The Australia and New Zealand Banking Group (ASX: ANZ) share price has given back yesterday's gain and dropped lower in morning trade.
At the time of writing the banking giant's shares are down just under 2.5% to $27.30.
Why is the ANZ share price in the red?
Whilst general share market weakness and a softer than expected result from National Australia Bank Ltd (ASX: NAB) have weighed on the banks today, ANZ's shares have fallen more than most due to being downgraded by analysts at Goldman Sachs.
According to the note, Goldman Sachs has downgraded ANZ's shares from a conviction buy rating to neutral with a reduced price target of $28.62.
Although ANZ delivered a solid half year result yesterday, the broker notes that the underlying momentum in the business was weak.
Furthermore, the broker suspects that this will remain the case in the medium term due to the shrinking of its mortgage book, the continued softening of its net interest margin, fee pressures, and the acceleration in 30/90-day past due Australian mortgage loans.
Finally, the broker had previously been bullish on ANZ due to the potential for further capital management initiatives. However, Goldman believes this is now on hold pending regulatory clarity from the RBNZ.
Should you invest?
Whilst I think that Goldman makes some fair points on ANZ, I still feel it could be a good option for income investors that don't have meaningful exposure to the banks.
After all, with its shares down almost 2.5% today, it means they offer a trailing fully franked 5.9% dividend yield.
If you do plan to buy shares, I would suggest you snap them up before May 13 when its shares trade ex-dividend for its 80 cents per share fully franked interim dividend. This will then be paid to eligible shareholders around six weeks later on July 1.
