Is the ANZ share price a buy?

Is the Australia and New Zealand Banking Group (ASX:ANZ) share price a buy? It's down 42% since the share market started declining.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy? It's down 42% since the Australian share market started declining.

The Australian banking sector has been turned upside down by the coronavirus pandemic.

Between all of the big ASX banks like ANZ, National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Macquarie Group Ltd (ASX: MQG), they have already provisioned billions of dollars for the economic impacts of the coronavirus. Commonwealth Bank of Australia (ASX: CBA) is yet to announce its own estimated pain.

In the recent half-year ANZ result announced that statutory profit after tax was down 51% to $1.55 billion. Cash profit was down 60% to $1.41 billion. The decline was driven by credit impairment charges of $1.67 billion which included increased credit reserves for coronavirus impacts of $1.031 billion.

Clearly bank investors had mostly been expecting something like this because the ANZ share price is currently down 41% to $16 today and on 23 March 2020 it had plunged to around $14.

Was it the right call to defer the ANZ dividend?

I think it was. In my mind it's a much wiser move to defer the dividend and not do a capital raising at a dilutive share price. We're still early into this whole situation. The economic fallout could last a lot longer than just the length of government restrictions.

On the economic side of things it's good the Australia is in a position where lockdowns can start to be lifted. But a lot of industries are still being heavily disrupted. ANZ can't truly say yet how much bad debts it will face because the situation is changing every week.

If it turns out better than expected than ANZ may still be able to pay a dividend later in the year. ANZ could also decide not to pay a dividend at all, depending on what happens.

Is the ANZ share price a buy?

If you believe the worst of the economic pain is already known then perhaps the ANZ share price is a buy. It's already fallen a lot – how much further could it fall?

I'm not sure it's good to buy yet though. I'd want to wait a few months to see what happens next. It could stay at this lower level for some time. There's a chance that the market is feeling a bit too confident about the rest of 2020. I wouldn't buy it thinking profit and dividends will resume quickly. Low interest rates are here to stay for at least a few years.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Dividend Investing

Are CBA shares still a good buy today for passive income?

Looking to earn passive income from ASX dividend stocks? Here’s my take on CBA shares.

Read more »

Shocked office worker staring at computer screen with colleagues working in the background.
Bank Shares

The ASX bank share beating CBA in 2025

Many investors might not realise this smaller bank stock is leading the pack this year. 

Read more »

man thinking about whether to invest in bitcoin
Bank Shares

Here's what needs to happen for the CBA share price to try and reach $200

What could drive the CBA share price higher?

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

Why now could be an opportune time to sell CBA shares

A leading expert offers his verdict on the outlook for CBA shares.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Bank Shares

The Westpac share price is a buy – UBS

The broker is optimistic on Westpac shares.

Read more »

Bank building with the word bank on it.
Bank Shares

The biggest buyers and sellers of ASX 200 bank stocks revealed

Macquarie breaks down who’s been buying and who’s been selling the ASX 200 bank stocks.

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Resources Shares

Should I switch my ASX 200 banking stocks for ASX 200 miners before earnings season?

The ASX 200 Index is dominated by Australia's bank and materials/mining sectors, which together account for around half of the…

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Bank Shares

Here's when Westpac says the RBA will now cut interest rates

The RBA surprised everyone by keeping rates on hold last week. So, when will the next cut happen?

Read more »