The Australia and New Zealand Banking Group (ASX: ANZ) share price has dropped lower with the market on Tuesday.
In early afternoon trade the banking giant's shares are down almost 1% to $26.49.
This decline means that its shares have fallen 9% over the last three months.
Is this a buying opportunity?
I think it could be a buying opportunity for investors that don't already have meaningful exposure to the banking sector.
After all, ANZ Bank's shares are currently changing hands at just 10x earnings and 1.3x book value, which is a reasonable discount to their average over the last decade.
In addition to this, the bank's shares offer a trailing fully franked 6% dividend at present. This is notably higher than the market average and especially attractive in this low interest rate environment.
I'm not the only one that likes ANZ Bank at these levels. A recent note out of Goldman Sachs reveals that its analysts still have its shares on their ANZ conviction buy list with a $31.52 price target.
According to the note, the bank is Goldman's preferred major bank exposure based on its view that it is best positioned of the major banks to face into the sector's slowing revenue environment.
This is because of opportunities for the bank to make further absolute cost reductions, reduce its share count by deploying surplus capital via buybacks, and due to its lower bad and doubtful debt charge given its structural shift in its portfolio.
Goldman believes that the bank's FY 2018 result was "further evidence that it is able to simultaneously pull all three of these levers" and expects more of the same in FY 2019.
While my preference remains Westpac Banking Corp (ASX: WBC) shares, I think both banks have the potential to generate solid total returns over the next 12 months and would suggest investors choose them ahead of rival Commonwealth Bank of Australia (ASX: CBA).
