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Is it time to buy Australia and New Zealand Banking Group (ASX:ANZ) shares?

In morning trade the Australia and New Zealand Banking Group (ASX: ANZ) share price has dropped lower.

At the time of writing the bank’s shares are down 0.5% to $29.18.

What happened?

This morning the banking giant provided an update on its New Zealand business for the for the nine months ended June 30.

According to the release, ANZ New Zealand has had a positive nine months which resulted in solid profit growth.

Interest income rose 3.2% to NZ$4,767 million, outpacing interest expense which grew 2.7% to NZ$2,415 million. This led to net interest income growth of 3.7% to NZ$2,352 million.

On the bottom line profit after tax for the period was NZ$1,432 million, up 12.4% on the prior corresponding period.

Was this a good result in New Zealand?

While I thought this was a strong result from its New Zealand business, it appears to be largely in line with expectations.

As a result, it hasn’t been able to hold up its shares today in the face of weakness in the banking sector. Its shares have fallen along with the likes of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) today.

Should you invest?

As its New Zealand segment is only a small part of its overall business and represents less than a fifth of its total revenue, I wouldn’t make an investment purely on the back of this update. The performance of its core banking business in Australia is what will have the biggest impact on its full-year results.

Pleasingly, I think this side of the banking giant’s business could perform better than expected over the next 12 months due to its cost cutting, lower than average bad debts, and share buyback plans.

This could make it a decent option for investors that don’t already have meaningful exposure to the banking sector.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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