Financial Analysis: HDFC Bank (NYSE:HDB) & RBB Bancorp (NASDAQ:RBB)

RBB Bancorp (NASDAQ:RBB) and HDFC Bank (NYSE:HDB) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, institutional ownership, earnings and risk.

Volatility & Risk

RBB Bancorp has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, HDFC Bank has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500.

Institutional & Insider Ownership

40.1% of RBB Bancorp shares are held by institutional investors. Comparatively, 17.6% of HDFC Bank shares are held by institutional investors. 6.8% of RBB Bancorp shares are held by insiders. Comparatively, 1.0% of HDFC Bank shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for RBB Bancorp and HDFC Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RBB Bancorp	0	3	3	0	2.50
HDFC Bank	0	3	1	0	2.25

RBB Bancorp currently has a consensus price target of $25.50, suggesting a potential downside of 4.64%. Given RBB Bancorp’s stronger consensus rating and higher probable upside, research analysts plainly believe RBB Bancorp is more favorable than HDFC Bank.

Dividends

RBB Bancorp pays an annual dividend of $0.64 per share and has a dividend yield of 2.4%. HDFC Bank pays an annual dividend of $0.34 per share and has a dividend yield of 1.5%. RBB Bancorp pays out 26.3% of its earnings in the form of a dividend. HDFC Bank pays out 20.0% 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 RBB Bancorp and HDFC Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RBB Bancorp	17.26%	7.94%	0.99%
HDFC Bank	15.96%	11.84%	1.64%

Valuation and Earnings

This table compares RBB Bancorp 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
RBB Bancorp	$238.00 million	1.90	$31.95 million	$2.43	11.00
HDFC Bank	$54.16 billion	2.14	$7.51 billion	$1.70	13.29

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

Summary

RBB Bancorp beats HDFC Bank on 9 of the 16 factors compared between the two stocks.

About RBB Bancorp

RBB Bancorp operates as the bank holding company for Royal Business Bank that provides various banking products and services to the Chinese-American, Korean-American, and other Asian-American communities. Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit. The company also offers commercial and industrial lines of credit, term loans, mortgage warehouse lines, and international trade discounts; commercial real estate loans; residential, commercial, and land acquisition and development construction loans; small business administration loans; and single-family residential mortgage loans. In addition, it provides international letters of credit, SWIFT, export advisory, trade finance discount, and foreign exchange services; and remote deposit, e-banking, and mobile banking services. The company serves individuals, businesses, municipalities, and other entities. It operates branches in the Western region with branches in Los Angeles County, California; Orange County, California; Ventura County, California; Clark County, Nevada; Honolulu, Hawaii, as well as in Eastern region with branches in Manhattan, Brooklyn and Queens, New York; Chicago, Illinois; and Edison, New Jersey. RBB Bancorp was founded in 2008 and is headquartered in Los Angeles, California.

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.