Reviewing Erste Group Bank (OTCMKTS:EBKDY) and HDFC Bank (NYSE:HDB)

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

Institutional and Insider Ownership

17.6% of HDFC Bank shares are owned by institutional investors. Comparatively, 0.4% of Erste Group Bank shares are owned by institutional investors. 1.0% of HDFC Bank shares are owned 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.

Risk & Volatility

HDFC Bank has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500. Comparatively, Erste Group Bank has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500.

Valuation & Earnings

This table compares HDFC Bank and Erste Group Bank’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HDFC Bank	$2,360.44 billion	0.05	$7.75 billion	$3.26	18.75
Erste Group Bank	$24.18 billion	0.94	$3.24 billion	$3.96	6.85

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

Dividends

HDFC Bank pays an annual dividend of $0.59 per share and has a dividend yield of 1.0%. Erste Group Bank pays an annual dividend of $1.01 per share and has a dividend yield of 3.7%. HDFC Bank pays out 18.1% of its earnings in the form of a dividend. Erste Group Bank pays out 25.5% 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.

Profitability

This table compares HDFC Bank and Erste Group Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HDFC Bank	14.69%	12.64%	1.70%
Erste Group Bank	14.34%	11.67%	0.93%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for HDFC Bank and Erste Group Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HDFC Bank	0	1	0	1	3.00
Erste Group Bank	0	1	0	0	2.00

Summary

HDFC Bank beats Erste Group Bank on 11 of the 15 factors compared between the two stocks.

About HDFC Bank

HDFC Bank Limited provides banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in three segments: Wholesale Banking, Retail Banking, and Treasury Services. It accepts savings, salary, current, rural, public provident fund, pension, and demat accounts; fixed and recurring deposits; and safe deposit lockers, as well as offshore accounts and deposits, and overdrafts against fixed deposits. The company also provides personal, home, car, two-wheeler, business, doctor, educational, gold, consumer, and rural loans; loans against properties, securities, fixed deposits, rental receivables, and assets; loans for professionals; government sponsored programs; and loans on credit card, as well as working capital and commercial/construction equipment finance, healthcare/medical equipment and commercial vehicle finance, dealer finance, and term loans. In addition, it offers credit, debit, prepaid, and forex cards; payment and collection, export, import, remittance, bank guarantee, letter of credit, trade, hedging, and merchant and cash management services; insurance and investment products. Further, the company provides short term finance, bill discounting, structured finance, export credit, loan repayment, and documents collection services; online and wholesale, mobile, and phone banking services; unified payment interface, immediate payment, national electronic funds transfer, and real time gross settlement services; and channel financing, vendor financing, reimbursement account, money market, derivatives, employee trusts, cash surplus corporates, tax payment, and bankers to rights/public issue services, as well as financial solutions for supply chain partners and agricultural customers. It operates branches and automated teller machines in various cities/towns. The company was incorporated in 1994 and is headquartered in Mumbai, India.

About Erste Group Bank

Erste Group Bank AG provides a range of banking and other financial services to retail, corporate, and public sector customers. The company operates through Retail, Corporates, Group Markets, Asset/Liability Management & Local Corporate Center, Savings Banks, and Group Corporate Center segments. It provides mortgage and consumer loans, investment products, current accounts, savings products, and credit cards, as well as cross selling products, such as leasing, insurance, and building society products. The company also offers factoring and accounts receivable purchasing; investment, acquisition and leveraged, project, and commercial real estate finance; interest rate and currency hedging, letters of credit, documentary collections, and guarantees; account management, payments, digital-banking, cash logistics, and payment factory and cash pooling services; documentary collection, equity interests and investments, revolving export credits lines, letters of credit, customer financing, and export guarantee; and loan syndication, and debt and equity capital market services. In addition, it provides cash management, trade finance, customer referral, markets execution, debt capital markets, and custody and brokerage services. Further, the company offers corporate finance; portfolio management; trading and market; trade execution, market making, and short-term liquidity management; and asset/liability management services, as well as working capital and bridge loans. It operates in Austria, the Czech Republic, Slovakia, Romania, Hungary, Serbia, Croatia, and internationally. The company was founded in 1819 and is headquartered in Vienna, Austria.