Is the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price a buy right now?
Some brokers have had their say on the matter including Credit Suisse and Morgan Stanley after the big four ASX bank released an update.
ANZ told investors how the bank performed the first three months of its FY21:
ANZ's first quarter performance
The major bank said that it generated statutory profit after tax of $1.62 billion for the first quarter. It also said that cash profit from continuing operations of $1.81 billion was up 54% on the average of the last two quarters of FY20.
However, when looking at the continuing cash profit before credit impairments, large items and tax, it was down slightly.
ANZ said that the total provision result in the three months to 31 December 2020 was a net release of $150 million. This comprised an individually assessed provision (IP) charge of $23 million and a collective provision (CP) release of $173 million. The release of CP is equivalent to around 10% of the $1.7 billion set aside during FY20.
The major bank said that the CP release is prudent when balancing the improvement in the economic outlook at the end of the December quarter with the level of ongoing uncertainty.
ANZ also said that its Australian loan book still had 15,000 active house loans still being deferred due to COVID-19, being represented by around $6 billion. This has fallen from 96,000 loans worth $33 billion. Of the 81,000 housing loan accounts that have completed their deferrals, 98% have returned to repayment, 1% has been restructured and 1% has been transferred to hardship.
The big four ASX bank said that the APRA level 2 common equity tier 1 (CET1) capital ratio had risen to 11.7%, up from 11.3% at September 2020 and 10.8% at March 2020.
ANZ CEO Shayne Elliott said:
ANZ is well positioned heading into the remainder of 2021 with good momentum in our core activities. The work done to simplify and de-risk the business over the past five years set us up well and we have the capital, liquidity and operational capacity to continue to support our customers and the broader economic through what remains a volatile period.
What do brokers think of the ANZ share price?
The brokers are pretty unanimous that ANZ shares look like a buy.
Credit Suisse said that ANZ's cash earnings were a lot better than expected, with a stronger net interest margin (NIM) and a good balance sheet. A highlight was the increase in the ANZ market share in home loans in Australia.
Based on this result, ANZ decided to increase its expectations of ANZ's profit by 40% in this financial year, as well as a mid single digit increase of underlying profit.
ANZ is the big four bank that the broker likes the most. It has a share price target for ANZ of $29.50.
Morgan Stanley was also impressed by the ANZ update, with areas like revenue and capital better than expected. Morgan Stanley thinks that the outlook is good for ANZ with its control of costs, lower loan bad debts and a good trend for the margin.
