The big four ASX banks have been the driving force behind the S&P/ASX 200 Index (ASX: XJO) resurgence to near pre-COVID highs.
Credit Suisse released a series of share price upgrades for big four ASX bank shares on Thursday, with Australia and New Zealand Banking Grp Ltd (ASX: ANZ) emerging as its preferred pick in the banking and financials sector.
Big four ASX bank upgrades
Commonwealth Bank of Australia (ASX: CBA)
The CBA share price target was increased from $74.80 to $82.00 with a neutral rating. Despite the increase in price target, the CBA share price closed at $86.33 on Thursday, or a 5% downside to Credit Suisse's new price target.
National Australia Bank Ltd (ASX: NAB)
Credit Suisse raised its NAB share price target to $26.00 or a 9% upside to its previous close. The broker takes a positive view on NAB with an outperform rating.
Westpac Banking Corp (ASX: WBC)
The Westpac share price target was also upgraded to $22.50 or a 7% upside to its previous close with an outperform rating.
ANZ
The ANZ share price has been the best performing bank amongst its peers in FY21, surging 32% in the last six months. Despite the surge, the ANZ share price is still 7% short of where it started 2020.
Credit Suisse raised its ANZ share price target from $26.20 to $28.00 with an outperform rating. This points to an upside of 14% to ANZ's closing price on Thursday of $24.60.
Overall, the broker anticipates a significant dividend recovery in F21 for all banks with potential capital management as soon as FY22.
Economic recovery taking shape
A number of domestic economic developments have pointed to the recovery establishing reasonable momentum, supported by the recent lifting of lockdown restrictions in Victoria.
In the RBA's December board meeting, it noted that expectations for GDP growth in the September and December quarters had been upgraded over the preceding month, and employment had also recovered faster than anticipated.
A rebound in household consumption was also seen as well, following a record contraction in the June quarter.
More bank-specific data has also pointed to a significant improvement in loan deferrals and signs of life in housing credit growth.
