Shinhan Financial Group (NYSE:SHG) and Nordea Bank (OTCMKTS:NRDBY) Critical Comparison

Nordea Bank (OTCMKTS:NRDBY) and Shinhan Financial Group (NYSE:SHG) 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, risk, dividends, valuation, institutional ownership, profitability and analyst recommendations.

Profitability

This table compares Nordea Bank and Shinhan Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nordea Bank	22.36%	15.61%	0.75%
Shinhan Financial Group	19.89%	10.87%	0.85%

Volatility and Risk

Nordea Bank has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500. Comparatively, Shinhan Financial Group has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500.

Earnings and Valuation

This table compares Nordea Bank and Shinhan Financial Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nordea Bank	$23.46 billion	2.63	$5.48 billion	$1.58	11.44
Shinhan Financial Group	$22,050.19 billion	0.00	$3.48 billion	$9.01	6.85

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

Insider and Institutional Ownership

0.0% of Nordea Bank shares are held by institutional investors. Comparatively, 7.8% of Shinhan Financial Group shares are held by institutional investors. 1.0% of Shinhan Financial Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Nordea Bank and Shinhan Financial Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nordea Bank	1	3	2	1	2.43
Shinhan Financial Group	0	0	1	1	3.50

Dividends

Nordea Bank pays an annual dividend of $0.47 per share and has a dividend yield of 2.6%. Shinhan Financial Group pays an annual dividend of $1.20 per share and has a dividend yield of 1.9%. Nordea Bank pays out 29.7% of its earnings in the form of a dividend. Shinhan Financial Group pays out 13.3% 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.

Summary

Shinhan Financial Group beats Nordea Bank on 8 of the 15 factors compared between the two stocks.

About Nordea Bank

Nordea Bank Abp offers banking products and services in Sweden, Finland, Norway, Denmark, and internationally. It operates through Personal Banking, Business Banking, Large Corporates & Institutions, and Asset & Wealth Management segments. The Personal Banking segment provides various financial services to customers through mobile banking, over the phone, online meetings, and branch offices. The Business Banking segment offers payments, cash management, cards, working capital management, and cards and finance solutions to corporate and personal customers. The Large Corporates & Institutions segment provides financing, cash management and payment, investment banking, capital market products, and securities services to corporate and institutional customers. The Asset & Wealth Management segment offers investment, savings, and risk management solutions to high net worth individuals and institutional investors. It also offers account-based products, such as lending and deposit; project finance services, asset-based financing through leasing, hire purchase, and factoring, as well as sales to finance partners, such as dealers, vendors, and retailers; financial instruments or arrangement for financial instruments, including currencies, commodities, stocks, and bonds; and asset management, including investment funds, discretionary management, portfolio advice, equity trading, and pension accounts, as well as life insurance and pension products and services. Nordea Bank Abp was founded in 1820 and is headquartered in Helsinki, Finland.

About Shinhan Financial Group

Shinhan Financial Group Co., Ltd. provides financial products and services in South Korea and internationally. The company operates through six segments: Banking, Credit Card, Securities, Insurance, Credit, and Others. It offers retail banking services, including demand, savings, and fixed deposit-taking; checking accounts; mortgage and home equity, and retail lending; electronic banking and automatic teller machines (ATM); and bill paying, payroll and check-cashing, currency exchange, and wire fund transfer services. The company also provides corporate banking services, such as investment banking, real estate financing, overseas real estate and development project financing, infrastructure and structured financing, equity/venture investments, mergers and acquisitions consulting; securitization and derivatives services comprising securities and derivative products, and foreign exchange trading; business expansion financing and consulting services; and working capital loans and facilities loans. In addition, it is involved in treasury and investment activities in international capital markets consisting of foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services, and foreign banking operations. Further, the company offers real estate trust, investment advisory, venture business investment, life and non-life insurance, trust account management, securities brokerage, and asset management services, as well as leasing and equipment financing, savings banking, loan collection and credit reporting, collective investment administration, private equity investment, and financial system development services. Additionally, it provides transaction history inquiries and fund transfers, opening letters of credit, trade finance, payment and collection management, sales and acquisition settlement, business-to-business settlement, sweeping, pooling, ERP interface, host-to-host banking, SWIFT SCORE, and cash and liquidity management service. Shinhan Financial Group Co., Ltd. was founded in 1982 and is headquartered in Seoul, South Korea.