The Australia and New Zealand Banking Group (ASX: ANZ) share price has consolidated its gains over the year so far.
ANZ shares started the year trading for $23.86, but have appreciated significantly in 2019 and are currently swapping hands for $28.29 – this represents a YTD gain of around 18.5% (not including dividends).
So what has caused this surge in value?
ANZ's time to shine?
There is no doubt ANZ has had a better 2019 than its 2018. This time last year, revelations of large-scale and blatant misconduct flowing out of the Royal Commission into the financial sector were in full swing. Although ANZ was not dragged through the mud like other institutions such as AMP Limited (ASX: AMP) or National Australia Bank Ltd (ASX: NAB), there were still serious issues raised for ANZ, including overcharged customers and phantom home loan discounts. In the second half of 2018, ANZ took an $824 million profit hit to pay for customer compensation resulting from the misconduct.
This all seems to be a distant memory, as the share price has stormed ahead this year. Interest rate cuts have seen demand for high-yielding shares like ANZ surge as investors chase replacements for the bonds that once paid a respectable return. A surging stock market and a rebounding housing market has also driven the prices of our biggest companies higher and ANZ has been caught in the tailwinds.
Is ANZ a buy at these prices?
Looking specifically at ANZ as a company, there is a lot to like (in my opinion). Like all of the 'Big Four' banks, ANZ enjoys phenomenal pricing power, brand recognition and market domination in both Australia and New Zealand. ANZ has a more balanced set of books to some of the other banks, with a larger focus on the business sector and less on retail banking. This gives it some relief from an over-reliance on the property market and retail loans.
ANZ also completed a share buy-back program back in March, which has reduced the number of shares on the market over the past year by over 108 million. While this in itself improves earnings-per-share (as the pie gets split between fewer shares), the buy-back was active when the ANZ share price was at a depressed level compared with today. I'm sure ANZ is now sitting on a tidy profit on the shares that were purchased, and this will add some ballast to the balance sheet going forward.
Foolish Takeaway
If you're looking for a stable dividend payer or just some financials exposure, ANZ would be a great option to consider (in my opinion). The bank's books look healthy and on current prices, ANZ is paying an 8.07% grossed-up dividend yield – nothing to turn your nose up at.
