Zacks Industry Outlook Highlights: Banco de Chile, Banco Macro S.A., HDFC and ICICI

CHICAGO--(BUSINESS WIRE)--Today, Zacks Equity Research discusses the Non-U.S. Banks Industry, including Banco de Chile (NYSE: BCH), Banco Macro S.A. (NYSE: BMA), HDFC Bank Limited (NYSE: HDB) and ICICI Bank Limited (NYSE: IBN).

A synopsis of today’s Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/36646/Non-U.S.+Banks+Stock+Update+-+July+2010.

Though the industry is in the process of adopting tougher measures to help prevent a recurrence of the global financial crisis and restore public confidence, there remain lingering concerns. However, we believe it would be a perfect time to get involved with non-U.S. bank stocks for long-term investments, as valuations are now comparatively cheaper.

Investors with short-term targets should not go for non-U.S. stocks at this point as the near-term fundamental outlook remains weak -- asset quality is expected to continue to deteriorate as individuals and companies default on loans, and revenue growth should remain stretched as loan growth falters and investment banking faces a dearth of new business despite the economic recovery.

In all, a key determinant for quick recovery will be the quality of risk analysis and how well risk awareness is built into decision-making and incentive policies. So we believe that accumulating larger capital buffers over the cycle and reducing pointless complexity in business will be crucial for the performance of non-U.S. banks. Also, the primary attention of policymakers should be to determine how much longer the fiscal stimulus should continue. The stimulus should continue at least until a clearer sign of economic recovery is visible.

Currently, the banks in the Zacks covered non-U.S. bank universe with a Zacks #1 Rank (Strong Buy) are Banco de Chile (NYSE: BCH) and Banco Macro S.A. (NYSE: BMA).

We also like HDFC Bank Limited (NYSE: HDB) and ICICI Bank Limited (NYSE: IBN) in India. Both of these banks have recently been emphasizing strong cost controls and improved operating efficiency, rather than growth, as key strategies. As a result, these banks have been able to offset some of the earnings pressure from higher loss provisions due to weakening asset quality. We anticipate continued synergies from these banks’ cost-containment measures and operating efficiency.

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