The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is inching higher this afternoon and is now up around 0.6% at $28.65.
With the bank releasing its full-year results last week, the analyst team at Macquarie Group Ltd (ASX: MQG) have chimed in with its opinion on the outlook for the ANZ share price.
But first – How did ANZ perform in FY21?
For the 12 months ended September 30 2021, the banking giant recognised a 72% jump in its statutory profit after tax at $6.16 billion.
This corresponded with a 65% year-on-year increase in cash earnings from continuous operations of $6.2 billion.
Another takeout from the year was ANZ's CET 1 ratio gaining 100 basis points to now sit at 12.3%. This result means the bank has eclipsed the $6 billion mark in 'surplus' capital on its balance sheet, well above its base-level requirements.
From this result in FY21, ANZ's board declared a fully franked final dividend of 72 cents per share, leading shareholders to relish in a $1.42 per share total dividend for FY21.
That's a 136% year-on-year gain in dividend income for ANZ investors to sink their teeth into.
With these results, the stage is set for brokers like Macquarie to update and remodel their forecasts on ANZ's outlook and its valuation.
Why does Macquarie think ANZ shares are worth $29.50?
The broker appeared to be pleased by ANZ's 2H FY21 results, citing better-than-expected margins and income from markets.
It reckons that while home lending came in below expectations, the market has likely already priced these negative catalysts into the ANZ share price.
Macquarie notes that "the key question will be how much margin ANZ will need to sacrifice to restore balance sheet growth", despite the bank's impressive CET 1 ratio.
Analysts at the investment bank also raise questions about the impact ANZ's increased spend on investments could have as a near-term headwind.
Nonetheless, the broker retained its outperform rating on ANZ shares, and reinstated its $29.50 price target.
It notes that "following the weak share price performance in the lead up to the result, we believe the balance of risks is skewed to the upside for ANZ".
In effect, from its commentary, the broker believes the juice is worth the squeeze in ANZ's investment debate.
ANZ share price snapshot
The ANZ share price has managed to outpace the benchmark S&P/ASX 200 Index (ASX: XJO) in the last 12 months. It has gained 48% during that time and 26% so far this year.
