Itau Unibanco (NYSE:ITUB) vs. Credicorp (NYSE:BAP) Critical Comparison

Itau Unibanco (NYSE:ITUB) and Credicorp (NYSE:BAP) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, analyst recommendations, risk, valuation, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Itau Unibanco and Credicorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Itau Unibanco	0	2	2	0	2.50
Credicorp	0	3	4	0	2.57

Itau Unibanco currently has a consensus target price of $9.00, indicating a potential upside of 7.46%. Credicorp has a consensus target price of $315.60, indicating a potential downside of 4.54%. Given Itau Unibanco’s higher probable upside, equities research analysts clearly believe Itau Unibanco is more favorable than Credicorp.

Dividends

Itau Unibanco pays an annual dividend of $0.03 per share and has a dividend yield of 0.4%. Credicorp pays an annual dividend of $11.01 per share and has a dividend yield of 3.3%. Itau Unibanco pays out 4.1% of its earnings in the form of a dividend. Credicorp pays out 45.3% 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. Credicorp has raised its dividend for 3 consecutive years. Credicorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Itau Unibanco and Credicorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Itau Unibanco	27.27%	29.45%	1.59%
Credicorp	24.53%	20.43%	2.86%

Volatility & Risk

Itau Unibanco has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, Credicorp has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Institutional and Insider Ownership

89.8% of Credicorp shares are held by institutional investors. 0.6% of Itau Unibanco shares are held by company insiders. Comparatively, 15.9% of Credicorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Itau Unibanco and Credicorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Itau Unibanco	$30.04 billion	3.09	$8.03 billion	$0.73	11.47
Credicorp	$8.01 billion	3.89	$1.94 billion	$24.31	13.60

Itau Unibanco has higher revenue and earnings than Credicorp. Itau Unibanco is trading at a lower price-to-earnings ratio than Credicorp, indicating that it is currently the more affordable of the two stocks.

Summary

Credicorp beats Itau Unibanco on 11 of the 17 factors compared between the two stocks.

About Itau Unibanco

Itaú Unibanco Holding S.A. offers a range of financial products and services to individuals and corporate customers in Brazil and internationally. The company operates through three segments: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. It offers current account; loans; credit and debit cards; investment and commercial banking services; real estate lending services; financing and investment services; economic, financial and brokerage advisory; and leasing and foreign exchange services. The company also provides property and casualty insurance products covering loss, damage, or liabilities for assets or persons, as well as life insurance products covering death and personal accident. It serves retail customers, account and non-account holders, individuals and legal entities, high income clients, microenterprises, and small companies, as well as middle-market companies and high net worth clients. The company was formerly known as Itaú Unibanco Banco Múltiplo S.A. and changed its name to Itaú Unibanco Holding S.A. in April 2009. The company was incorporated in 1924 and is headquartered in São Paulo, Brazil. Itaú Unibanco Holding S.A. operates as a subsidiary of IUPAR – Itaú Unibanco Participações S.A.

About Credicorp

Credicorp Ltd. provides various financial, insurance, and health services and products primarily in Peru and internationally. It operates through Universal Banking, Insurance and Pensions, Microfinance, and Investment Banking and Equity Management segments. The Universal Banking segment grants various credits and financial instruments to individuals and legal entities; and various deposits and current accounts. The Insurance and Pensions segment issues insurance policies to cover losses in commercial property, transport, marine vessels, automobiles, life, health, and pensions; and management services for private pension funds. The Microfinance segment provides management of loans, deposits, and current accounts for small and microenterprises. The Investment Banking and Equity Management segment is involved in provision of brokerage and investment management services for corporations, institutional investors, governments, and foundations; structuring and placement of issues in the primary market; execution and negotiation of transactions in the secondary market; and structuring of securitization processes for corporate customers and manages mutual funds. The company was founded in 1889 and is headquartered in Lima, Peru.