter ending September 30, 2023, is expected to increase 52% year-over-year to $2.87 billion. Over the past nine months, the stock has gained 68.6% to close the last trading session at $12.36.
CRZBY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. It is ranked #8 in the same industry. It has a B grade for Growth, Momentum, Stability, and Sentiment. Click here to see the other POWR Ratings of CRZBY for Value and Quality.
Woori Financial Group Inc. (WF)
Headquartered in Seoul, South Korea, WF operates as a commercial bank that provides a range of financial services to individual, business, and institutional customers. It operates through Banking, Credit Card; Capital; Investment Banking; and Others segments.
In terms of forward non-GAAP P/E, WF’s 3.02x is 66.9% lower than the 9.11x industry average. Likewise, its 0.84x forward Price/Sales is 62.9% lower than the 2.27x industry average.
WF’s comprehensive income attributable to owners increased 80% year-over-year to ₩1.27 trillion ($1.00 billion) for the fiscal first quarter that ended March 31, 2023. The company’s operating income increased 1.9% year-over-year to ₩1.25 trillion ($985.47 million). Additionally, its EPS came in at ₩1,214, representing a 7.7% increase over the prior-year quarter.
WF’s revenue for the fiscal period ended June 30, 2023, is expected to increased 3.1% year-over-year to $2.00 billion. Over the past nine months, the stock has gained 15.1% to close the last trading session at $27.96.
WF’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. It is ranked #18 in the Foreign Banks industry. It has an A grade for Value and B grade for Momentum and Stability. We have also given WF grades for Growth, Sentiment, and Quality. Get all WF ratings here.
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ISNPY shares were trading at $16.41 per share on Monday morning, up $0.04 (+0.26%). Year-to-date, ISNPY has gained 26.24%, versus a 18.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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