Several factors, such as multi-decade high inflation, the possibility of aggressive interest rate hikes, and the Ukraine-Russia war, have resulted in enormous volatility in the stock market. Furthermore, lingering supply chain issues due to geopolitical tensions and extended COVID-19 lockdowns in China have added to investors' anxieties. Many analysts also expect the Fed’s monetary policy tightening to push the economy into a recession.
Following a decline in GDP in the first quarter, many analysts and economists have cut their GDP growth estimates for the second quarter. Goldman Sachs slashed its estimates for second-quarter GDP from 2.9% to 2.5%. And Wells Fargo's CEO said there's "no question" that the economy is heading into a recession.
When domestic market and economic trends are uncertain, investing in foreign stocks helps mitigate one’s portfolio risks as their performance is tied to different economic conditions. Therefore, we think it could be wise to bet on fundamentally sound foreign bank stocks KB Financial Group Inc. (KB) and Banco Santander, S.A. (SAN).
KB Financial Group Inc. (KB)
Headquartered in Seoul, South Korea KB offers a variety of banking and related financial services to consumers and corporations in South Korea and internationally. Corporate Banking, Retail Banking, Other Banking Services, Securities Business, Non-life Insurance Business, Credit Card Business, and Life Insurance Business segments are the different operational segments of the company.
During the first quarter, ending March 31, 2022, KB's net interest income increased 3.3% year-over-year to KRW2648.00 billion ($2.09 billion). Its gross operating income grew 2.8% from its year-ago value to KRW3723.70 billion ($2.94 billion), while its profit for the period improved 149.8% from its prior-year quarter to KRW1464.1 billion ($1.16 billion).
Analysts expect revenue to increase 4.8% year-over-year to $12.68 billion for fiscal 2023. The stock has gained 2.4% in price over the past nine months.
KB's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has a B grade for Value, Stability, and Growth. Within the B-rated Foreign Banks Industry, it is ranked #1 of 95 stocks.
To see additional POWR Ratings for Sentiment, Quality, and Momentum for KB, click here.
Banco Santander, S.A. (SAN)
Headquartered in Madrid, Spain, SAN renders several retail and commercial banking products and services to individuals, small- and medium-sized enterprises, and large companies worldwide. It offers demand and time deposits, current and savings accounts; mortgages, consumer finance, and other related products and services.
SAN's total income increased 4.5% year-over-year to €12.31 billion ($12.96 billion) for the first quarter, ending March 31, 2022. Its net operating income improved 10.2% from its year-ago value to €6.77 billion ($7.13 billion), while its profit before tax amounted to €4.17 billion ($4.39 billion), up 8.9% from its prior-year quarter. The company's EPS rose 13.2% year-over-year to €0.14.
Analysts expect SAN's revenue to increase 4.3% year-over-year to $54.52 billion for fiscal 2023. The stock has declined 15.7% in price over the past month.
SAN's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has a B grade for Value, Sentiment, and Stability. Within the same industry, it is ranked #5.
In total, we rate SAN on eight distinct levels. Beyond what we have stated above, we have also given SAN grades for Quality, Growth, and Momentum. Get all the SAN ratings here.
KB shares were trading at $44.93 per share on Friday afternoon, up $0.07 (+0.16%). Year-to-date, KB has declined -2.06%, versus a -18.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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