Critical Review: Banco Santander Chile (NYSE:BSAC) and China CITIC Bank (OTCMKTS:CHCJY)

Banco Santander Chile (NYSE:BSAC) and China CITIC Bank (OTCMKTS:CHCJY) 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.

Analyst Recommendations

This is a breakdown of recent ratings for Banco Santander Chile and China CITIC Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banco Santander Chile	1	4	2	1	2.38
China CITIC Bank	0	1	0	0	2.00

Banco Santander Chile currently has a consensus target price of $36.00, indicating a potential upside of 9.90%. Given Banco Santander Chile’s stronger consensus rating and higher probable upside, analysts clearly believe Banco Santander Chile is more favorable than China CITIC Bank.

Profitability

This table compares Banco Santander Chile and China CITIC Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banco Santander Chile	24.95%	21.00%	1.54%
China CITIC Bank	20.39%	8.44%	0.71%

Institutional & Insider Ownership

6.4% of Banco Santander Chile shares are held by institutional investors. 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.

Valuation & Earnings

This table compares Banco Santander Chile and China CITIC Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banco Santander Chile	$4.50 billion	3.43	$1.12 billion	$2.32	14.12
China CITIC Bank	$49.07 billion	0.97	$9.82 billion	$3.38	5.77

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

Volatility & Risk

Banco Santander Chile has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500. Comparatively, China CITIC Bank has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500.

Dividends

Banco Santander Chile pays an annual dividend of $1.10 per share and has a dividend yield of 3.4%. China CITIC Bank pays an annual dividend of $0.87 per share and has a dividend yield of 4.5%. Banco Santander Chile pays out 47.4% of its earnings in the form of a dividend. China CITIC Bank pays out 25.7% 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. China CITIC Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Banco Santander Chile beats China CITIC Bank on 11 of the 16 factors compared between the two stocks.

About Banco Santander Chile

Banco Santander-Chile, together with its subsidiaries, provides commercial and retail banking services in Chile. It operates through Retail Banking, Middle-Market, Corporate Investment Banking, and Corporate Activities segments. The company offers debit and credit cards, checking accounts, and savings products; consumer, automobile, commercial, mortgage, and government-guaranteed loans; and Chilean peso and foreign currency-denominated loans to finance various commercial transactions, trade, foreign currency forward contracts, and credit lines, as well as mortgage financing services. It also provides mutual fund management, insurance and securities brokerage, foreign exchange services, financial leasing, financial consulting and advisory, investment management, foreign trade, leasing, factoring, treasury, and transactional services, as well as specialized services to finance residential projects. In addition, the company offers short-term financing and fundraising, and brokerage services, as well as derivatives, securitization, and other products; and manages capital allocations. It serves individuals, small to middle-sized entities, companies, and large corporations, as well as universities, government entities, and local and regional governments. The company was incorporated in 1977 and is headquartered in Santiago, Chile. Banco Santander-Chile operates as a subsidiary of Banco Santander, S.A.

About China CITIC Bank

China CITIC Bank Corporation Limited provides various banking products and services in the People's Republic of China and internationally. The company operates in segments, such as Corporate Banking, Retail Banking, and Financial Market business. It accepts deposits; offers corporate and personal loans; and provides securities agency, remittance and settlement, and guarantee services, as well as investment banking and international services. The company also engages in the capital markets operations and inter-bank operations, including inter-bank money market transactions, repurchase transactions, investments, and trading in debt instruments; and derivatives and forex trading. In addition, it offers asset management, finance leasing, wealth management, ageing finance, private banking, credit card, payroll, and other non-banking financial services. The company serves corporations, government agencies, and non-financial institutions; and individual customers and micro and small enterprises. The company operates tier-one branches, tier-two branches, and sub-branches; self-service banks; and self-service terminals, as well as smart teller machines. The company was founded in 1987 and is headquartered in Beijing, the People's Republic of China. China CITIC Bank Corporation Limited operates as a subsidiary of CITIC Financial Holdings Co., Ltd.