It has been a remarkable week for shareholders of Australia and New Zealand Banking Group (ASX: ANZ). As of the market close yesterday its shares had climbed almost 6% higher week-to-date, making it the best-performing Australian bank by some distance.
But can this good run continue?
Despite the recent rally in its share price I still feel ANZ shares are a little on the cheap side in comparison to the rest of the big four banks. Its shares are changing hands at the joint lowest price-to-book ratio along with National Australia Bank Ltd. (ASX: NAB).
At just 1.2x book value this is a significant discount to Commonwealth Bank of Australia (ASX: CBA) shares which are trading at 2.3x book value, and I feel this could be seen as a sign that they still have further to climb.
As well as being an attractive investment based on its book value, its big dividend is another reason to consider its shares in my opinion. Despite ANZ cutting its interim dividend, its shares are still expected to provide an estimated fully franked 6.5% dividend this year according to CommSec.
There is no doubt ANZ has been through an incredibly difficult time of late. But I feel confident that it is turning a corner now, as does its chairman David Gonski.
In his latest letter to shareholders he acknowledged that the bank was operating in a difficult environment brought on by slower global growth, but sounded optimistic about the progress ANZ was making. His target now is to turn ANZ into a simpler, stronger, and better balanced bank in the years ahead.
It will undoubtedly take some time and shareholders may need to be patient. But with a 6.5% dividend that many expect to begin to grow again, I feel it could be worth adding a small position in ANZ to your portfolio today if you're not already invested in the banks.
