Why this top broker thinks the ANZ (ASX:ANZ) share price is overcooked

The ANZ share price could have peaked for the time being…

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The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price has been a very positive performer in 2021.

Since the start of the year, the banking giant’s shares have risen a sizeable 19.3%.

This is more than double the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.

Where next for the ANZ share price?

Unfortunately, one leading broker believes the ANZ share price may now have peaked.

According to a note out of Citi this week, its analysts have retained their sell rating and $28.00 price target on the bank’s shares.

While this still implies potential upside of almost 2% from the current ANZ share price of $27.49, it pales in comparison to the returns on offer elsewhere.

For example, Citi currently has a buy rating and $30.00 price target on the Westpac Banking Corp (ASX: WBC) share price. That price target implies potential upside of 19% over the next 12 months for the shares of Australia’s oldest bank.

What did the broker say about ANZ?

According to its latest note, Citi has warned investors not to get excited by the prospect of rising rates in New Zealand.

Although the broker acknowledges that ANZ has the largest exposure to the New Zealand market, it doesn’t expect it to benefit as greatly from rising interest rates as the market may think.

In addition to this, the broker has recently voiced its concerns over APRA data which showed a sharp contraction in ANZ’s mortgage book. This was particularly disappointing given strong market conditions.

Citi suspects that a number of internal issues, such as manual systems, could be weighing on its performance.

As a result of these factors, the broker believes ANZ could fall short of core profit expectations in the second half. In light of this, it doesn’t appear to be in a rush to change its rating on the ANZ share price.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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