Reviewing Shinhan Financial Group (NYSE:SHG) & Swedbank (OTCMKTS:SWDBY)

Swedbank (OTCMKTS:SWDBY) and Shinhan Financial Group (NYSE:SHG) are both large-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Risk and Volatility

Swedbank has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500. Comparatively, Shinhan Financial Group has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Swedbank and Shinhan Financial Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Swedbank	3	3	0	0	1.50
Shinhan Financial Group	0	0	1	1	3.50

Earnings & Valuation

This table compares Swedbank 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
Swedbank	$11.08 billion	3.51	$3.35 billion	SEK 2.96	11.67
Shinhan Financial Group	$23.83 billion	1.24	$3.48 billion	$9.01	6.91

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Swedbank	30.27%	15.50%	1.07%
Shinhan Financial Group	19.89%	10.87%	0.85%

Dividends

Swedbank pays an annual dividend of SEK 1.55 per share and has a dividend yield of 4.5%. Shinhan Financial Group pays an annual dividend of $1.20 per share and has a dividend yield of 1.9%. Swedbank pays out 52.4% 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.

Insider and Institutional Ownership

7.8% of Shinhan Financial Group shares are owned by institutional investors. 1.0% of Shinhan Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Shinhan Financial Group beats Swedbank on 10 of the 16 factors compared between the two stocks.

About Swedbank

Swedbank AB (publ) provides various banking products and services to private and corporate customers in Sweden, Estonia, Latvia, Lithuania, Norway, the United States, Finland, Denmark, Luxembourg, and China. The company operates through three business areas: Swedish Banking, Baltic Banking, and Corporates and Institutions. It offers savings accounts, mutual funds and insurance savings, pension savings, institutional asset management, and other savings and investment products; private residential lending, consumer financing, corporate lending, leasing, and other financing products, as well as trade finance and factoring services; and current accounts, cash handling, debit and credit cards, and card acquiring, as well as domestic, international, mobile, document, and other payment products. The company also provides equity trading, structured products, corporate finance, custody services, fixed income and currency trading, and other capital market products; and administrative services, treasury operations, real estate brokerage and management services, legal services, safe deposit boxes, and other services. In addition, it offers pension insurance and plan, life, endowment insurance, and personal insurance products; investment management, investment banking, and mortgage lending services; and transaction banking services comprising cash management, securities, account, and clearing and settlement services, as well as Internet and mobile banking services. The company was formerly known as ForeningsSparbanken AB and changed its name to Swedbank AB (publ) in September 2006. Swedbank AB (publ) was founded in 1820 and is headquartered in Sundbyberg, Sweden.

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.