Reviewing Erste Group Bank (OTCMKTS:EBKDY) and Lloyds Banking Group (NYSE:LYG)

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for Erste Group Bank and Lloyds Banking Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Erste Group Bank	0	2	0	1	2.67
Lloyds Banking Group	0	7	3	0	2.30

Lloyds Banking Group has a consensus target price of $2.75, indicating a potential upside of 0.00%. Given Lloyds Banking Group’s higher possible upside, analysts clearly believe Lloyds Banking Group is more favorable than Erste Group Bank.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Erste Group Bank	15.21%	11.11%	0.94%
Lloyds Banking Group	10.89%	9.81%	0.51%

Insider & Institutional Ownership

0.4% of Erste Group Bank shares are held by institutional investors. Comparatively, 2.2% of Lloyds Banking Group shares are held by institutional investors. 0.0% of Lloyds Banking Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Erste Group Bank pays an annual dividend of $1.01 per share and has a dividend yield of 3.4%. Lloyds Banking Group pays an annual dividend of $0.10 per share and has a dividend yield of 3.6%. Erste Group Bank pays out 25.0% of its earnings in the form of a dividend. Lloyds Banking Group pays out 25.6% 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.

Valuation & Earnings

This table compares Erste Group Bank and Lloyds Banking Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Erste Group Bank	$24.18 billion	1.02	$3.24 billion	$4.04	7.45
Lloyds Banking Group	$18.79 billion	2.22	$6.79 billion	$0.39	7.05

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

Volatility & Risk

Erste Group Bank has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500. Comparatively, Lloyds Banking Group has a beta of 1.31, indicating that its share price is 31% more volatile than the S&P 500.

Summary

Erste Group Bank beats Lloyds Banking Group on 9 of the 17 factors compared between the two stocks.

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.

About Lloyds Banking Group

Lloyds Banking Group plc, together with its subsidiaries, provides a range of banking and financial services in the United Kingdom and internationally. It operates in three segments: Retail; Commercial Banking; and Insurance, Pensions and Investments. The Retail segment offers a range of financial service products, including current accounts, savings, mortgages, motor finance, unsecured loans, leasing solutions, and credit cards to personal customers. The Commercial Banking segment provides lending, transactional banking, working capital management, risk management, and debt financing services to small and medium-sized entities, corporates, and institutions. The Insurance, Pensions, and Investments segment offers insurance, investment, and pension management products and services. It also provides digital banking services. The company offers its products and services under the Lloyds Bank, Halifax, Bank of Scotland, Scottish Widows, MBNA, Schroders Personal Wealth, Black Horse, Lex Autolease, Birmingham Midshires, LDC, AMC, Embark Group, Citra, IWeb, Cavendish Online, and Tusker brand names. Lloyds Banking Group plc was founded in 1695 and is headquartered in London, the United Kingdom.