Are ANZ shares a buy following the CBA result?

Could ANZ shares be a compelling investment amid recent insights into the banking sector?

| More on:

Should you invest $1,000 in Bluebet right now?

Before you buy Bluebet shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Bluebet wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price

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

It's worthwhile examining ANZ Group Holdings Ltd (ASX: ANZ) shares following the recent Commonwealth Bank of Australia (ASX: CBA) results because we may be able to gather useful understandings of the ASX bank share industry.

While they are two separate businesses, they operate in the same industry and largely offer the same services to customers.

ANZ is not quite as large as CBA, though it did recently become materially bigger after acquiring Suncorp Bank from Suncorp Group Ltd (ASX: SUN).

Let's remind ourselves of some of the most important aspects of the CBA result and then consider if the ANZ share price is a buy.

CBA result highlights

In the FY24 result, CBA reported its cash net profit after tax (NPAT) declined by 2% to $9.8 billion.

The net interest margin (NIM) dropped by 8 basis points year over year to 1.99%. However, interestingly, CBA reported its NIM increased by 1 basis point in the second half of FY24 compared to the first half of FY24.

Operating income was flat while operating expenditure rose by 3%. The ASX bank share said expenses rose due to higher inflation impacting staff costs and additional technology spending.

Pleasingly, the CBA loan impairment expense decreased, reflecting its "robust credit origination and underwriting practices, rising house prices, and lower expected losses within consumer finance."

CBA's annual dividend was increased by 3% to $4.65 per share.

At the current CBA share price, it's trading at around 23x FY24's earnings.

Are ANZ shares a buy?

The broker UBS is expecting ANZ's cash net profit to drop as CBA's did in FY24.

CBA's stabilisation of its NIM may be a sign that the worst of the competition is over. However, CBA did make a conscious decision to tactically manage the relationship between margin and growth. I'd be surprised if ANZ's NIM performed as well as CBA's because it has been focused on growth.

UBS suggests that ANZ has been slowly but steadily regaining its market share since September 2022 and if it could return to the 2018 level of 15.8% it could provide "significant upside to revenue".

However, I do think CBA's pleasing performance with its loan impairment expense may be at least partially applicable to ANZ because of the strength of the Australian economy and rising house prices.

One of the best things about ANZ, according to UBS, is its institutional bank. In UBS' words:

We believe ANZ remains the largest and strongest bank in the institutional banking product segment among the majors and we think it is well placed to benefit from potentially higher volatility and volumes in FY24.

The broker thinks ANZ's earnings per share (EPS) could grow at a compound annual growth rate (CAGR) of 3.6% over the next three years, which is actually faster than what UBS thinks CBA's EPS will grow by.

On the face of it, ANZ shares seem like better value than CBA shares, though there is a question mark about whether the ASX bank share could suffer due to the government bond trading scandal.

According to UBS' estimates, ANZ shares are trading at under 12x FY25's estimated earnings with a dividend yield of more than 6%. Those statistics are much more appealing than CBA's.

Motley Fool contributor Tristan Harrison 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 Scott Phillips.

More on Bank Shares

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Bank Shares

Why does Macquarie think the big 4 ASX bank shares are 'on borrowed time'?

With Australian interest rates likely to fall, the banks face compressed margins in the medium term.

Read more »

Bank building in a financial district.
Bank Shares

What happened with the big four ASX 200 bank stocks in April?

CBA led the charge among the ASX 200 bank stocks in April. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Bank Shares

Why did CBA shares jump over 10% in April?

It was a great month for owners of this banking giant's shares.

Read more »

Happy young woman saving money in a piggy bank.
Bank Shares

Which big 4 ASX bank share does Macquarie currently prefer?

Here’s why Macquarie likes this bank the most.

Read more »

Bank building with word Bank on it.
Bank Shares

ASX bank shares outperformed in April. Will this continue according to Macquarie?

What drove the strong performance by banks in April?

Read more »

a couple and their baby sit together at their computer carrying out digital transactions and smiling happily.
Bank Shares

3 things about BOQ stock every smart investor knows

This smaller bank has aspirations to become a larger competitor.

Read more »

Man raising both his arms in the air with a piggy bank on his lap, symbolising a record high.
Bank Shares

CBA shares reach new all time high after 4% surge

CBA shares have done it again.

Read more »

Bank building in a financial district.
Bank Shares

Would I buy ANZ shares right now?

Would the bank be a good investment right now?

Read more »