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Featured Article from MarketBeat Media Why Smart Money Is Looking Overseas for Bank StocksBy Dan Schmidt. First Published: 1/11/2026. 
At a Glance - The S&P 500 returned 2.6% over the last three months, yet another quarter where many international markets like Spain, Canada, and South Korea posted better gains.
- If the international outperformance trend continues into 2026, many of the winners could be in the banking sector, which is severely undervalued.
- These two international banks are well-positioned to benefit from these economic trends.
What were the best-performing sectors and industries in 2025? For most investors, some version of technology tied to artificial intelligence is the answer—whether semiconductors, memory storage, or software. It could also be a commodities-based industry, such as gold or silver. A mention of international bank stocks might raise eyebrows, but this sector deserves to be mentioned in the same breath as 2025's winners. Global banks, especially European ones, enjoyed tremendous outperformance last year thanks to several tailwinds at home and abroad. Can those tailwinds continue in 2026? Two international bank stocks appear well-positioned to deliver additional upside while favorable trends remain in place. International Stocks Continue to Outperform U.S. Peers Just like Microsoft and Adobe rode the software wave in Web 1.0, RAD Intel is riding the AI software wave in 2025. Their product helps brands instantly find the right audience and message using AI – solving the #1 waste in marketing: misfired ad spend.
Already trusted by a who's-who of Fortune 1000 brands and leading global agencies – with recurring seven-figure partnerships in place. With a Nasdaq ticker reserved, $RADI, it's early – but very real. $0.85 Won't Last – Secure Your Shares Now. Despite a resurgent AI trade in the U.S., the fourth quarter of 2025 was another win for international peers. The SPDR S&P 500 ETF (NYSEARCA: SPY) gained 2.61% over the last three months, but that gain was more than doubled by ETFs representing equities in Italy, Canada, Spain, and South Korea. South Korean equities were on a particular tear, surging nearly 27% since the start of October. The tech sector has driven much of the U.S. market's gains in recent years, while international markets have become more diverse and, in many cases, less expensive. 
The outperformance of international equities is being driven by several familiar factors. The U.S. dollar is no longer free-falling, but it remains weak against major currencies like the euro and the British pound. Currency moves are also highlighting the valuation gap between U.S. and international equities. While the price-to-earnings (P/E) ratio of the S&P 500 continues to drift toward 30, European and Canadian indices sit at more modest P/Es between 17 and 20. The banking sector in those countries is particularly undervalued, with P/Es often between 10 and 12. International banks also tend to be more generous with dividends than their U.S. counterparts. U.S. banks often prefer buybacks when returning value to shareholders, which can be more tax-efficient but isn't helpful to investors seeking steady income. International banks frequently yield higher dividends than typical large-cap domestic banks. Few Sectors Have Been Hotter Than International Banking: These 2 Stocks Lead the Pack The banking component of the STOXX Europe 600 has actually outperformed the U.S. tech sector since 2021, yet valuations remain suppressed. If you're looking to diversify away from tech-heavy U.S. indices, consider one of these international bank stocks that offer value and further upside potential. Deutsche Bank: No Longer the Sick Bank of Europe For many years, investors avoided shares of Deutsche Bank AG (NYSE: DB) like the Dallas Cowboys avoid playoff victories. If there was a scandal in European banking, Deutsche likely had a hand in it. Fines and restructuring costs kept the stock in a steady decline following the 2008 financial crisis. DB shares are still far off their 2007 all-time high, but the stock is up roughly 500% since July 2022 thanks to a series of cost-cutting measures designed to exit underperforming businesses and return to core strengths and profitability. 
The turnaround has produced results for DB shareholders: three straight quarters of positive EPS and several sizable revenue beats. Despite strong earnings, the stock trades at just 13x forward earnings and about 0.87 times book value. Deutsche Bank no longer needs to be handled with kid gloves, and the chart shows a bullish trend with solid momentum behind it. The 50-day simple moving average (SMA) was an attractive entry point for investors in 2025, and it appears to be holding into the new year. HSBC Holdings: Bridging Europe and Asia HSBC Holdings plc (NYSE: HSBC) occupies a unique position as a large-cap bank with meaningful ties to both Europe and Asia. The company is doubling down on Asia, having recently acquired and privatized Hang Seng Bank to strengthen its footprint in Hong Kong. HSBC's wealth-management operations in Asia are scaling quickly, giving the bank multiple sources of both fee revenue and interest income. HSBC is a deliberate steward of capital: it pays a 2.46% dividend yield with a 41% payout ratio. It also rewarded shareholders with a special dividend and share buybacks funded in part by proceeds from selling its Canadian banking units. 
A solid dividend and a growing global client base create opportunities for income and share-price appreciation, and analysts spent much of Q4 2025 upgrading HSBC. Zacks Research, Erste Group Bank, Bank of America, and Keefe, Bruyette & Woods all moved the stock to Buy or Strong Buy before year-end. HSBC shares have risen nearly 20% in the last three months, so investors should monitor the MACD for signs of a pullback. The 50-day SMA is again a sensible entry point should momentum cool from here.
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