Australia & New Zealand Banking Group (ASX: ANZ) shares are up 16 per cent over 2019 to $27.69 today as a rebound in house prices and a solid half-year report to March 31 2019 combine to attract buyers.
Recently though investor concerns have been raised over moves by the New Zealand prudential regulator to increase capital adequacy requirements for regulated entities including ANZ's banking operations in New Zealand.
While the local regulator, APRA, also flagged in July 2019 that it expects banks to lift their capital reserve ratios regarding assessed counterparty credit and operational risks.
Regulators' capital adequacy requirements are important to banks as the tighter they're the more they crimp banks' return on equity and profitability.
On August 20 the banking analysts at Goldman Sachs updated their ANZ numbers in response to the new prudential demands and their potential impact on capital flows with one important takeaway.
Goldman's has now scrubbed its forecast that ANZ would complete a $1 billion of share buybacks by September 2021 and lowered its earnings per share estimates for FY 2021 by 0.7 per cent as a result.
Still it has a $28.84 12-month share price target on the bank, which suggests it offers reasonable total returns if we assume it pays out $1.60 per share in dividends plus franking credits over the next 12 months.
Elsewhere, Goldman's is still negative on Commonwealth Bank of Australia (ASX: CBA), with a 'sell' rating partly on valuation grounds.
