Australia and New Zealand Banking Group (ASX: ANZ) is the best big four bank. Although it may not be as large as Commonwealth Bank of Australia (ASX: CBA), or as profitable as Westpac Banking Corp (ASX: WBC), it has number of characteristics which make it the best big bank to 'buy and hold'.
With shares up 61% not including dividends in the past two years alone, I don't think it warrants a 'buy' rating but here are four reasons why, if you already own ANZ shares, you should continue holding them into the foreseeable future…
1. In 2013 ANZ committed itself to domestic growth and grew its loan portfolio at the quickest rate of any of the big banks. Although this has the potential to result in rising bad debts when interest rates inevitably rise, it's a much better tactic to grow market share than the one employed by National Australia Bank Ltd. (ASX: NAB).
2. ANZ maintains robust profit margins. Of the big four banks, ANZ has the largest Net Interest Margin (a key measure of bank profitability). Currently 2.15% compared to Westpac's 2.11%.
3. ANZ is forecast to pay a 5.1% fully franked dividend in FY14. With higher earnings this can be expected to increase.
4. The most important reason to hold ANZ shares, above other bank shares, is its Super Regional Strategy. ANZ's Asia, Pacific, Europe and Americas markets now account for 19% of FX-Adjusted cash profit. Led by the group's International and Institutional Banking (IIB) division it will boost earnings for many years to come.
A better buy and hold than ANZ
If you bought ANZ shares below $24, you can comfortably sit back and relax knowing Australia's best bank is working hard to grow your wealth. However if, like me, you missed the opportunity to purchase them so cheap you should take a look at other growth and dividend ideas…
