Contrasting Bank of China (OTCMKTS:BACHY) and Sumitomo Mitsui Financial Group (NYSE:SMFG)

Bank of China (OTCMKTS:BACHY) and Sumitomo Mitsui Financial Group (NYSE:SMFG) are both large-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Dividends

Bank of China pays an annual dividend of $0.55 per share and has a dividend yield of 3.3%. Sumitomo Mitsui Financial Group pays an annual dividend of $0.48 per share and has a dividend yield of 2.2%. Bank of China pays out 21.4% of its earnings in the form of a dividend. Sumitomo Mitsui Financial Group pays out 40.0% 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. Bank of China is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Bank of China and Sumitomo Mitsui Financial Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of China	$169.73 billion	1.26	$33.81 billion	$2.57	6.47
Sumitomo Mitsui Financial Group	$66.82 billion	2.11	$3.36 billion	$1.20	18.42

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Bank of China and Sumitomo Mitsui Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of China	0	1	0	0	2.00
Sumitomo Mitsui Financial Group	0	1	0	2	3.33

Volatility & Risk

Bank of China has a beta of 0.06, meaning that its stock price is 94% less volatile than the S&P 500. Comparatively, Sumitomo Mitsui Financial Group has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500.

Institutional & Insider Ownership

3.9% of Sumitomo Mitsui Financial Group shares are owned by institutional investors. 0.1% of Sumitomo Mitsui Financial Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Bank of China and Sumitomo Mitsui Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of China	20.09%	7.81%	0.67%
Sumitomo Mitsui Financial Group	13.81%	9.38%	0.48%

Summary

Sumitomo Mitsui Financial Group beats Bank of China on 8 of the 15 factors compared between the two stocks.

About Bank of China

Bank of China Limited, together with its subsidiaries, provides various banking and financial services in Chinese Mainland, Hong Kong, Macao, Taiwan, and internationally. It operates through six segments: Corporate Banking, Personal Banking, Treasury Operations, Investment Banking, Insurance, and Other. The Corporate Banking segment provides current accounts, deposits, overdrafts, loans, payments and settlements, trade-related products, and other credit facilities, as well as foreign currency, derivative, and wealth management products for corporate customers, government authorities, and financial institutions. The Personal Banking segment offers savings deposits, personal loans, credit cards and debit cards, payments and settlements, wealth management, and funds and insurance agency services to retail customers. The Treasury Operations segment offers foreign exchange transactions, customer-based interest rate, and foreign exchange derivative transactions, as well as money market transactions, proprietary trading, and asset and liability management. The Investment Banking segment provides debt and equity underwriting and financial advisory, sale and trading of securities, stock brokerage, investment research, asset management services, and private equity investment services. The Insurance segment provides underwriting services for general and life insurance business, and insurance agency services. In addition, the company operates debt-to-equity swaps and other supporting, and aircraft and financial leasing business. The company was founded in 1912 and is headquartered in Beijing, China.

About Sumitomo Mitsui Financial Group

Sumitomo Mitsui Financial Group, Inc., together with its subsidiaries, provides banking, leasing, securities, credit card, and consumer finance services in Japan, the Americas, Europe, the Middle East, Asia, and Oceania. It operates through Wholesale Business Unit, Retail Business Unit, Global Business Unit, and Global Markets Business Unit segments. The company was incorporated in 2002 and is headquartered in Tokyo, Japan.