Should you buy ANZ?

ANZ (ASX: ANZ) is held by investors for a number of reasons, including income, management and safety, but perhaps it’s growth is what sets it apart from the rest of the big four.

Although it has returned a similar amount to the S&P/ASX 200 (ASX: XJO) (Index: ^AXJO) for the past three years, shareholders have witnessed a 25% capital growth and good dividend yields. It domestic operations have seen it remain in the top spot for being the most efficient local lender and has aggressively cut costs.

The Australian economy has provided a platform for it to launch operations in Asia and 32 countries across the world. The move was aimed at taking advantage of a once-in-a-century shift in the global economy from the West to Asia and China.

Senior management, headed by CEO Mike Smith, realised that they had to adapt to lower growth in New Zealand and Australia and build shareholder value by expanding into developing markets. Its 2007 predictions seem to be spot on, particularly when it forecasted much slower loan growth and higher funding costs which included the need to hold massive amounts of capital.

Currently, ANZ has been funnelling money into its ‘Super Regional Strategy’ but analysts are hoping that the next batch of annual results shows some amount of profit. However, even if it doesn’t turn a profit quite so soon, it is in the right place, and by all predictions, at the right time.

Already the company has millions of customers in the Asia Pacific region and hopes the International and Institutional Banking division will account for 25% to 30% of group revenue by 2017. It seems the stars are aligning — it recently received a retail Renminbi licence to trade the currency with Chinese customers directly from Australia and has opened branches in one of Hong Kong’s busiest retail and commercial districts.

In addition, the company has received many accolades for its strategy and has been ranked as a top five corporate bank in Asia, after only five years ago it was able to make the top 20, and is ranked the number one foreign exchange provider.

Foolish takeaway

With interest rates low, and expected to go lower, ANZ pays a 5.1% fully franked dividend that trumps any bank account. It operates at a healthy earnings ratio and, if all the above comes to fruition, it might even be considered cheap.

ANZ is not an overnight earner and punters looking for short-term gains must acknowledge that the company still has ground to cover before its Asian strategy pays off. However, it does tick all the boxes for savvy investors, with healthy upward trend lines, good income, strong leadership and the safety of a highly regulated Australian banking system.

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Motley Fool contributor Owen Raszkiewicz owns shares in ANZ.

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