Is the ANZ share price a buy and a dividend opportunity?

Four ASX dividend shares investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces wondering what the APA share price will do today and how big the APA dividend yield will be in 2022Four ASX dividend shares investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces wondering what the APA share price will do today and how big the APA dividend yield will be in 2022

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is facing investor attention after the company reported its half-year results last week.

ANZ is one of the big four banks alongside Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), and National Australia Bank Ltd (ASX: NAB).

It is banking reporting season right now as every major bank releases a result or profit update. Macquarie Group Ltd (ASX: MQG) has also released its FY22 result recently.

Let’s take a look at what the ANZ result might mean for investors and its share price.

HY22 earnings wrap

ANZ said its statutory net profit after tax (NPAT) grew by 10% to $3.53 billion. However, the continuing operations cash profit actually fell by 3% to $3.11 billion. The continuing operations cash profit before credit impairments, tax, and large/notable items fell by 10% to $4.14 billion.

The board declared an interim dividend of 72 cents per share.

ANZ said its total provision release was $284 million, compared to a release of $76 million in the second half of FY21. The ANZ share price edged 0.44% higher when the results were released last Wednesday but has ended each subsequent session in the red.

Meanwhile, the bank said it saw “positive” balance sheet growth in Australia which was driven by home loan processing capability. There was also “strong” home loan momentum in New Zealand which delivered market share growth.

ANZ explained that institutional customer revenue grew “strongly” with risk-adjusted lending margins expanding.

The big four ASX bank also said that costs were “tightly managed” with ‘run the bank’ expenses being flat for the half with the investment focused on “operational resilience” and new growth opportunities.

Recently, ANZ launched its new retail banking platform called ANZ Plus. It has also been working on improving its home loan processing capacity in Australia. The bank said it is on target to grow in line with the Australian major banks by the end of FY22, but will do so as it keeps an eye on its profit margins.

In terms of the loan book performance, ANZ revealed that customers are “generally emerging from the pandemic in a position of strength, with healthy balance sheets and low levels of arrears across key segments”.

Management thoughts on the outlook

The ANZ CEO Shayne Elliot said:

Looking ahead, the economic environment is likely to be very different and we will continue to adjust our risk appetite, business setting and investment priorities as required. We are already seeing increased demand from our business customers and we are well placed to continue to support them as they manage in a world of higher inflation and interest rates.

For ANZ, we will continue to focus on the long term – investing for tomorrow and not just running today.

Is the ANZ share price a buy?

The ANZ share price ended Monday’s session at $26.03.

Macquarie currently rates ANZ as a buy, with a price target of $29.50. While the half-year result didn’t impress, the broker points out that interest rate hikes are expected to be beneficial for the net interest margin. Higher interest rates could be more useful to ANZ than other banks.

The broker Citi also rates ANZ shares as a buy, with a price target of $30.75. The end of its $8 billion cost goal means profit isn’t likely to be as high as previously expected in the next couple of years. Citi also thinks that higher interest rates will help the bank.

At the current ANZ share price, Macquarie thinks the bank will pay a grossed-up dividend yield of 7.9% in FY22 and 8% in FY23.

Citi’s projection for dividends means ANZ could pay a grossed-up dividend yield of 8.1% in FY22 and 9.3% in FY23.

The post Is the ANZ share price a buy and a dividend opportunity? appeared first on The Motley Fool Australia.

Should you invest $1,000 in ANZ right now?

Before you consider ANZ, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and ANZ wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

More reading

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/3nJcYdL

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s