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Which bank shares should you buy next week?

The big four banks have had a tricky 12 months and it will come as no surprise to learn that their shares are far closer to their 52-week lows than their 52-week highs.

While I think that this makes most of them great investment options, here’s what brokers are saying about them:

Australia and New Zealand Banking Group (ASX: ANZ)

According to a note out of Goldman Sachs, it has ANZ Bank’s shares on its conviction buy list with a price target of $32.63. The broker believes that the bank is the pick of the group due to its low bad and doubtful debts, high CET1 ratio, and share buyback opportunities.

One broker that isn’t as bullish on the bank is Morgans which has a hold rating and $30.00 price target. The broker was surprised with a recent slowdown in the bank’s owner-occupied home loans and is concerned that its institutional banking business could be suffering from margin pressures.

Commonwealth Bank of Australia (ASX: CBA)

Although the banking giant delivered a result that fell short of expectations in FY 2018, Morgans remains positive on CommBank due to its dividend and cost reduction potential.

However, the majority of brokers are currently neutral on CommBank’s shares. I would agree with this view and feel some of its rivals are better options.

National Australia Bank Ltd (ASX: NAB)

Last week analysts at Citi retained their buy rating and $32.25 price target on National Australia Bank’s shares. The broker held firm with its rating despite the bank deciding against raising its mortgage rates. Citi expects other areas of its business to be able to offset higher wholesale funding costs.

Morgan Stanley doesn’t appear to agree with Citi. It has an underweight rating and $26.40 price target on the bank’s shares. It doesn’t expect the bank to see a notable pick up in new loans, though it does believe customer churn could be reduced. It has forecast a dividend cut to $1.74 per share in FY 2019.

Westpac Banking Corp (ASX: WBC)

A note out of Deutsche Bank reveals that its analysts have a buy rating and $31.00 price target on the shares of Australia’s oldest bank. The broker appears to have been pleased with its decision to lift its mortgage rates and expects it to result in a net profit benefit of up to 4% on an annualised basis.

UBS, on the other hand, has a sell rating and $26.00 price target on Westpac’s shares. However, that note was release after Westpac made its out of cycle rate rise and prior to the other banks (except NAB) following Westpac’s lead. At that point UBS felt other banks might hold off lifting rates in order to grab a greater share of the market.

Foolish Takeaway.

My preference remains Westpac, closely followed by ANZ Bank. The only bank I would avoid right now is National Australia Bank due to its potential need to cut its dividend in FY 2019.

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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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