Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day.

It's Monday, March 5th, and we're talking about investing in international banks.

I'm your host, Michael, and I'm joined by Matt Frankel. Now folks you've been listening for a little while

know that we've done we did kind of a three-part series on the big American

Banks. We started with the Investment Banks, then we went to the universal banks, and then we ended with the commercial banks.

Well, now with that as kind of a background and using the same framework that we've been using to approach banks, let's talk

a little bit about international banks.

Now, I guess the first thing we should note here is that international banks in a lot of ways

are pretty similar to US-based banks.

You know, generally speaking, they lend out money. They take in money as deposit, they lend out money.

They lend out at a higher rate and that's how they make their money.

And they have largely the same valuation metrics as U.S. Banks too.

Yeah, just like US banks you can find

foreign banks that are you know purely commercial banks, investment banks,

Universal banks, kind of like so our three-part series we just did.

And you use kind of the same valuation metrics to evaluate them.

Price to Tangible Book is always one of our favorites when it comes to banks.

Again, don't do a too much stock into the price to earnings ratio with a bank.

The price to tangible book combined with profitability metrics such as return on assets,

return on equity, which by the way you want to see about 1% and 10% give or take on those,

respectively, efficiency ratio. When you put those metrics together, it kind of gives you a good picture of what you're buying for your money.

Yeah and I'll just sort of double underline efficiency ratio as just such a useful way to understand really how the bank,

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