Critical Survey: Banco Santander Chile (NYSE:BSAC) & Bank of Nova Scotia (NYSE:BNS)

Bank of Nova Scotia (NYSE:BNS) and Banco Santander Chile (NYSE:BSAC) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, valuation and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bank of Nova Scotia	10.60%	12.10%	0.65%
Banco Santander Chile	24.57%	23.25%	1.60%

Analyst Recommendations

This is a summary of recent ratings for Bank of Nova Scotia and Banco Santander Chile, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of Nova Scotia	0	4	1	0	2.20
Banco Santander Chile	2	4	0	0	1.67

Bank of Nova Scotia currently has a consensus target price of $97.00, suggesting a potential upside of 25.17%. Banco Santander Chile has a consensus target price of $27.67, suggesting a potential downside of 26.22%. Given Bank of Nova Scotia’s stronger consensus rating and higher probable upside, analysts plainly believe Bank of Nova Scotia is more favorable than Banco Santander Chile.

Dividends

Bank of Nova Scotia pays an annual dividend of $3.20 per share and has a dividend yield of 4.1%. Banco Santander Chile pays an annual dividend of $0.99 per share and has a dividend yield of 2.6%. Bank of Nova Scotia pays out 79.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Banco Santander Chile pays out 43.0% of its earnings in the form of a dividend. 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

49.1% of Bank of Nova Scotia shares are held by institutional investors. Comparatively, 6.4% of Banco Santander Chile shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Bank of Nova Scotia and Banco Santander Chile”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of Nova Scotia	$37.10 billion	2.58	$5.56 billion	$4.02	19.28
Banco Santander Chile	$4.50 billion	N/A	$1.11 billion	$2.30	16.30

Bank of Nova Scotia has higher revenue and earnings than Banco Santander Chile. Banco Santander 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.

Volatility and Risk

Bank of Nova Scotia has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, Banco Santander Chile has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500.

Summary

Bank of Nova Scotia beats Banco Santander Chile on 11 of the 15 factors compared between the two stocks.

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.

About Banco Santander Chile

Banco Santander-Chile, together with its subsidiaries, provides commercial and retail banking services in Chile. It operates through Retail Banking, Middle-Market, Corporate Investment Banking, and Corporate Activities segments. The company offers debit and credit cards, checking accounts, and savings products; consumer, automobile, commercial, mortgage, and government-guaranteed loans; and Chilean peso and foreign currency-denominated loans to finance various commercial transactions, trade, foreign currency forward contracts, and credit lines, as well as mortgage financing services. It also provides mutual fund management, insurance and securities brokerage, foreign exchange services, financial leasing, financial consulting and advisory, investment management, foreign trade, leasing, factoring, treasury, and transactional services, as well as specialized services to finance residential projects. In addition, the company offers short-term financing and fundraising, and brokerage services, as well as derivatives, securitization, and other products; and manages capital allocations. It serves individuals, small to middle-sized entities, companies, and large corporations, as well as universities, government entities, and local and regional governments. The company was incorporated in 1977 and is headquartered in Santiago, Chile. Banco Santander-Chile operates as a subsidiary of Banco Santander, S.A.