Zacks Industry Outlook Highlights: Barclays, Credit Suisse Group, HSBC Holdings, Deutsche Bank and UBS

    Zacks Industry Outlook Highlights: Barclays, Credit Suisse Group, HSBC
                       Holdings, Deutsche Bank and UBS

PR Newswire

CHICAGO, Nov. 2, 2012

CHICAGO, Nov. 2, 2012 /PRNewswire/ --Today, Zacks Equity Research discusses
the U.S. Foreign Banks, including Barclays plc (NYSE:BCS), Credit Suisse Group
(NYSE:CS),HSBC Holdings plc (NYSE:HBC), Deutsche Bank AG (NYSE:DB) and UBS AG
(NYSE:UBS).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

A synopsis of today's Industry Outlook is presented below. The full article
can be read at 

Link: 
http://www.zacks.com/stock/news/86077/foreign-banks-stock-outlook-november-2012

Valuations Look Attractive

Balance sheet repair and credit environment recovery will make the valuations
of some non-U.S. banks attractive. Particularly, valuations of the mega banks,
which could comfortably maintain the minimum capital norms mandated by the
Basel Committee, will experience the fastest valuation upside. Consequently,
we believe this would be a good time for long-term investors to consider
foreign bank stocks, as the valuations at present look comparatively cheaper.

Investors with short-term targets, however, should be watchful while choosing
foreign bank stocks at this point as near-term fundamentals remain weak. Asset
quality lacks the potential to rebound anytime soon as default rates for
individuals and companies are not expected to materially subside, and revenue
growth might remain weak with faltering loan growth and a low interest rate
environment.

If any improvement occurs in the near to mid term, it will vary from country
to country, depending on industry circumstances.

Ratings Concerns

Ratings downgrades are a major threat for major global banks. In July 2012,
Moody's Investors Service downgraded credit ratings of 15 systematically
important banks in the U.S., U.K. and Europe. The foreign banks include the
likes of

Barclays plc

(NYSE:

BCS

),

Credit Suisse Group

(NYSE:

CS

),

HSBC Holdings plc

(NYSE:

HBC

),

Deutsche Bank AG

(NYSE:

DB

) and

UBS AG

(NYSE:

UBS

).

The downgrade was based on the agency's concern related to these banks'
significant exposure to the volatility and expected losses from capital market
activities. This rating action could compel many of these banks to post
billions in additional collateral, which will make derivative trading costly.
Also, already-high borrowing costs for these banks will increase further.

In October 2012, Standard and Poor's (S&P) downgraded three French banks,
including BNP Paribas, due to rock bottom French consumer confidence. Also, in
a report issued in the same month, Moody's kept a negative outlook on
Germany's banking system as it believes intense competition, margin pressure
due to a low interest rate environment, high balance-sheet leverage and low
pre-provision profits will make it difficult for a number of German banks to
stay afloat if they incur major losses.

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