China Merchants Bank (OTCMKTS:CIHKY – Get Free Report) and China CITIC Bank (OTCMKTS:CHCJY – Get Free Report) are both large-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, risk and profitability.
Volatility and Risk
China Merchants Bank has a beta of 0.2, meaning that its stock price is 80% less volatile than the S&P 500. Comparatively, China CITIC Bank has a beta of 0.28, meaning that its stock price is 72% less volatile than the S&P 500.
Earnings & Valuation
This table compares China Merchants Bank and China CITIC Bank”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| China Merchants Bank | $65.04 billion | 2.44 | $20.89 billion | $4.03 | 7.81 |
| China CITIC Bank | $49.07 billion | 0.97 | $9.82 billion | $3.38 | 5.77 |
China Merchants Bank has higher revenue and earnings than China CITIC Bank. China CITIC Bank is trading at a lower price-to-earnings ratio than China Merchants Bank, indicating that it is currently the more affordable of the two stocks.
Dividends
China Merchants Bank pays an annual dividend of $1.15 per share and has a dividend yield of 3.7%. China CITIC Bank pays an annual dividend of $0.87 per share and has a dividend yield of 4.5%. China Merchants Bank pays out 28.5% 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.
Analyst Ratings
This is a breakdown of current ratings and recommmendations for China Merchants Bank and China CITIC Bank, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| China Merchants Bank | 0 | 1 | 0 | 0 | 2.00 |
| China CITIC Bank | 0 | 1 | 0 | 0 | 2.00 |
Profitability
This table compares China Merchants Bank and China CITIC Bank’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| China Merchants Bank | 32.40% | 12.14% | 1.21% |
| China CITIC Bank | 20.39% | 8.44% | 0.71% |
Summary
China Merchants Bank beats China CITIC Bank on 8 of the 11 factors compared between the two stocks.
About China Merchants Bank
China Merchants Bank Co., Ltd., together with its subsidiaries, provides various banking products and services. It operates through Wholesale Finance Business, Retail Finance Business, and Other Business segments. The company offers current, demand, time, call, savings, notice, and renminbi accounts. Its loan products include personal commercial real estate, consumption, housing, and car loans; loans to finance for studying abroad; micro-business loans; mortgage loans for equipment; joint guarantee, special guarantee, and housing mortgage loan; bank acceptance, discount, liquid capital, and fixed asset loans; and loans for vessels. The company also offers credit cards; insurance products; open-ended funds; discount and guarantees for commercial bills, redemption of commercial bills, and guaranteed discount for commercial acceptance bills; and financial consultation, debt financing underwriting, merger and acquisition financing, and equity financing and enterprise listing services. In addition, it provides forfeiting and risk participation, escrow, cross-border RMB clearing, and interbank services; and risk and financial management, cross-border RMB and oversea financing, international factoring and settlement, and trade finance services. Further, the company offers financial leasing and guarantee, investment and wealth management, forex option and gold trading, forex express trading, international, offshore and private banking, custody, pension, and electronic banking services. The company also operates in Hong Kong, New York, London, Singapore, Luxembourg, Sydney, and Taipei. China Merchants Bank Co., Ltd. was founded in 1987 and is headquartered in Shenzhen, China.
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.
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