HSBC (NYSE:HSBC – Get Free Report) and Industrial & Commercial Bank of China Ltd. (OTCMKTS:IDCBY – Get Free Report) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.
Risk & Volatility
HSBC has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, Industrial & Commercial Bank of China Ltd. has a beta of 0.18, suggesting that its share price is 82% less volatile than the S&P 500.
Insider & Institutional Ownership
1.5% of HSBC shares are held by institutional investors. 0.0% of HSBC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| HSBC | $141.75 billion | 1.62 | $23.98 billion | $5.05 | 13.02 |
| Industrial & Commercial Bank of China Ltd. | $219.33 billion | 1.26 | $50.89 billion | $2.69 | 5.77 |
Industrial & Commercial Bank of China Ltd. has higher revenue and earnings than HSBC. Industrial & Commercial Bank of China Ltd. is trading at a lower price-to-earnings ratio than HSBC, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of recent recommendations for HSBC and Industrial & Commercial Bank of China Ltd., as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| HSBC | 0 | 4 | 1 | 0 | 2.20 |
| Industrial & Commercial Bank of China Ltd. | 0 | 0 | 0 | 0 | 0.00 |
HSBC presently has a consensus target price of $63.00, suggesting a potential downside of 4.17%. Given HSBC’s stronger consensus rating and higher probable upside, equities analysts plainly believe HSBC is more favorable than Industrial & Commercial Bank of China Ltd..
Profitability
This table compares HSBC and Industrial & Commercial Bank of China Ltd.’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| HSBC | 13.48% | 12.73% | 0.81% |
| Industrial & Commercial Bank of China Ltd. | 23.38% | 9.08% | 0.73% |
Dividends
HSBC pays an annual dividend of $1.98 per share and has a dividend yield of 3.0%. Industrial & Commercial Bank of China Ltd. pays an annual dividend of $0.70 per share and has a dividend yield of 4.5%. HSBC pays out 39.2% of its earnings in the form of a dividend. Industrial & Commercial Bank of China Ltd. pays out 26.0% 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. Industrial & Commercial Bank of China Ltd. is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
HSBC beats Industrial & Commercial Bank of China Ltd. on 11 of the 16 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 Industrial & Commercial Bank of China Ltd.
Industrial and Commercial Bank of China Limited, together with its subsidiaries, provides banking products and services in the People's Republic of China and internationally. The company operates through Corporate Banking, Personal Banking, and Treasury Operations segments. The Corporate Banking segment offers financial products and services to corporations, government agencies, and financial institutions. Its products and services include trade financing, deposit, corporate wealth management, custody, and various corporate intermediary services, as well as corporate loans. Its Personal Banking segment provides financial products and services to individual customers. This segment's products and services comprise personal loans and cards, deposits, and personal wealth management and intermediary services. The Treasury Business segment is involved in the money market transactions, investment securities, and proprietary and foreign exchange transactions businesses. It also offers e-banking services, investment banking, financial leasing, and insurance services. Industrial and Commercial Bank of China Limited was incorporated in 1984 and is based in Beijing, the People's Republic of China.
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