KB Financial Group (NYSE:KB) and Bank of China (OTCMKTS:BACHY) Critical Review

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

Institutional & Insider Ownership

11.5% of KB Financial Group shares are held by institutional investors. 69.0% of KB Financial Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for Bank of China and KB Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of China	0	1	0	0	2.00
KB Financial Group	1	0	1	0	2.00

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bank of China	19.65%	7.81%	0.66%
KB Financial Group	16.96%	9.79%	0.76%

Volatility & Risk

Bank of China has a beta of 0.13, meaning that its share price is 87% less volatile than the S&P 500. Comparatively, KB Financial Group has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500.

Dividends

Bank of China pays an annual dividend of $0.55 per share and has a dividend yield of 3.8%. KB Financial Group pays an annual dividend of $2.04 per share and has a dividend yield of 2.2%. Bank of China pays out 21.4% of its earnings in the form of a dividend. KB Financial Group pays out 19.2% 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.

Valuation & Earnings

This table compares Bank of China and KB Financial Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of China	$174.63 billion	1.08	$33.08 billion	$2.57	5.70
KB Financial Group	$27.12 billion	1.32	$3.44 billion	$10.60	8.89

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

Summary

KB Financial Group beats Bank of China on 10 of the 14 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 KB Financial Group

KB Financial Group Inc. provides a range of banking and related financial services to consumers and corporations in South Korea, the United States, New Zealand, China, Cambodia, the United Kingdom, Indonesia, and internationally. The company operates through Retail Banking, Corporate Banking, Other Banking Services, Credit Card, Securities, Life Insurance, and Non-Life Insurance segments. It offers loans, deposit products, and other related financial products and services to large, small, medium-sized enterprises, and small office/home office, as well as individuals and households; investment banking, and brokerage and supporting services; life insurance products; non-life insurance products, including fire, maritime, injury, technology, liability, package, title, guarantee, other special type insurances, automobile, long-term nonlife, property damage, injury, driver, savings, illness, nursing, pension, and others; and credit sale, cash service, card loan, and other supporting services. The company also engages in securities and derivatives trading, funding, and other supporting activities. In addition, it offers foreign exchange transaction; financial investment; credit card and installment financing; financial leasing; auto Installment finance; real estate trust management; capital and collective investment; collection of receivables or credit investigation; software advisory, development, and supply; microfinance; investment advisory; claim; management; savings banking; information and communication; e-commerce; and general advisory services. The company was founded in 1963 and is headquartered in Seoul, South Korea.