Critical Review: Bank of China (OTCMKTS:BACHY) and Swedbank (OTCMKTS:SWDBY)

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

Dividends

Bank of China pays an annual dividend of $0.55 per share and has a dividend yield of 3.4%. Swedbank pays an annual dividend of SEK 1.48 per share and has a dividend yield of 4.0%. Bank of China pays out 21.4% of its earnings in the form of a dividend. Swedbank pays out 49.5% 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 Swedbank’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%
Swedbank	30.22%	15.02%	1.05%

Earnings and Valuation

This table compares Bank of China and Swedbank”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	1.22	$33.81 billion	$2.57	6.26
Swedbank	$11.08 billion	3.73	$3.35 billion	SEK 2.99	12.30

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

Risk & Volatility

Bank of China has a beta of 0.06, suggesting that its stock price is 94% less volatile than the S&P 500. Comparatively, Swedbank has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Bank of China and Swedbank, 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
Swedbank	3	2	0	0	1.40

Summary

Swedbank beats Bank of China on 8 of the 12 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 Swedbank

Swedbank AB (publ) provides various banking products and services to private and corporate customers in Sweden, Estonia, Latvia, Lithuania, Norway, the United States, Finland, Denmark, Luxembourg, and China. The company operates through three business areas: Swedish Banking, Baltic Banking, and Corporates and Institutions. It offers savings accounts, mutual funds and insurance savings, pension savings, institutional asset management, and other savings and investment products; private residential lending, consumer financing, corporate lending, leasing, and other financing products, as well as trade finance and factoring services; and current accounts, cash handling, debit and credit cards, and card acquiring, as well as domestic, international, mobile, document, and other payment products. The company also provides equity trading, structured products, corporate finance, custody services, fixed income and currency trading, and other capital market products; and administrative services, treasury operations, real estate brokerage and management services, legal services, safe deposit boxes, and other services. In addition, it offers pension insurance and plan, life, endowment insurance, and personal insurance products; investment management, investment banking, and mortgage lending services; and transaction banking services comprising cash management, securities, account, and clearing and settlement services, as well as Internet and mobile banking services. The company was formerly known as ForeningsSparbanken AB and changed its name to Swedbank AB (publ) in September 2006. Swedbank AB (publ) was founded in 1820 and is headquartered in Sundbyberg, Sweden.