One thing Australian investors are not short of is investment options in the banking space.
But with so many to choose from it can be hard to decide which ones to buy.
With that in mind, I've picked out three bank shares which have been rated as buys by brokers recently. They are as follows:
Macquarie Group Ltd (ASX: MQG)
Analysts at Morgan Stanley have an overweight rating and $136.00 price target on this investment bank's shares. This price target implies potential upside of around 7.5% over the next 12 months or 12% if you include dividends. Morgan Stanley believes that Macquarie's guidance for FY 2020 is conservative and notes that the bank has several options to boost revenue and cut costs. It also sees the weaker Aussie dollar as a tailwind for the company.
National Australia Bank Ltd (ASX: NAB)
According to a note out of Goldman Sachs, its analysts have a buy rating and $30.45 price target on NAB's shares at present. This price target implies potential upside of over 13% for its shares over the next 12 months excluding dividends. If you include the $1.66 per share dividend that the broker expects the bank to pay in FY 2019, this return stretches to over 19%. NAB is Goldman Sachs' preferred pick due to the sustainability of its return on tangible equity outperformance, volume tailwinds from its overweight exposure to SME lending, and its cost out opportunity over the near term.
Westpac Banking Corp (ASX: WBC)
A note out of Morgans last month reveals that its analysts continue to favour Westpac above the rest of the big four banks. Its analysts have an add rating and $33.00 price target on Westpac's shares, which implies potential upside of almost 20% for its shares excluding dividends. Including the $1.88 per share dividend that Morgans expects Westpac to pay over the next 12 months brings the potential total return to a whopping 26.5%. The broker likes Westpac due to its relatively low risk profile in respect to loan book positioning and its low reliance on treasury and markets income. It also believes concerns over its relatively high interest-only home loan exposure have been overblown.
