ASX bank shares have shown mixed results so far in 2022 with some names flying well ahead of the pack whilst others drag the group down.
The S&P/ASX 200 Financials Index (ASX: XFJ) has slipped more than 4% into the red since trade commenced on January 4.
Although, it has clawed back gains and landed 1% up over last month as the market digests a wave of geopolitical conflict and macroeconomic pressures.
One particular ASX 200 bank share that has struggled heavily this year is Australia and New Zealand Banking Group Ltd (ASX: ANZ), finding itself more than 6% in the red, well ahead of the broad sector.
Not only that, but the bank nudged past its 52-week low's in trading today, settling at a price of $25.75 at the time of writing.
Not all are so downbeat on the ANZ share price, however. Analysts at JP Morgan reckon the bank has plenty of upside left and rates it one of the top picks amongst the banking majors.
ANZ share price tipped to surge 20% in 2022 by top broker
Analysts at JP Morgan reckon there is "greater certainty" in ANZ's growth story and have subsequently baked in a period of underlying momentum in 2022 and 2023 projections.
The broker recently made some key earnings changes to its outlook of ANZ by increasing net interest margin (NIM) by 300 basis points in FY23/24, "primarily to reflect a bring forward of rate hikes to Q4 of CY22".
This should transpose well for the bank's impairment expenses, the broker says, reducing its loan-loss estimates in the process.
"Our loan-loss forecasts have reduced in FY22 (higher assumed CP release), but increased in FY24 to 18bps of gross loans, reflecting the impact of rate hikes on the broader economy" the broker said.
"While mortgage growth has been disappointing of late, we expect a gradual improvement in line with improved processing efficiencies", it added.
In JP Morgan's eyes ANZ also offers the best exposure to non-domestic interest rates, a luxury it enjoys thanks to its NZ enterprise and the size of its institutional segment.
And to help offset the foreseeable headwinds to mortgage margins, that are likely to plague the sector in 2022 due to saturation and tightening policy, the broker says ANZ's relatively large exposure to business lending should provide enough protection.
One key headwind the broker alludes to in its thesis is "a more negative impact than expected from APS111 and RBNZ capital rule changes".
JP Morgan analysts set a price target of $30.50 on ANZ shares whilst urging clients to buy the stock. At the current market price today, that valuation signals an upside potential of 20% on last check.
Around 60% of brokers have ANZ as a buy right now according to a list provided by Bloomberg Intelligence, where the consensus price target is $29.13.
ANZ – an ASX 200 share with a mixed past
In the last 12 months, the ANZ share price has collapsed over 4% and is down 6% this year to date.
During the past month of trading, shares have collapsed another 3%, and ANZ is thus trailing the major ASX 200 banking indexes this year.
