HDFC Bank (NYSE:HDB) versus Metropolitan Bank (NYSE:MCB) Head to Head Review

Metropolitan Bank (NYSE:MCB) and HDFC Bank (NYSE:HDB) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, profitability, earnings and dividends.

Insider & Institutional Ownership

79.8% of Metropolitan Bank shares are held by institutional investors. Comparatively, 17.6% of HDFC Bank shares are held by institutional investors. 5.5% of Metropolitan Bank shares are held by insiders. Comparatively, 1.0% of HDFC Bank shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Metropolitan Bank	18.03%	12.63%	1.29%
HDFC Bank	15.84%	11.70%	1.68%

Valuation & Earnings

This table compares Metropolitan Bank and HDFC Bank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Metropolitan Bank	$527.15 million	2.24	$71.10 million	$9.81	9.71
HDFC Bank	$54.16 billion	2.10	$7.51 billion	$1.75	12.68

HDFC Bank has higher revenue and earnings than Metropolitan Bank. Metropolitan 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

Metropolitan Bank pays an annual dividend of $1.40 per share and has a dividend yield of 1.5%. HDFC Bank pays an annual dividend of $0.34 per share and has a dividend yield of 1.5%. Metropolitan Bank pays out 14.3% of its earnings in the form of a dividend. HDFC Bank pays out 19.4% 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.

Volatility and Risk

Metropolitan Bank has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, HDFC Bank has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Metropolitan Bank and HDFC Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Metropolitan Bank	0	1	2	1	3.00
HDFC Bank	1	2	1	0	2.00

Metropolitan Bank currently has a consensus target price of $105.00, suggesting a potential upside of 10.19%. HDFC Bank has a consensus target price of $26.10, suggesting a potential upside of 17.62%. Given HDFC Bank’s higher probable upside, analysts plainly believe HDFC Bank is more favorable than Metropolitan Bank.

Summary

Metropolitan Bank beats HDFC Bank on 11 of the 17 factors compared between the two stocks.

About Metropolitan Bank

Metropolitan Bank Holding Corp. operates as the bank holding company for Metropolitan Commercial Bank that provides a range of business, commercial, and retail banking products and services to small businesses, middle-market enterprises, public entities, and individuals in the New York metropolitan area. The company offers checking, savings, term deposit, money market, demand deposit, and other interest-bearing transaction accounts. It also provides lending products, including commercial real estate, multi-family, construction, and one-to four-family real estate loans; commercial and industrial loans; consumer loans; acquisition and renovation loans; loans to refinance or return borrower equity; loans on owner-occupied properties; working capital lines of credit; trade finance and letters of credit; and term loans. In addition, the company offers cash management services, as well as online and mobile banking, ACH, remote deposit capture, and debit cards. The company was formerly known as Metbank Holding Corp. and changed its name to Metropolitan Bank Holding Corp. in January 2007. Metropolitan Bank Holding Corp. was incorporated in 1997 and is headquartered in New York, New York.

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.