Next month the Australia and New Zealand Banking Group Limited (ASX: ANZ) share price will be in focus when it releases its first quarter update.
To get readers ready for the release, I've looked to see what a leading broker is expecting from the bank's update.
What Is expected from ANZ during the first quarter?
According to a note out of Bell Potter, its analysts are expecting a first quarter cash profit of $1.59 billion. This will be down 12.2% from $1.81 billion in the prior corresponding period.
The broker commented: "We look at numbers on a continuing basis again following the renewed impact of COVID19 on community health and the economy. In terms of 1Q22, we estimate cash profit of around $1.59bn and cash EPS of around 56¢."
"We were hoping for a quick end to support packages this time around but this was not to be given onset of the Omicron and other variants (and bearing in mind that support for home and business loans is still in excess of 90%). Nevertheless, we still expect the bank to revert back to credit impairment expenses in 1Q22 but not as much as before," it added.
What else should you look out for?
Bell Potter expects ANZ to report a net interest margin (NIM) of 1.62% for the quarter, down from 1.64% in FY 2021. This reflects lower volumes in both Australia Retail and Commercial and Institutional.
Another metric investors might want to look out for is the bank's costs. Largely due to one-offs in the fourth quarter, Bell Potter expects a decent reduction in the bank's expenses. It explained: "We have opted for operating expenses of around $2.00bn in 1Q22, a fair drop from $2.28bn in 4Q21 of around 12% but mainly due to the removal of large/notable items."
Finally, the broker is forecasting a CET1 ratio of 11.8%, which is notably higher than APRA's unquestionably strong benchmark of 10.5%.
Is the ANZ share price in the buy zone?
The broker sees a lot of value in the ANZ share price at the current level and has retained its buy rating and lifted its price target to $31.00.
Based on the current ANZ share price of $26.62, this implies potential upside of 16% over the next 12 months.
And with Bell Potter forecasting a $1.44 per share fully franked dividend in FY 2022, the total return stretches to over 21%.
