Excluding its generous dividends, year-to-date Australia and New Zealand Banking Group (ASX: ANZ) shares are down almost 4%.
By comparison, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has managed to push 5% higher since the start of the year.
Will this underperformance continue?
Unfortunately I think it will. Considering their limited scope to drive growth and the multiples that they currently trade on, I believe the majority of Australian banks are fully valued now and therefore would class them as holds.
I'm not alone in thinking this way. As I mentioned last month, analysts at Citi downgraded ANZ Bank's shares to a hold rating with a $30.00 price target following its full-year results release.
With its shares currently trading at $29.29, that price target doesn't leave much by way of upside for its shares over the next 12 months.
But I wouldn't necessarily rush out and sell those shares. At present ANZ Bank's shares provide a trailing fully franked 5.5% dividend. I think this makes it worth sticking around for even if its shares go sideways in 2018.
And if you don't already own ANZ then I would suggest you hold out for an opportunity to buy in at around $27.00 if possible.
While it may be wishful thinking, if it shares came down to this level I would certainly consider backing up the truck.
But until then I think investors should hold off an investment in ANZ Bank and Westpac Banking Corp (ASX: WBC). Instead, I would consider some of the other quality options available on the local market.
