Analysts at Bell Potter have been busy finding ASX shares from several industries that they believe are best placed to have a strong 2021.
On this occasion, I'm going to look at the banking and financial sector. Here are a few shares they rate highly:
Australia and New Zealand Banking GrpLtd (ASX: ANZ)
Bell Potter's favourite major bank is ANZ due partly to its belief that there is greater upside for its dividends compared to peers. It has a buy rating and $24.50 price target on its shares.
The broker explained: "FY20 performance may have been impacted by large notable items and COVID-19 provisions but underlying performance was sound and included a better outcome in 2H20."
"With a normalised target payout ratio lower than those of its peers, we believe there is greater upside for ANZ to increase dividends and especially when APRA relaxes its current payout restriction. Credit provisions are higher than the sector average and support the potential for write-backs."
Auswide Bank Ltd (ASX: ABA)
Another (smaller) bank that the broker is positive on is Auswide Bank. It currently has a buy rating and $6.70 price target on its shares. Bell Potter has been pleased with its performance in FY 2021 and notes that it is outperforming its larger peers.
It commented: "ABA provided an upbeat four month trading update with earnings momentum having further strengthened since the end of 1Q21 and performance indicators that are sector-beating."
"This represents a dream start to FY21 that should comfortably ensure an unbroken track record for ABA in generating profitable growth. All FY21 targets are set to be exceeded."
Macquarie Group Ltd (ASX: MQG)
Finally, this investment bank is the broker's favourite in the sector. Bell Potter has a buy rating and $150.00 price target on its shares. It notes that its business model has positioned it for growth in the future.
Bell Potter explained: "Looking past the COVID-19 noise, this longer term "Cash and Growth" story remains intact. The way MQG's business model is split across annuity-style and markets-facing activities – respectively 70% and 30% of net profit contribution – strengthens resilience in withstanding market volatility and improves flexibility in being able to capitalise on higher risk-adjusted return opportunities when operating conditions normalise."
Another positive in Bell Potter's eyes is its strong capital adequacy. It notes that this is being underpinned by its strong organic capital generation and efficient asset utilisation.
