Greater Certainty: Why this top broker is bullish on ANZ (ASX:ANZ) shares in 2022

Not all are downbeat on ANZ in 2022. This broker sees something in the bank that most don't.

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Key points
  • ANZ shares have started the year poorly and are trailing the other banking majors in 2o22 
  • Not all are as downbeat on the bank however – analysts at JP Morgan are bullish on the outlook for ANZ investors this year 
  • In the last 12 months, ANZ shares have fallen less than 1% into the red 

Shares in Australia and New Zealand Banking Group Ltd (ASX: ANZ) are walking south in Monday's session and now trade less than 1% in the red at $26.02 apiece.

The bank has lagged the other majors on the chart so far in 2022 and is currently trading down 5% since trading kicked off on January 4.

TradingView Chart
Bull with the word bull run and a rising arrow symbolising bullish.

Image source: Getty Images

Who is bullish on ANZ shares?

Despite the weakness in its share price, ANZ is well poised to deliver upside in 2022 and 2023 according to analysts at JP Morgan.

The broker is overweight on ANZ and values the bank well ahead of its current market price. More visibility around ANZ's earnings profile has JP Morgan constructive on the bank moving forward.

"Our Overweight recommendation reflects our greater certainty in ANZ's top line. ANZ offers the greatest exposure to rising offshore rates, stemming from its NZ franchise, and its large Institutional business" the broker said in a recent note.

"It also has a large relative exposure to business lending, which should provide some protection from the severe short-term pressure on mortgage margins".

Whilst ANZ has faced challenges in its mortgage segment in recent periods, the broker expects these to lift overtime "in line with improved cost efficiencies".

Analysts at the firm forecast net interest income of $14.113 billion in FY22 for the bank, growing to $14.69 billion the year after. It also tips ANZ's net interest margin (NIM) to hold firm at 1.5% during this time.

Meanwhile, JP Morgan is also estimating ANZ to pay $1.44 in dividends per share for FY22 then growing to $1.56 per share in FY23. This signifies a growth of 1.4% for both years, less than the level of headline inflation.

Capital management potential is also "at the upper end of the major banks" according to JP Morgan analysts, and the firm expects ANZ will return to out-cost in FY23.

As a result, analysts are positioning ANZ towards the top of the mantlepiece with respect to the broker's banking universe, valuing the bank at $30.50 per share.

"Our December 2022 price target of $30.50 reflects the aggregate of the present value of the dividend stream paid to shareholders through to FY24E and the present value of a multiple of FY24E tangible book value", it remarked.

Quick summary of ANZ shares

In the last 12 months, ANZ shares have fallen less than 1% into the red. However, they are down 6% this year to date.

During the past month of trading, shares have collapsed another 4%, and ANZ is thus trailing the broad indexes this year.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. 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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