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3 Stocks to Consider From the Thriving Foreign Banks Industry
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The efforts made by most banks across the globe to continuously restructure their businesses to focus on core operations are expected to elevate expenses in the near term but drive growth in the long run. Though the uneven economic recovery in developed and emerging nations has been hurting revenue growth for companies within the Zacks Foreign Banks Industry, relatively lower interest rates will likely provide support.
Thus, despite geopolitical and macroeconomic woes, industry players like HSBC Holdings plc (HSBC - Free Report) , UBS Group AG (UBS - Free Report) and Barclays PLC (BCS - Free Report) are well-poised to gain from business streamlining efforts and lower rates.
About the Industry
The Zacks Foreign Banks Industry consists of overseas banks with operations in the United States. Since a foreign banking organization may have federal and state-chartered offices in the country, the Federal Reserve plays a major role in supervising their U.S. operations. In addition to providing a broad range of products and services to customers in the United States, banks offer financial services to corporate clients having businesses in the country. Financial firms establish relations with U.S. corporations operating in their home countries. Some units of foreign banks offer a broad range of wholesale and retail services and conduct money-market transactions for their parent organizations. Some industry players are involved in developing only specialized services like wealth/asset management and investment banking.
3 Themes Influencing the Foreign Banks Industry
Restructuring Efforts: Several foreign banks have continuously been undertaking business restructuring initiatives. Many banks have been divesting or closing non-core operations to focus more on their core businesses and profitable markets. Through this, industry players are changing their revenue mix and aiming to expand to other lucrative operations.
Relatively Lower Interest Rates: Given that central banks globally have been lowering interest rates, foreign banks’ net interest income (NII) and margins are expected to benefit, which were under pressure because of higher funding/deposit costs. With falling rates and decent economic growth, demand for loans is expected to improve. Industry players are likely to witness NII expansion. Efforts taken by most banks to diversify revenues to become less dependent on spread income are likely to aid non-interest income. Also, lower interest rates will likely lead to the revival of investment banking business and support wealth/asset management operations. Hence, industry players are likely to record an increase in revenues in the coming quarters.
Uneven Global Economic Recovery: Following the COVID-19 pandemic, global economic recovery has been uneven. In many regions, economic growth has slowed but not fully recovered from the pandemic’s effects, while geopolitical headwinds are hurting the economy in others. Banks’ performances are directly linked to the performance of the overall economy. Weak economic growth in their home markets may hurt foreign banks’ profitability to some extent in the upcoming period.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Foreign Banks Industry is a 66-stock group within the broader Zacks Finance Sector. The industry currently carries a Zacks Industry Rank #62, which places it in the top 25% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is because of the encouraging earnings outlook for the constituent companies in aggregate. The aggregate earnings estimate revisions show that analysts are gaining confidence in this group’s growth potential. Since September 2024, the industry’s earnings estimates for 2025 have been revised 11.7% upward.
Hence, we present a few stocks from the industry that you may want to consider. But before that, let us check out the industry’s recent stock market performance and valuation picture.
Industry vs. S&P 500 & Sector
The Zacks Foreign Banks Industry has outperformed the S&P 500 and its sector in the past two years. Stocks in the industry have collectively surged 68.7%. The S&P 500 composite has rallied 44.6% and the Zacks Finance Sector has appreciated 48.9%.
2-Year Price Performance
Industry's Valuation
One may get a good sense of the industry’s relative valuation by looking at its price-to-tangible book ratio (P/TBV), which is commonly used for valuing foreign banks because of large variations in their earnings from one quarter to the next.
The industry currently has a trailing 12-month P/TBV of 2.53X. This compares with the highest level of 2.55X, the lowest level of 1.03X and the median of 1.72X over the past five years. The industry is trading at a significant discount compared with the market at large, as the trailing 12-month P/TBV for the S&P 500 composite is 13.04X, which the chart below shows.
Price-to-Tangible Book Ratio (TTM)
As finance stocks typically have a lower P/TBV ratio, comparing foreign banks with the S&P 500 may not make sense to many investors. However, a comparison of the group’s P/TBV ratio with that of its broader sector ensures that it is trading at a decent discount. The Zacks Finance Sector’s trailing 12-month P/TBV of 5.64X and the median level of 4.71X for the same period are above the Zacks Foreign Banks Industry’s ratios.
Price-to-Tangible Book Ratio (TTM)
3 Foreign Bank Stocks to Consider
HSBC: Headquartered in London, HSBC is a major global banking and financial services firm, with $3.21 trillion in assets as of June 30, 2025. The company has been committed to bolstering its performance, focusing on building operations across Asia. It intends to position itself as a top bank for high-net-worth and ultra-high-net-worth clients in the region.
In mainland China, HSBC has been growing its wealth business through lifestyle-focused centers, acquisitions like Citigroup’s retail wealth arm, digital upgrades and talent hires. In India, the company is expanding rapidly, with approval to open 20 new branches, adding to its current 26. As the country’s wealthy population surges, HSBC is boosting its presence through initiatives like launching Global Private Banking, acquiring L&T Investment Management and enhancing Premier Banking. These initiatives will likely help the company strengthen its position in the Asia and global markets.
Moreover, in sync with its Asia pivot strategy, HSBC announced plans to redeploy an additional $1.5 billion from the reallocation of costs from non-strategic or low-returning activities into its core strategy, wherein it has competitive strength. The bank is winding down its non-core operations in the U.K., Europe and the United States, while maintaining a more focused presence in Asia and the Middle East.
It is also progressing with divestments in Uruguay, Germany, South Africa, Bahrain and France. Apart from these, HSBC completed the sale of its businesses in the United States, Canada, New Zealand, Greece, Russia, Argentina and Armenia, as well as the retail banking operations in France and Mauritius.
Further, HSBC has been restructuring its operations to improve operating efficiency. In February 2025, the company announced a $1.5-billion cost-saving plan from the organizational simplification efforts (to be achieved by 2026). It will likely incur $1.8 billion in total severance and other upfront charges by the end of next year to implement these efforts.
Shares of the company have risen 6% on the NYSE in the past six months. The Zacks Consensus Estimate for its current-year earnings has moved 3.1% higher in the past 60 days. Currently, HSBC sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: HSBC
UBS: Zurich, Switzerland-based UBS Group is a major global financial services firm with $1.67 trillion in total assets as of June 30, 2025.
Over the years, UBS has fortified its geographic footprint and expanded operations with partnerships and buyouts. In April 2025, UBS made a partnership with 360 ONE WAM Ltd, one of India's leading wealth and asset managers. In June 2023, it completed the regulatory-assisted acquisition of Credit Suisse, strengthening its wealth and asset management capabilities and supporting growth in capital-light businesses.
Per its business restructuring plans, UBS is likely to wind down its Non-Core and Legacy portfolio, releasing more than $6 billion of capital by 2026-end. Its Non-core and Legacy business division has achieved a 62% reduction in risk-weighted assets (RWA) by the second quarter, well ahead of its original plan. As a result, the company has updated its ambition and aims to reduce Non-core and Legacy RWA to below $8 billion by the end of 2025 and $1.6 billion by the end of 2026.
Through these efforts, UBS is well-positioned to enhance the client experience and unlock further cost reductions toward the end of 2025 and into 2026 as it delivers on its ambition of $13 billion in gross cost savings by the end of 2026. Also, its wealth management joint venture (JV) with Japan’s Sumitomo Mitsui Trust Holdings (UBS SuMi TRUST Wealth Management Co.) and investment banking JV with Banco Do Brasil SA are likely to keep supporting its financials going forward.
Shares of this Zacks Rank #1 company have risen 19% on the NYSE in the past six months. The Zacks Consensus Estimate for its current-year earnings has moved 10.9% higher in the past 60 days.
Price & Consensus: UBS
Barclays: Headquartered in London, Barclays is a major global banking and financial services company with £1,598.7 billion ($2,192.3 billion) in total assets as of June 30, 2025.
The firm’s initiatives to improve efficiency over the past few years have been bearing fruit, as evident by a fall in expenses. While total operating expenses increased in 2022, 2023 and the first half of 2025, the metric declined in 2024, seeing a negative CAGR of 2.4% over the six years ended 2021. Overall expenses are anticipated to remain manageable as business restructuring initiatives continue to provide support.
BCS intends to undertake further cost-saving actions to improve efficiency. Its structural cost actions have resulted in gross savings of £1 billion in 2024. It aims to achieve gross efficiency savings of £0.5 billion in 2025. By 2026-end, management expects total gross efficiency savings of £2 billion and the cost-to-income ratio to be in the high 50s.
Barclays has been striving to simplify operations and focus on its core businesses. In August 2025, it agreed to sell its stake in Entercard Group to partner Swedbank AB for $273 million. In April 2025, it announced a collaboration with Brookfield to transform its payment acceptance business. In February 2025, it divested its Germany-based consumer finance business. Driven by these initiatives, along with several past efforts, the company’s profitability is expected to improve over time.
Currently, Barclays carries a Zacks Rank #3 (Hold). BCS shares have gained 24.5% on the NYSE in the past six months. The Zacks Consensus Estimate for the company’s 2025 earnings has moved marginally lower in the past 60 days.
Price & Consensus: BCS
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3 Stocks to Consider From the Thriving Foreign Banks Industry
The efforts made by most banks across the globe to continuously restructure their businesses to focus on core operations are expected to elevate expenses in the near term but drive growth in the long run. Though the uneven economic recovery in developed and emerging nations has been hurting revenue growth for companies within the Zacks Foreign Banks Industry, relatively lower interest rates will likely provide support.
Thus, despite geopolitical and macroeconomic woes, industry players like HSBC Holdings plc (HSBC - Free Report) , UBS Group AG (UBS - Free Report) and Barclays PLC (BCS - Free Report) are well-poised to gain from business streamlining efforts and lower rates.
About the Industry
The Zacks Foreign Banks Industry consists of overseas banks with operations in the United States. Since a foreign banking organization may have federal and state-chartered offices in the country, the Federal Reserve plays a major role in supervising their U.S. operations. In addition to providing a broad range of products and services to customers in the United States, banks offer financial services to corporate clients having businesses in the country. Financial firms establish relations with U.S. corporations operating in their home countries. Some units of foreign banks offer a broad range of wholesale and retail services and conduct money-market transactions for their parent organizations. Some industry players are involved in developing only specialized services like wealth/asset management and investment banking.
3 Themes Influencing the Foreign Banks Industry
Restructuring Efforts: Several foreign banks have continuously been undertaking business restructuring initiatives. Many banks have been divesting or closing non-core operations to focus more on their core businesses and profitable markets. Through this, industry players are changing their revenue mix and aiming to expand to other lucrative operations.
Relatively Lower Interest Rates: Given that central banks globally have been lowering interest rates, foreign banks’ net interest income (NII) and margins are expected to benefit, which were under pressure because of higher funding/deposit costs. With falling rates and decent economic growth, demand for loans is expected to improve. Industry players are likely to witness NII expansion. Efforts taken by most banks to diversify revenues to become less dependent on spread income are likely to aid non-interest income. Also, lower interest rates will likely lead to the revival of investment banking business and support wealth/asset management operations. Hence, industry players are likely to record an increase in revenues in the coming quarters.
Uneven Global Economic Recovery: Following the COVID-19 pandemic, global economic recovery has been uneven. In many regions, economic growth has slowed but not fully recovered from the pandemic’s effects, while geopolitical headwinds are hurting the economy in others. Banks’ performances are directly linked to the performance of the overall economy. Weak economic growth in their home markets may hurt foreign banks’ profitability to some extent in the upcoming period.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Foreign Banks Industry is a 66-stock group within the broader Zacks Finance Sector. The industry currently carries a Zacks Industry Rank #62, which places it in the top 25% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is because of the encouraging earnings outlook for the constituent companies in aggregate. The aggregate earnings estimate revisions show that analysts are gaining confidence in this group’s growth potential. Since September 2024, the industry’s earnings estimates for 2025 have been revised 11.7% upward.
Hence, we present a few stocks from the industry that you may want to consider. But before that, let us check out the industry’s recent stock market performance and valuation picture.
Industry vs. S&P 500 & Sector
The Zacks Foreign Banks Industry has outperformed the S&P 500 and its sector in the past two years. Stocks in the industry have collectively surged 68.7%. The S&P 500 composite has rallied 44.6% and the Zacks Finance Sector has appreciated 48.9%.
2-Year Price Performance
Industry's Valuation
One may get a good sense of the industry’s relative valuation by looking at its price-to-tangible book ratio (P/TBV), which is commonly used for valuing foreign banks because of large variations in their earnings from one quarter to the next.
The industry currently has a trailing 12-month P/TBV of 2.53X. This compares with the highest level of 2.55X, the lowest level of 1.03X and the median of 1.72X over the past five years. The industry is trading at a significant discount compared with the market at large, as the trailing 12-month P/TBV for the S&P 500 composite is 13.04X, which the chart below shows.
Price-to-Tangible Book Ratio (TTM)
As finance stocks typically have a lower P/TBV ratio, comparing foreign banks with the S&P 500 may not make sense to many investors. However, a comparison of the group’s P/TBV ratio with that of its broader sector ensures that it is trading at a decent discount. The Zacks Finance Sector’s trailing 12-month P/TBV of 5.64X and the median level of 4.71X for the same period are above the Zacks Foreign Banks Industry’s ratios.
Price-to-Tangible Book Ratio (TTM)
3 Foreign Bank Stocks to Consider
HSBC: Headquartered in London, HSBC is a major global banking and financial services firm, with $3.21 trillion in assets as of June 30, 2025. The company has been committed to bolstering its performance, focusing on building operations across Asia. It intends to position itself as a top bank for high-net-worth and ultra-high-net-worth clients in the region.
In mainland China, HSBC has been growing its wealth business through lifestyle-focused centers, acquisitions like Citigroup’s retail wealth arm, digital upgrades and talent hires. In India, the company is expanding rapidly, with approval to open 20 new branches, adding to its current 26. As the country’s wealthy population surges, HSBC is boosting its presence through initiatives like launching Global Private Banking, acquiring L&T Investment Management and enhancing Premier Banking. These initiatives will likely help the company strengthen its position in the Asia and global markets.
Moreover, in sync with its Asia pivot strategy, HSBC announced plans to redeploy an additional $1.5 billion from the reallocation of costs from non-strategic or low-returning activities into its core strategy, wherein it has competitive strength. The bank is winding down its non-core operations in the U.K., Europe and the United States, while maintaining a more focused presence in Asia and the Middle East.
It is also progressing with divestments in Uruguay, Germany, South Africa, Bahrain and France. Apart from these, HSBC completed the sale of its businesses in the United States, Canada, New Zealand, Greece, Russia, Argentina and Armenia, as well as the retail banking operations in France and Mauritius.
Further, HSBC has been restructuring its operations to improve operating efficiency. In February 2025, the company announced a $1.5-billion cost-saving plan from the organizational simplification efforts (to be achieved by 2026). It will likely incur $1.8 billion in total severance and other upfront charges by the end of next year to implement these efforts.
Shares of the company have risen 6% on the NYSE in the past six months. The Zacks Consensus Estimate for its current-year earnings has moved 3.1% higher in the past 60 days. Currently, HSBC sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: HSBC
UBS: Zurich, Switzerland-based UBS Group is a major global financial services firm with $1.67 trillion in total assets as of June 30, 2025.
Over the years, UBS has fortified its geographic footprint and expanded operations with partnerships and buyouts. In April 2025, UBS made a partnership with 360 ONE WAM Ltd, one of India's leading wealth and asset managers. In June 2023, it completed the regulatory-assisted acquisition of Credit Suisse, strengthening its wealth and asset management capabilities and supporting growth in capital-light businesses.
Per its business restructuring plans, UBS is likely to wind down its Non-Core and Legacy portfolio, releasing more than $6 billion of capital by 2026-end. Its Non-core and Legacy business division has achieved a 62% reduction in risk-weighted assets (RWA) by the second quarter, well ahead of its original plan. As a result, the company has updated its ambition and aims to reduce Non-core and Legacy RWA to below $8 billion by the end of 2025 and $1.6 billion by the end of 2026.
Through these efforts, UBS is well-positioned to enhance the client experience and unlock further cost reductions toward the end of 2025 and into 2026 as it delivers on its ambition of $13 billion in gross cost savings by the end of 2026. Also, its wealth management joint venture (JV) with Japan’s Sumitomo Mitsui Trust Holdings (UBS SuMi TRUST Wealth Management Co.) and investment banking JV with Banco Do Brasil SA are likely to keep supporting its financials going forward.
Shares of this Zacks Rank #1 company have risen 19% on the NYSE in the past six months. The Zacks Consensus Estimate for its current-year earnings has moved 10.9% higher in the past 60 days.
Price & Consensus: UBS
Barclays: Headquartered in London, Barclays is a major global banking and financial services company with £1,598.7 billion ($2,192.3 billion) in total assets as of June 30, 2025.
The firm’s initiatives to improve efficiency over the past few years have been bearing fruit, as evident by a fall in expenses. While total operating expenses increased in 2022, 2023 and the first half of 2025, the metric declined in 2024, seeing a negative CAGR of 2.4% over the six years ended 2021. Overall expenses are anticipated to remain manageable as business restructuring initiatives continue to provide support.
BCS intends to undertake further cost-saving actions to improve efficiency. Its structural cost actions have resulted in gross savings of £1 billion in 2024. It aims to achieve gross efficiency savings of £0.5 billion in 2025. By 2026-end, management expects total gross efficiency savings of £2 billion and the cost-to-income ratio to be in the high 50s.
Barclays has been striving to simplify operations and focus on its core businesses. In August 2025, it agreed to sell its stake in Entercard Group to partner Swedbank AB for $273 million. In April 2025, it announced a collaboration with Brookfield to transform its payment acceptance business. In February 2025, it divested its Germany-based consumer finance business. Driven by these initiatives, along with several past efforts, the company’s profitability is expected to improve over time.
Currently, Barclays carries a Zacks Rank #3 (Hold). BCS shares have gained 24.5% on the NYSE in the past six months. The Zacks Consensus Estimate for the company’s 2025 earnings has moved marginally lower in the past 60 days.
Price & Consensus: BCS