The team at Bell Potter has been busy this week looking at its top ASX share picks for 2022.
On this occasion, I'm going to look at what the broker is saying about the banking sector. Here are its top picks in the sector:
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Which ASX bank shares are buys?
Bell Potter notes that its top picks in the sector possess proven risk management capabilities, defensive qualities, strong growth prospects, and health balance sheets. The latter includes surplus capital that could eventually be returned to shareholders.
Those top picks are Australia and New Zealand Banking GrpLtd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB). The broker has a buy rating and $30.00 price target on ANZ's shares and a buy rating and $31.00 price target on NAB's shares.
Based on the current ANZ share price, this implies potential upside of 9.2%. Whereas based on the latest NAB share price, Bell Potter's price target suggests upside of 9%.
Don't forget the dividends
The broker is expecting the banks to provide attractive fully franked dividend yields next year. Its analysts are forecasting a fully franked 4.7% yield for ANZ's shares and a fully franked 5.1% yield for NAB's shares.
This brings the total return on offer for both bank shares to approximately 14% over the next 12 months.
Bell Potter Analyst TS Lim, commented: "Our 2022 top picks once again possess proven risk management capabilities, defensive qualities including healthy balance sheets and surplus capital that could be returned to shareholders in due course, and strong growth prospects."
"These companies have undergone massive transformation since the GFC to improve earnings quality and consistency. Our selection comprises two major banks. The longer term operating environment post COVID-19 remains positive for ANZ and NAB. Both are well-provisioned and well-placed to capitalise on post-pandemic opportunities in retail and SME banking," Lim added.
