Financial Analysis: Banco Santander Chile (NYSE:BSAC) vs. Bank of Nova Scotia (NYSE:BNS)

Banco Santander Chile (NYSE:BSAC) and Bank of Nova Scotia (NYSE:BNS) are both large-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Profitability

This table compares Banco Santander Chile and Bank of Nova Scotia’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banco Santander Chile	24.57%	23.25%	1.60%
Bank of Nova Scotia	10.60%	12.10%	0.65%

Dividends

Banco Santander Chile pays an annual dividend of $0.99 per share and has a dividend yield of 2.7%. Bank of Nova Scotia pays an annual dividend of $3.20 per share and has a dividend yield of 4.1%. Banco Santander Chile pays out 43.0% of its earnings in the form of a dividend. Bank of Nova Scotia pays out 79.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bank of Nova Scotia has raised its dividend for 14 consecutive years. Bank of Nova Scotia is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Banco Santander Chile and Bank of Nova Scotia, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banco Santander Chile	2	4	0	0	1.67
Bank of Nova Scotia	0	4	1	0	2.20

Banco Santander Chile presently has a consensus price target of $27.67, indicating a potential downside of 25.12%. Bank of Nova Scotia has a consensus price target of $97.00, indicating a potential upside of 25.68%. Given Bank of Nova Scotia’s stronger consensus rating and higher possible upside, analysts plainly believe Bank of Nova Scotia is more favorable than Banco Santander Chile.

Insider and Institutional Ownership

6.4% of Banco Santander Chile shares are held by institutional investors. Comparatively, 49.1% of Bank of Nova Scotia shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

Banco Santander Chile has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, Bank of Nova Scotia has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.

Earnings & Valuation

This table compares Banco Santander Chile and Bank of Nova Scotia”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banco Santander Chile	$2,881.94 billion	0.01	$1.11 billion	$2.30	16.07
Bank of Nova Scotia	$37.10 billion	2.57	$5.56 billion	$4.02	19.20

Bank of Nova Scotia has lower revenue, but higher earnings than Banco Santander Chile. Banco Santander Chile is trading at a lower price-to-earnings ratio than Bank of Nova Scotia, indicating that it is currently the more affordable of the two stocks.

Summary

Bank of Nova Scotia beats Banco Santander Chile on 11 of the 16 factors compared between the two stocks.

About Banco Santander Chile

Banco Santander-Chile, together with its subsidiaries, provides commercial and retail banking services in Chile. It operates through Retail Banking, Middle-Market, Corporate Investment Banking, and Corporate Activities segments. The company offers debit and credit cards, checking accounts, and savings products; consumer, automobile, commercial, mortgage, and government-guaranteed loans; and Chilean peso and foreign currency-denominated loans to finance various commercial transactions, trade, foreign currency forward contracts, and credit lines, as well as mortgage financing services. It also provides mutual fund management, insurance and securities brokerage, foreign exchange services, financial leasing, financial consulting and advisory, investment management, foreign trade, leasing, factoring, treasury, and transactional services, as well as specialized services to finance residential projects. In addition, the company offers short-term financing and fundraising, and brokerage services, as well as derivatives, securitization, and other products; and manages capital allocations. It serves individuals, small to middle-sized entities, companies, and large corporations, as well as universities, government entities, and local and regional governments. The company was incorporated in 1977 and is headquartered in Santiago, Chile. Banco Santander-Chile operates as a subsidiary of Banco Santander, S.A.

About Bank of Nova Scotia

The Bank of Nova Scotia provides various banking products and services in Canada, the United States, Mexico, Peru, Chile, Colombia, the Caribbean and Central America, and internationally. It operates through Canadian Banking, International Banking, Global Wealth Management, and Global Banking and Markets segments. The company offers financial advice and solutions, and banking products, including debit and credit cards, chequing and saving accounts, investments, mortgages, loans, and insurance to individuals; and retail automotive financing solutions. It also provides business banking solutions comprising lending, deposit, cash management, and trade finance solutions to small, medium, and large businesses. In addition, it provides wealth management advice and solutions, including online brokerage, mobile investment, full-service brokerage, trust, private banking, and private investment counsel services; and retail mutual funds, exchange traded funds, liquid alternatives, and institutional funds. The Bank of Nova Scotia was founded in 1832 and is headquartered in Toronto, Canada.