Reviewing Bank of China (OTCMKTS:BACHY) and Erste Group Bank (OTCMKTS:EBKDY)

Bank of China (OTCMKTS:BACHY) and Erste Group Bank (OTCMKTS:EBKDY) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of current ratings and price targets for Bank of China and Erste Group Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of China	0	1	0	0	2.00
Erste Group Bank	0	3	3	1	2.71

Earnings and Valuation

This table compares Bank of China and Erste Group Bank”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of China	$169.73 billion	1.27	$33.81 billion	$2.57	6.53
Erste Group Bank	$23.77 billion	1.92	$3.97 billion	$4.98	11.83

Bank of China has higher revenue and earnings than Erste Group Bank. Bank of China is trading at a lower price-to-earnings ratio than Erste Group Bank, indicating that it is currently the more affordable of the two stocks.

Dividends

Bank of China pays an annual dividend of $0.55 per share and has a dividend yield of 3.3%. Erste Group Bank pays an annual dividend of $0.27 per share and has a dividend yield of 0.5%. Bank of China pays out 21.4% of its earnings in the form of a dividend. Erste Group Bank pays out 5.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares Bank of China and Erste Group Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of China	20.09%	7.81%	0.67%
Erste Group Bank	19.27%	10.96%	1.01%

Risk & Volatility

Bank of China has a beta of 0.06, indicating that its stock price is 94% less volatile than the S&P 500. Comparatively, Erste Group Bank has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.

Institutional & Insider Ownership

0.4% of Erste Group Bank shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Erste Group Bank beats Bank of China on 11 of the 15 factors compared between the two stocks.

About Bank of China

Bank of China Limited, together with its subsidiaries, provides various banking and financial services in Chinese Mainland, Hong Kong, Macao, Taiwan, and internationally. It operates through six segments: Corporate Banking, Personal Banking, Treasury Operations, Investment Banking, Insurance, and Other. The Corporate Banking segment provides current accounts, deposits, overdrafts, loans, payments and settlements, trade-related products, and other credit facilities, as well as foreign currency, derivative, and wealth management products for corporate customers, government authorities, and financial institutions. The Personal Banking segment offers savings deposits, personal loans, credit cards and debit cards, payments and settlements, wealth management, and funds and insurance agency services to retail customers. The Treasury Operations segment offers foreign exchange transactions, customer-based interest rate, and foreign exchange derivative transactions, as well as money market transactions, proprietary trading, and asset and liability management. The Investment Banking segment provides debt and equity underwriting and financial advisory, sale and trading of securities, stock brokerage, investment research, asset management services, and private equity investment services. The Insurance segment provides underwriting services for general and life insurance business, and insurance agency services. In addition, the company operates debt-to-equity swaps and other supporting, and aircraft and financial leasing business. The company was founded in 1912 and is headquartered in Beijing, China.

About Erste Group Bank

Erste Group Bank AG provides a range of banking and other financial services to retail, corporate, and public sector customers. The company operates through Retail, Corporates, Group Markets, Asset/Liability Management & Local Corporate Center, Savings Banks, and Group Corporate Center segments. It provides mortgage and consumer loans, investment products, current accounts, savings products, and credit cards, as well as cross selling products, such as leasing, insurance, and building society products. The company also offers factoring and accounts receivable purchasing; investment, acquisition and leveraged, project, and commercial real estate finance; interest rate and currency hedging, letters of credit, documentary collections, and guarantees; account management, payments, digital-banking, cash logistics, and payment factory and cash pooling services; documentary collection, equity interests and investments, revolving export credits lines, letters of credit, customer financing, and export guarantee; and loan syndication, and debt and equity capital market services. In addition, it provides cash management, trade finance, customer referral, markets execution, debt capital markets, and custody and brokerage services. Further, the company offers corporate finance; portfolio management; trading and market; trade execution, market making, and short-term liquidity management; and asset/liability management services, as well as working capital and bridge loans. It operates in Austria, the Czech Republic, Slovakia, Romania, Hungary, Serbia, Croatia, and internationally. The company was founded in 1819 and is headquartered in Vienna, Austria.