Zacks Industry Outlook Highlights ICICI Bank, Itau Unibanco and Deutsche Bank

Zacks Equity Research
11 min read

In This Article:

For Immediate Release

Chicago, IL – January 31, 2024 – Today, Zacks Equity Research discusses ICICI Bank Ltd. IBN, Itaú Unibanco Holding S.A. ITUB and Deutsche Bank Aktiengesellschaft DB.

Industry: Foreign Banks

Link: https://www.zacks.com/commentary/2217653/3-stocks-to-consider-from-the-prospering-foreign-banks-industry

Banks across the globe have been continuously undertaking restructuring efforts to focus more on core operations. While these efforts are expected to result in elevated expenses, they will aid growth in the long run. Moreover, while the uneven economic recovery in developed and emerging nations has been hurting revenue growth for companies within the Zacks Foreign Banks Industry, higher interest rates will continue to provide support.

Thus, despite the geopolitical concerns, industry players like ICICI Bank Ltd., Itaú Unibanco Holding S.A. and Deutsche Bank Aktiengesellschaft are well-poised to benefit from the high interest rate environment.

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, the banks offer financial services to corporate clients having businesses in the country.

The 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 firms are involved in developing only specialized services.

3 Foreign Bank Industry Trends to Watch

High Interest Rates Likely to Aid Top-Line Growth: The efforts undertaken by the central banks across the globe to cushion economies from the pandemic-induced economic slowdown in 2020 (reducing benchmark interest rates to record lows) were successful in aiding immediate economic growth. However, it eroded banks' profitability to a great extent.

The pace of economic recovery, which has been uneven in the developed (home to a number of major foreign banks) and emerging nations, also hampered banking operations globally. Nevertheless, almost all central banks across the globe began raising interest rates since the beginning of 2022 to counter inflation, which supported banks' top-line growth. Despite the current pause in rate hikes, banks are expected to continue to witness growth in their net interest income and margins in the high interest rate environment.

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