Australia and New Zealand Banking Group (ASX: ANZ) is a great Australian bank.
Perhaps surprisingly, it is the only one looking to really capitalise on: 'The Asian Century'.
Unlike Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), whose focus in recent years has been firmly fixed on domestic retail banking (including mortgages), ANZ has continued to grow in Asia through exposure to trade flows, foreign exchange, joint venture partnerships and a growing branch network.
Launched in 2007 and later refined, CEO Mike Smith's 'Super Regional Strategy' has now begun to bear fruit. In its 2014 financial year, ANZ derived 24% of revenues from Asia, the Pacific, Europe and Americas (APEA) markets. It has set a goal of between 25% and 30% by 2017. At current rates, it appears almost certain the bank will achieve its goal.
However ANZ is not a one-trick pony.
Indeed ANZ's recent results announcement, which included a $7.1 billion cash profit and sizable dividend increase of 14%, also showed strong growth in the domestic market. Cash profit for the Australia division increased 7% and achieved a cost to income of 37.2% (which is very good). The New Zealand division achieved a cash profit of $1.07 billion, up from $877 million a year earlier.
Buy, Hold, or Sell?
In my opinion, ANZ is likely to be the best performing big bank over the next decade given its exposure to both the booming Asian markets and a well-regulated local market. Unfortunately, at over $32 per share I believe ANZ isn't cheap and is best left on your watchlist until we get a betting buying opportunity. I believe fair value for the stock is around $30 per share but a good buying level would be around $25. Remember, patience doesn't lose you money.
