Credicorp (NYSE:BAP) vs. HSBC (NYSE:HSBC) Financial Analysis

Credicorp (NYSE:BAP) and HSBC (NYSE:HSBC) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their institutional ownership, earnings, profitability, analyst recommendations, dividends, valuation and risk.

Institutional and Insider Ownership

89.8% of Credicorp shares are owned by institutional investors. Comparatively, 1.5% of HSBC shares are owned by institutional investors. 15.9% of Credicorp shares are owned by company insiders. Comparatively, 0.0% of HSBC shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

Credicorp has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, HSBC has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for Credicorp and HSBC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Credicorp	0	3	4	0	2.57
HSBC	0	6	5	0	2.45

Credicorp presently has a consensus target price of $356.40, indicating a potential downside of 2.31%. Given Credicorp’s stronger consensus rating and higher possible upside, equities analysts plainly believe Credicorp is more favorable than HSBC.

Valuation & Earnings

This table compares Credicorp and HSBC”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Credicorp	$8.01 billion	4.30	$1.94 billion	$25.94	14.06
HSBC	$131.35 billion	2.47	$22.29 billion	$6.10	15.47

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

Profitability

This table compares Credicorp and HSBC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Credicorp	24.81%	20.61%	2.91%
HSBC	16.06%	13.35%	0.82%

Dividends

Credicorp pays an annual dividend of $14.48 per share and has a dividend yield of 4.0%. HSBC pays an annual dividend of $1.98 per share and has a dividend yield of 2.1%. Credicorp pays out 55.8% of its earnings in the form of a dividend. HSBC pays out 32.5% 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. Credicorp has increased its dividend for 3 consecutive years. Credicorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Credicorp beats HSBC on 12 of the 17 factors compared between the two stocks.

About Credicorp

Credicorp Ltd. provides various financial, insurance, and health services and products primarily in Peru and internationally. It operates through Universal Banking, Insurance and Pensions, Microfinance, and Investment Banking and Equity Management segments. The Universal Banking segment grants various credits and financial instruments to individuals and legal entities; and various deposits and current accounts. The Insurance and Pensions segment issues insurance policies to cover losses in commercial property, transport, marine vessels, automobiles, life, health, and pensions; and management services for private pension funds. The Microfinance segment provides management of loans, deposits, and current accounts for small and microenterprises. The Investment Banking and Equity Management segment is involved in provision of brokerage and investment management services for corporations, institutional investors, governments, and foundations; structuring and placement of issues in the primary market; execution and negotiation of transactions in the secondary market; and structuring of securitization processes for corporate customers and manages mutual funds. The company was founded in 1889 and is headquartered in Lima, Peru.

About HSBC

HSBC Holdings plc provides banking and financial services worldwide. The company operates through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. The Wealth and Personal Banking segment offers retail banking and wealth products, including current and savings accounts, mortgages and personal loans, credit and debit cards, and local and international payment services; and wealth management services comprising insurance and investment products, global asset management services, investment management, and private wealth solutions. This segment serves personal banking and high net worth individuals. The Commercial Banking segment provides credit and lending, treasury management, payment, cash management, commercial insurance, and investment services; commercial cards; international trade and receivables finance services; foreign exchange products; capital raising services on debt and equity markets; and advisory services. It serves small and medium sized enterprises, mid-market enterprises, and corporates. The Global Banking and Markets segment offers financing, advisory, and transaction services; and credit, rates, foreign exchange, equities, money markets, and securities services; and engages in principal investment activities. It serves government, corporate and institutional clients, and private investors. HSBC Holdings plc was founded in 1865 and is headquartered in London, the United Kingdom.