Reviewing Bank of Nova Scotia (NYSE:BNS) and Banco De Chile (NYSE:BCH)

Banco De Chile (NYSE:BCH) and Bank of Nova Scotia (NYSE:BNS) are both large-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Risk and Volatility

Banco De Chile has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, Bank of Nova Scotia has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500.

Profitability

This table compares Banco De Chile and Bank of Nova Scotia’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banco De Chile	32.87%	23.25%	2.52%
Bank of Nova Scotia	9.74%	11.61%	0.62%

Earnings and Valuation

This table compares Banco De Chile and Bank of Nova Scotia”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banco De Chile	$4.21 billion	4.24	$1.37 billion	$2.80	12.62
Bank of Nova Scotia	$36.00 billion	2.25	$5.70 billion	$3.72	17.63

Bank of Nova Scotia has higher revenue and earnings than Banco De Chile. Banco De Chile is trading at a lower price-to-earnings ratio than Bank of Nova Scotia, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Banco De Chile and Bank of Nova Scotia, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banco De Chile	0	2	0	1	2.67
Bank of Nova Scotia	0	5	4	0	2.44

Banco De Chile presently has a consensus target price of $33.00, suggesting a potential downside of 6.61%. Bank of Nova Scotia has a consensus target price of $86.00, suggesting a potential upside of 31.15%. Given Bank of Nova Scotia’s higher probable upside, analysts clearly believe Bank of Nova Scotia is more favorable than Banco De Chile.

Dividends

Banco De Chile pays an annual dividend of $1.57 per share and has a dividend yield of 4.4%. Bank of Nova Scotia pays an annual dividend of $3.20 per share and has a dividend yield of 4.9%. Banco De Chile pays out 56.1% of its earnings in the form of a dividend. Bank of Nova Scotia pays out 86.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bank of Nova Scotia has raised its dividend for 14 consecutive years. Bank of Nova Scotia is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

1.2% of Banco De Chile shares are owned by institutional investors. Comparatively, 49.1% of Bank of Nova Scotia shares are owned by institutional investors. 5.9% of Banco De Chile shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Bank of Nova Scotia beats Banco De Chile on 10 of the 18 factors compared between the two stocks.

About Banco De Chile

Banco de Chile, together with its subsidiaries, provides various banking services to customers in Chile. The company offers checking and debit accounts, debit and credit cards, and lines of credit; mortgage, consume, commercial, general purpose mortgage loans, and finance leases; and factoring services, mutual fund management, stock brokerage, foreign trade, payments and collections, insurance brokerage, including life and general insurance, as well as time deposits, savings instruments, and foreign currency services through branches under the Banco de Chile and Banco Edwards brands. It also provides working capital loans, corporate credit cards, foreign currency brokerage, leasing and long-term syndicated loans, advisory services for mergers acquisitions and debt restructuring; cash management services, including payment and collection services; and international fund transfer networks, current account and deposit products, fund administration, and treasury management. In addition, the company offers insurance brokerage, derivative contracts, transactional banking, financial risks coverage, representation and asset custody, investment banking and management, capital markets products, foreign exchange transactions; and advisory services for initial public offerings, capital increases, sales and purchases of blocks of shares, private capital placements, public share tenders, company valuations, bond issuances, and syndicated loans services. Further, it provides foreign exchange brokerage, forward contracts, interest rate swaps, repurchase agreements, and other investment products based on bonds, mortgage bonds and deposits. The company serves individuals, small and medium-sized companies, corporate clients, and large companies, real estate and construction, and high net worth family office customers. Banco de Chile was founded in 1893 and is headquartered in Santiago, Chile.

About Bank of Nova Scotia

The Bank of Nova Scotia provides various banking products and services in Canada, the United States, Mexico, Peru, Chile, Colombia, the Caribbean and Central America, and internationally. It operates through Canadian Banking, International Banking, Global Wealth Management, and Global Banking and Markets segments. The company offers financial advice and solutions, and banking products, including debit and credit cards, chequing and saving accounts, investments, mortgages, loans, and insurance to individuals; and retail automotive financing solutions. It also provides business banking solutions comprising lending, deposit, cash management, and trade finance solutions to small, medium, and large businesses. In addition, it provides wealth management advice and solutions, including online brokerage, mobile investment, full-service brokerage, trust, private banking, and private investment counsel services; and retail mutual funds, exchange traded funds, liquid alternatives, and institutional funds. The Bank of Nova Scotia was founded in 1832 and is headquartered in Toronto, Canada.