Zacks Industry Outlook Highlights: BBVA Banco Frances S.A., Bancolombia S.A., Banco Bradesco S.A., Banco Latinoamericano de Come

CHICAGO, Feb. 16, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Non-U.S. Banks Industry, including: BBVA Banco Frances S.A. (NYSE: BFR), Bancolombia S.A. (NYSE: CIB), Banco Bradesco S.A. (NYSE: BBD), Banco Latinoamericano de Comercio Exterior, S.A (NYSE: BLX) and Mitsubishi UFJ Financial Group, Inc. (NYSE: MTU).

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A synopsis of today's Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/47644/Non-U.S.+Banks+Stock+Update+-+Feb.+2011

Although the upturn in the banking sector through the first half of 2011 will vary from country to country, depending on industry circumstances, we believe that banks in emerging economies -- Chile, Brazil or India -- might make more attractive investments, akin to our expectations from certain regional banks in the U.S.

The same, however, cannot be said of European institutions. In early 2010, the debt crisis originating in the Greek economy shook the stability of the European Union's (EU) monetary policies. Starting as a solvency crisis in a single country, the turmoil threatened the entire Euro-zone.

Greece adopted measures to minimize government spending and stress test results were largely reassuring, but there is no guarantee that the country is out of the woods as affluent domestic and foreign investors will not stop withdrawing their money from Greek banks anytime soon. Also, rising inflation will force regulators to tighten their policies in the Euro zone, making banks less flexible.

The European Union is in the process to restore confidence of investors and health of the European banking system, but the issue is far from fully addressed.

Quite obviously, banks in emerging economies will face asset quality issues. However, they are not plagued by other significant problems that many of the larger banks face in continental Europe and the United Kingdom, such as toxic securities and dilution from capital raising. Moreover, these emerging-market banks generally tend to be well capitalized, aren't as heavily exposed to property markets, and have significant and growing sources of non-interest income.

Banks are finally learning from the crisis. In 2010, banks in emerging economies performed remarkably well in serving as a stabilizing force in global economic recovery.

Overall, a key determinant for quick recovery will be the quality of risk analysis and risk-awareness in 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 to banking performance.

Also, the primary attention of policymakers should be on determining how much longer the fiscal stimulus should continue, ensuring that it is not withdrawn before a clearer sign of economic recovery is visible.

OPPORTUNITIES

Currently, financial institutions in the non-U.S. bank universe with a Zacks #1 Rank (Strong Buy) are BBVA Banco Frances S.A. (NYSE: BFR) and Bancolombia S.A. (NYSE: CIB). Banks that we like with a Zacks #2 Rank (Buy) include Banco Bradesco S.A. (NYSE: BBD), Banco Latinoamericano de Comercio Exterior, S.A (NYSE: BLX) and Mitsubishi UFJ Financial Group, Inc. (NYSE: MTU).

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