Bank of Communications (OTCMKTS:BCMXY) and Westpac Banking (OTCMKTS:WEBNF) Critical Analysis

Bank of Communications (OTCMKTS:BCMXY) and Westpac Banking (OTCMKTS:WEBNF) are both financial services companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Profitability

This table compares Bank of Communications and Westpac Banking’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of Communications	17.24%	8.84%	0.68%
Westpac Banking	N/A	N/A	N/A

Dividends

Bank of Communications pays an annual dividend of $1.12 per share and has a dividend yield of 6.8%. Westpac Banking pays an annual dividend of C$1.78 per share and has a dividend yield of 10.3%. Bank of Communications pays out 27.4% of its earnings in the form of a dividend. Westpac Banking pays out 74.6% 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.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Bank of Communications and Westpac Banking, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of Communications	0	0	0	0	N/A
Westpac Banking	1	2	0	0	1.67

Earnings & Valuation

This table compares Bank of Communications and Westpac Banking’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of Communications	$77.53 billion	0.63	$13.69 billion	$4.09	4.03
Westpac Banking	N/A	N/A	N/A	C$2.39	7.23

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

Insider and Institutional Ownership

13.9% of Westpac Banking shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Bank of Communications beats Westpac Banking on 6 of the 9 factors compared between the two stocks.

About Bank of Communications

Bank of Communications Co., Ltd. provides commercial banking products and services. It offers personal deposit products including savings, and personal certificate and structured deposits; personal loan, consumption, housing, mortgage loan, commercial housing, and business loans; and debit and credit card services. The company also provides investment services, which includes funds, insurance, financial products, trust, asset management, and precious metals and commodities trading services, as well as operates banking securities and future business; exclusive services, such as ward fortune, salary payment, community finance, value-added, and junior finance. In addition, it offers foreign exchange services comprising personal foreign exchange settlement and sale, exchange trading, and international money transfer services, as well as cross-border study abroad finance, and business travel services. Further, the company provides business banking services, which includes deposit wealth and cash management, industry chain and government, auto, and shipping finance, as well as investment banking, asset custody, and enterprise annuity account management services; and basic, online and international trade finance, and billing services. It also offers international business services, such as cross-border, exchange rate management, foreign exchange wealth management, international settlement, trade finance, letter of credit, and correspondent banking, as well as operates domestic and overseas linkage, and electronic business. Additionally, it provides bond underwriting, and equity financing and supporting M&A advisory and financing services; offshore and trust business services; leasing services; consignment financial management services; and operates bank-securities, insurance, non-banking financial institution, financial market, money and bond market, forex, and derivatives. The company was founded in 1908 and is headquartered in Shanghai, the People's Republic of China.

About Westpac Banking

Westpac Banking Corporation provides various banking and financial services in Australia, New Zealand, and internationally. The company operates through Consumer, Business, Consumer and Business Banking, Westpac Institutional Bank, Specialist Businesses, and Westpac New Zealand segments. It offers savings, term deposit, business transaction, not-for-profit transaction, foreign currency, farm management deposit, project and retention trust, and statutory trust accounts; home, personal, business, and commercial loans; car and equipment finance; business overdrafts and bank guarantees; debit and credit cards; international and travel services; share trading services; investment products; and home, car, travel, life, caravan and trailer, credit card and loan repayment, boat, and business insurance products. In addition, the company provides corporate and institutional, transaction banking, financial market, corporate and structured finance, trade and supply chain financing, and industry specific banking and treasury services, as well as online banking services. It serves individuals; small, and medium enterprises; commercial and agribusiness; and private wealth clients; and corporate, institutional, and government customers. The company was formerly known as Bank of New South Wales and changed its name to Westpac Banking Corporation in October 1982. Westpac Banking Corporation was founded in 1817 and is based in Sydney, Australia.