Head to Head Review: HSBC (NYSE:HSBC) versus Credicorp (NYSE:BAP)

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

Dividends

HSBC pays an annual dividend of $1.98 per share and has a dividend yield of 2.1%. Credicorp pays an annual dividend of $14.48 per share and has a dividend yield of 3.8%. HSBC pays out 32.5% of its earnings in the form of a dividend. Credicorp pays out 55.8% 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 raised its dividend for 3 consecutive years. Credicorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

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

Analyst Recommendations

This is a breakdown of recent ratings for HSBC and Credicorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HSBC	0	6	5	0	2.45
Credicorp	0	3	5	0	2.63

Credicorp has a consensus target price of $377.00, indicating a potential downside of 1.04%. Given Credicorp’s stronger consensus rating and higher probable upside, analysts clearly believe Credicorp is more favorable than HSBC.

Profitability

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

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

Institutional & Insider Ownership

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

Earnings & Valuation

This table compares HSBC and Credicorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HSBC	$131.35 billion	2.52	$22.29 billion	$6.10	15.81
Credicorp	$8.01 billion	4.49	$1.94 billion	$25.94	14.69

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.

Summary

Credicorp beats HSBC on 12 of the 16 factors compared between the two stocks.

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.

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.