The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has slipped 5% since releasing its first-half results for FY21 on 5 May.
Its results highlighted an impressive 45% increase in statutory profit after tax and 28% increase in cash earnings compared to a year ago. ANZ also went ex-dividend last Monday, with eligible shareholders expected to receive an interim dividend of 70 cents per share. This greatly towers over the 60 cents FY20 dividend paid out last year.
However, the seemingly impressive figures were not enough to buoy its share price, which has retreated back to 2-month lows of around $27.40.
Today, analysts at Macquarie have flagged ANZ as potentially the better big bank to buy. Here’s why the ANZ share price might have an edge against other banks.
Why the ANZ share price might be better than other banks
In Macquarie’s review of first-half bank results, the broker was disappointed by the fact that pre-provision earnings excluding markets income had continued to decline.
While banks were able to deliver impressive double digit growth against a year ago, Macquarie notes that compared to the FY20 average, a majority of banks actually experienced a revenue decline.
The broker explains that the recent selloff across both the ANZ share price and broader big four banks was driven by the lack of pre-provision earnings growth. The market was expecting an improvement in this area, which failed to materialise.
Macquarie highlights ANZ as the only bank that didn’t experience a revenue (excluding markets income) decline. Its analysts believe the bank continues to better relative value compared to peers, maintaining an outperform rating with a $30.50 target price.
Despite the outperform rating, the broker warns that its outlook for the second half of FY21 appears less optimistic. Macquarie pointed to factors such as a lift in expenses and slowing balance sheet momentum that could weigh against expectations.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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