HSBC (NYSE:HSBC) and Banco Santander Chile (NYSE:BSAC) Critical Comparison

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

Dividends

HSBC pays an annual dividend of $8.98 per share and has a dividend yield of 10.6%. Banco Santander Chile pays an annual dividend of $0.99 per share and has a dividend yield of 3.0%. HSBC pays out 148.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Banco Santander Chile pays out 43.0% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current recommendations for HSBC and Banco Santander Chile, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HSBC	0	3	7	0	2.70
Banco Santander Chile	1	4	2	0	2.14

HSBC presently has a consensus price target of $63.00, indicating a potential downside of 25.94%. Banco Santander Chile has a consensus price target of $35.50, indicating a potential upside of 7.28%. Given Banco Santander Chile’s higher possible upside, analysts clearly believe Banco Santander Chile is more favorable than HSBC.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
HSBC	16.07%	13.10%	0.82%
Banco Santander Chile	24.57%	21.51%	1.57%

Valuation & Earnings

This table compares HSBC and Banco Santander Chile”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HSBC	$131.35 billion	2.22	$22.29 billion	$6.05	14.06
Banco Santander Chile	$4.50 billion	3.46	$1.12 billion	$2.30	14.39

HSBC has higher revenue and earnings than Banco Santander Chile. HSBC 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.

Risk & Volatility

HSBC has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, Banco Santander Chile has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500.

Institutional & Insider Ownership

1.5% of HSBC shares are held by institutional investors. Comparatively, 6.4% of Banco Santander Chile shares are held by institutional investors. 0.0% of HSBC shares are held by 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.

Summary

Banco Santander Chile beats HSBC on 8 of the 15 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 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.