Reviewing Mitsubishi UFJ Financial Group (NYSE:MUFG) and China Merchants Bank (OTCMKTS:CIHKY)

Mitsubishi UFJ Financial Group (NYSE:MUFG) and China Merchants Bank (OTCMKTS:CIHKY) are both large-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, profitability and risk.

Risk and Volatility

Mitsubishi UFJ Financial Group has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500. Comparatively, China Merchants Bank has a beta of 0.35, meaning that its stock price is 65% less volatile than the S&P 500.

Profitability

This table compares Mitsubishi UFJ Financial Group and China Merchants Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mitsubishi UFJ Financial Group	13.95%	9.35%	0.48%
China Merchants Bank	30.77%	12.69%	1.23%

Valuation & Earnings

This table compares Mitsubishi UFJ Financial Group and China Merchants Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mitsubishi UFJ Financial Group	$89.51 billion	2.06	$8.36 billion	$1.08	14.17
China Merchants Bank	$69.20 billion	2.25	$20.64 billion	$3.90	7.92

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

Analyst Recommendations

This is a breakdown of recent ratings for Mitsubishi UFJ Financial Group and China Merchants Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mitsubishi UFJ Financial Group	0	0	0	1	4.00
China Merchants Bank	0	0	0	0	0.00

Insider and Institutional Ownership

13.6% of Mitsubishi UFJ Financial Group shares are owned by institutional investors. 0.0% of Mitsubishi UFJ Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Mitsubishi UFJ Financial Group pays an annual dividend of $0.43 per share and has a dividend yield of 2.8%. China Merchants Bank pays an annual dividend of $1.18 per share and has a dividend yield of 3.8%. Mitsubishi UFJ Financial Group pays out 39.8% of its earnings in the form of a dividend. China Merchants Bank pays out 30.3% 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 Merchants Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

China Merchants Bank beats Mitsubishi UFJ Financial Group on 8 of the 15 factors compared between the two stocks.

About Mitsubishi UFJ Financial Group

Mitsubishi UFJ Financial Group, Inc. operates as the bank holding company, that engages in a range of financial businesses in Japan, the United States, Europe, Asia/Oceania, and internationally. It operates through seven segments: Digital Service, Retail & Commercial Banking, Japanese Corporate & Investment Banking, Global Commercial Banking, Asset Management & Investor Services, Global Corporate & Investment Banking, and Global Markets. The company offers commercial banking, trust banking, and securities products and services to retail, and small and medium-sized enterprise customers. It also provides mergers and acquisition, debt and equity issuance, financial advice, and real estate-related services; digital-based financial services; credit cards; and trust banking and securities products and services, as well as engages in the lending, fund settlement, and foreign exchange businesses. In addition, the company offers corporate banking services, such as project export credit agency finance, and financing through asset-backed commercial paper; investment and transaction banking services for corporations, financial institutions, sovereign and multinational organizations, and institutional investors; and asset management and investor services, including pension fund management and administration, pension structure advisory, beneficiary payment, and investment trust services for retail customers. Further, it provides loans, deposits, fund transfers, hedging, and investments services for retail, small and medium-sized enterprise, as well as corporate customers; financing for automotive and consumer goods; sells and trades in fixed income instruments, currencies, equities, and equities; offers investment products comprising mutual funds, structured bonds, and notes; originates and distributes of financial products; and provides insurance and treasury services. The company was founded in 1880 and is headquartered in Tokyo, Japan.

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.