Critical Survey: Bank Hapoalim (OTCMKTS:BKHYY) and Credicorp (NYSE:BAP)

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

Institutional and Insider Ownership

89.8% of Credicorp shares are owned by institutional investors. 15.9% of Credicorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Bank Hapoalim has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, Credicorp has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500.

Dividends

Bank Hapoalim pays an annual dividend of $3.82 per share and has a dividend yield of 3.1%. Credicorp pays an annual dividend of $11.01 per share and has a dividend yield of 3.6%. Bank Hapoalim pays out 38.6% of its earnings in the form of a dividend. Credicorp pays out 49.6% 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.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Bank Hapoalim and Credicorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank Hapoalim	0	1	0	0	2.00
Credicorp	0	3	4	1	2.75

Credicorp has a consensus price target of $276.60, indicating a potential downside of 8.56%. Given Credicorp’s stronger consensus rating and higher probable upside, analysts plainly believe Credicorp is more favorable than Bank Hapoalim.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank Hapoalim	$10.95 billion	2.93	$2.08 billion	$9.89	12.34
Credicorp	$7.00 billion	3.44	$1.47 billion	$22.19	13.63

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bank Hapoalim	21.60%	14.60%	1.20%
Credicorp	23.59%	19.50%	2.68%

Summary

Credicorp beats Bank Hapoalim on 14 of the 18 factors compared between the two stocks.

About Bank Hapoalim

Bank Hapoalim B.M., together with its subsidiaries, provides various banking and financial products and services in Israel and internationally. It operates through Household, Private Banking, Small businesses and micro businesses, Mid-sized businesses, Large businesses, Institutional entities, and Financial management segments. The company offers account-management services, lending for various purposes, deposits, and savings plans, and capital-market service; housing loans; research and advisory services; and pension advisory and retirement planning services. It also provides products and services for the expansion of a business, advanced digital services, and a service center specializing in businesses; credit for routine operations and investment financing, guarantees, letters of credit, foreign trade, and transactions in financial and derivative instruments, as well as investment services in various channels, such as foreign currency, shekels, and securities. In addition, the company offers financial services, including foreign-trade financing, financing of working capital, financing of assets overseas, complex financing transactions, syndication, and credit-risk transfers; and financing of construction projects, granting credit to customers, and issuing guarantees to buyers of homes. Further, it provides managers of mutual funds, managers of investment portfolios, and managers of provident funds, study funds, and pension funds; trading activities; underwriting services; and brokerage and custody services. The company serves households, private-banking customers, foreign residents, small businesses, financial-asset managers, middle-market business clients, and large corporations. Bank Hapoalim B.M. was founded in 1921 and is based in Tel Aviv, Israel.

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.