There's little doubt that the Aussie banks have underperformed expectations – and the S&P/ASX 200 (INDEXASX: XJO) – in 2019.
The Macquarie Group Ltd (ASX: MQG) share price is the only one of the ASX banking stocks that has outperformed the ASX 200 this year.
Amongst the under performers, Commonwealth Bank of Australia Ltd (ASX: CBA) leads the way with a 13.88% gain. National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) have both only seen single digit growth in 2019.
That being said, here's why I think ANZ shares could be the best of the Aussie banking stocks in 2020.
Why ANZ could be the best ASX banking stock
Investing is always a trade-off between risk and return.
In that sense, ANZ has a great case as the best ASX banking stock to buy ahead of next year.
Westpac Banking Corp (ASX: WBC) shares have been smashed in recent weeks as its AUSTRAC scandal rolls on.
Westpac is alleged to have committed 23 million breaches of Australian anti-money laundering and counter-terrorism financing laws.
The revelations have destroyed the bank's capital gains as it faces over $1 billion in fines, not long after Commonwealth Bank's $700 million AUSTRAC fine.
However, ANZ has sailed through unscathed, as its long-term prudence in risk management looks to be paying dividends.
Given the Aussie banking sector has underperformed as a whole in this year, ANZ's performance may not be that bad.
Its status as a Big Four bank already gives it huge potential for growth. The non-major banks have struggled for years to break open the Big Four "cartel".
ANZ's dividend yield of 6.44% is also very handy, particularly given it hasn't been inflated by share price declines.
Is now the time to buy ANZ?
I think ANZ could be the best ASX banking stock, but I wouldn't be buying in just yet.
The banking sector is faces challenges on several fronts, including regulatory pressure and low interest rates.
With profitability slipping in FY19, I don't have high hopes for the Aussie banks in 2020.
However, if you're after a high-yield dividend stock that is minimising its individual risk, ANZ looks to fit the bill right now.
