Greater Certainty: Why this top broker is bullish on ANZ (ASX:ANZ) shares in 2022

Not all are downbeat on ANZ in 2022. This broker sees something in the bank that most don't.

| More on:
Bull with the word bull run and a rising arrow symbolising bullish.

Image source: Getty Images

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

Key points

  • ANZ shares have started the year poorly and are trailing the other banking majors in 2o22 
  • Not all are as downbeat on the bank however – analysts at JP Morgan are bullish on the outlook for ANZ investors this year 
  • In the last 12 months, ANZ shares have fallen less than 1% into the red 

Shares in Australia and New Zealand Banking Group Ltd (ASX: ANZ) are walking south in Monday's session and now trade less than 1% in the red at $26.02 apiece.

The bank has lagged the other majors on the chart so far in 2022 and is currently trading down 5% since trading kicked off on January 4.

TradingView Chart

Who is bullish on ANZ shares?

Despite the weakness in its share price, ANZ is well poised to deliver upside in 2022 and 2023 according to analysts at JP Morgan.

The broker is overweight on ANZ and values the bank well ahead of its current market price. More visibility around ANZ's earnings profile has JP Morgan constructive on the bank moving forward.

"Our Overweight recommendation reflects our greater certainty in ANZ's top line. ANZ offers the greatest exposure to rising offshore rates, stemming from its NZ franchise, and its large Institutional business" the broker said in a recent note.

"It also has a large relative exposure to business lending, which should provide some protection from the severe short-term pressure on mortgage margins".

Whilst ANZ has faced challenges in its mortgage segment in recent periods, the broker expects these to lift overtime "in line with improved cost efficiencies".

Analysts at the firm forecast net interest income of $14.113 billion in FY22 for the bank, growing to $14.69 billion the year after. It also tips ANZ's net interest margin (NIM) to hold firm at 1.5% during this time.

Meanwhile, JP Morgan is also estimating ANZ to pay $1.44 in dividends per share for FY22 then growing to $1.56 per share in FY23. This signifies a growth of 1.4% for both years, less than the level of headline inflation.

Capital management potential is also "at the upper end of the major banks" according to JP Morgan analysts, and the firm expects ANZ will return to out-cost in FY23.

As a result, analysts are positioning ANZ towards the top of the mantlepiece with respect to the broker's banking universe, valuing the bank at $30.50 per share.

"Our December 2022 price target of $30.50 reflects the aggregate of the present value of the dividend stream paid to shareholders through to FY24E and the present value of a multiple of FY24E tangible book value", it remarked.

Quick summary of ANZ shares

In the last 12 months, ANZ shares have fallen less than 1% into the red. However, they are down 6% this year to date.

During the past month of trading, shares have collapsed another 4%, and ANZ is thus trailing the broad indexes this year.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

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

Goldman Sachs says these ASX 200 stocks are strong buys

The broker is feeling very bullish about these stocks. But why?

Read more »

A bland looking man in a brown suit opens his jacket to reveal a red and gold superhero dollar symbol on his chest.
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in May

These stocks could be best buys this month according to the broker.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Man looking upwards contemplating which shares to buy
Broker Notes

CSL shares have climbed 10% since 11 April. Is it too late to buy?

What are analysts saying about this biotech giant after its recent rally? Let's find out.

Read more »

Excited couple celebrating success while looking at smartphone.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in May

The broker is feeling bullish on these names this month. Let's find out why.

Read more »

Red buy button on an apple keyboard with a finger on it representing asx tech shares to buy today
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Share Market News

ASX shares in April: 8 key takeaways according to Macquarie

Here are eight key takeaways from April, according to a new note from the broker.

Read more »