Head to Head Comparison: HDFC Bank (NYSE:HDB) and Danske Bank (OTCMKTS:DNKEY)

Danske Bank (OTCMKTS:DNKEY) and HDFC Bank (NYSE:HDB) are both large-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, valuation, earnings, risk and dividends.

Dividends

Danske Bank pays an annual dividend of $1.58 per share and has a dividend yield of 6.1%. HDFC Bank pays an annual dividend of $0.32 per share and has a dividend yield of 1.3%. Danske Bank pays out 72.8% of its earnings in the form of a dividend. HDFC Bank 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 Danske Bank and HDFC Bank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Danske Bank	$8.61 billion	4.93	$3.49 billion	$2.17	11.99
HDFC Bank	$54.16 billion	2.35	$8.59 billion	$1.67	14.95

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

Analyst Recommendations

This is a summary of current ratings and price targets for Danske Bank and HDFC Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Danske Bank	0	2	4	0	2.67
HDFC Bank	1	1	0	0	1.50

Institutional & Insider Ownership

17.6% of HDFC Bank shares are owned by institutional investors. 1.0% of HDFC Bank shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Danske Bank and HDFC Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Danske Bank	40.38%	13.14%	0.62%
HDFC Bank	15.30%	12.96%	1.63%

Risk and Volatility

Danske Bank has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500. Comparatively, HDFC Bank has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.

Summary

HDFC Bank beats Danske Bank on 8 of the 15 factors compared between the two stocks.

About Danske Bank

Danske Bank A/S provides various banking products and services to corporate, institutional, and international clients. The company offers insurance and pension products, mortgage finance and real-estate brokerage services, asset management and trading services in fixed income products, foreign exchange services, and equities. It also provides advisory services to personal and private banking customers; and business advisory services, including acquisition, change of ownership, strategic development, or international expansion. In addition, the company offers financing, risk management, investment, and financial advisory services for large corporates and institutions; healthcare solutions; and online and mobile banking services. It has operations in Denmark, Finland, Sweden, Norway, the United Kingdom, and internationally. The company was founded in 1871 and is headquartered in Copenhagen, Denmark.

About HDFC Bank

HDFC Bank Limited provides banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in three segments: Wholesale Banking, Retail Banking, and Treasury Services. It accepts savings, salary, current, rural, public provident fund, pension, and demat accounts; fixed and recurring deposits; and safe deposit lockers, as well as offshore accounts and deposits, and overdrafts against fixed deposits. The company also provides personal, home, car, two-wheeler, business, doctor, educational, gold, consumer, and rural loans; loans against properties, securities, fixed deposits, rental receivables, and assets; loans for professionals; government sponsored programs; and loans on credit card, as well as working capital and commercial/construction equipment finance, healthcare/medical equipment and commercial vehicle finance, dealer finance, and term loans. In addition, it offers credit, debit, prepaid, and forex cards; payment and collection, export, import, remittance, bank guarantee, letter of credit, trade, hedging, and merchant and cash management services; insurance and investment products. Further, the company provides short term finance, bill discounting, structured finance, export credit, loan repayment, and documents collection services; online and wholesale, mobile, and phone banking services; unified payment interface, immediate payment, national electronic funds transfer, and real time gross settlement services; and channel financing, vendor financing, reimbursement account, money market, derivatives, employee trusts, cash surplus corporates, tax payment, and bankers to rights/public issue services, as well as financial solutions for supply chain partners and agricultural customers. It operates branches and automated teller machines in various cities/towns. The company was incorporated in 1994 and is headquartered in Mumbai, India.