Contrasting National Bank of Canada (OTCMKTS:NTIOF) & China Merchants Bank (OTCMKTS:CIHKY)

China Merchants Bank (OTCMKTS:CIHKY) and National Bank of Canada (OTCMKTS:NTIOF) are both large-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, earnings, risk, profitability, analyst recommendations, institutional ownership and dividends.

Analyst Ratings

This is a breakdown of recent ratings and target prices for China Merchants Bank and National Bank of Canada, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
China Merchants Bank	0	0	0	0	0.00
National Bank of Canada	0	7	3	0	2.30

Earnings & Valuation

This table compares China Merchants Bank and National Bank of Canada”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
China Merchants Bank	$69.20 billion	2.20	$20.64 billion	$3.94	7.65
National Bank of Canada	$21.96 billion	2.14	$2.87 billion	$7.23	16.66

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

Profitability

This table compares China Merchants Bank and National Bank of Canada’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
China Merchants Bank	32.06%	12.04%	1.19%
National Bank of Canada	13.07%	15.74%	0.83%

Dividends

China Merchants Bank pays an annual dividend of $0.58 per share and has a dividend yield of 1.9%. National Bank of Canada pays an annual dividend of $3.55 per share and has a dividend yield of 2.9%. China Merchants Bank pays out 14.7% of its earnings in the form of a dividend. National Bank of Canada pays out 49.1% 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.

Institutional & Insider Ownership

0.1% of National Bank of Canada shares are held by institutional investors. 0.3% of National Bank of Canada shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

China Merchants Bank has a beta of 0.24, meaning that its share price is 76% less volatile than the S&P 500. Comparatively, National Bank of Canada has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Summary

National Bank of Canada beats China Merchants Bank on 9 of the 15 factors compared between the two stocks.

About China Merchants Bank

China Merchants Bank Co., Ltd., together with its subsidiaries, provides various banking products and services. It operates through Wholesale Finance Business, Retail Finance Business, and Other Business segments. The company offers current, demand, time, call, savings, notice, and renminbi accounts. Its loan products include personal commercial real estate, consumption, housing, and car loans; loans to finance for studying abroad; micro-business loans; mortgage loans for equipment; joint guarantee, special guarantee, and housing mortgage loan; bank acceptance, discount, liquid capital, and fixed asset loans; and loans for vessels. The company also offers credit cards; insurance products; open-ended funds; discount and guarantees for commercial bills, redemption of commercial bills, and guaranteed discount for commercial acceptance bills; and financial consultation, debt financing underwriting, merger and acquisition financing, and equity financing and enterprise listing services. In addition, it provides forfeiting and risk participation, escrow, cross-border RMB clearing, and interbank services; and risk and financial management, cross-border RMB and oversea financing, international factoring and settlement, and trade finance services. Further, the company offers financial leasing and guarantee, investment and wealth management, forex option and gold trading, forex express trading, international, offshore and private banking, custody, pension, and electronic banking services. The company also operates in Hong Kong, New York, London, Singapore, Luxembourg, Sydney, and Taipei. China Merchants Bank Co., Ltd. was founded in 1987 and is headquartered in Shenzhen, China.

About National Bank of Canada

National Bank of Canada provides financial services to individuals, businesses, institutional clients, and governments in Canada and internationally. It operates through four segments: Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International. The Personal and Commercial segment offers personal banking services, including transaction solutions, mortgage loans and home equity lines of credit, consumer loans, payment solutions, and savings and investment solutions; various insurance products; and commercial banking services, such as credit, and deposit, investment solutions, international trade, foreign exchange transactions, payroll, cash management, insurance, electronic transactions, and complimentary services. The Wealth Management segment provides full-service brokerage, private banking, direct brokerage, investment solutions, administrative and trade execution, transaction products, and trust and estate services. The Financial Markets segment offers corporate banking, advisory, and capital markets services; and project financing, debt, and equity underwriting; advisory services in the areas of mergers and acquisitions, and financing. The U.S. Specialty Finance and International segment provides specialty finance products; and personal and commercial banking in Cambodia. National Bank of Canada was founded in 1859 and is headquartered in Montreal, Canada.