What’s the outlook for the ANZ share price in April?

ANZ shares have done well in March. What’s next in April?

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Key points

  • ANZ shares have risen in March
  • Multiple brokers rate the bank as a buy
  • ANZ is considering upsizing its share buyback

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has risen by more than 7% in March. At the time of writing, it has beaten the performance of the S&P/ASX 200 Index (ASX: XJO) which has risen 6.7% so far this month. But what’s the outlook for the bank share in April?

ANZ shares are essentially flat in 2022, but most brokers are optimistic about the business with plenty of buy ratings.

Broker ratings on the ANZ share price

UBS rates ANZ as a buy, with a price target of $30. That implies a potential upside of 7% over the next 12 months. It noted ANZ’s new banking offering, ANZ Plus, though it doesn’t think it will help with its problems in mortgages.

Ord Minnett also rates ANZ as a buy, with a price target of $30.50. That’s a potential upside of almost 10%. However, it said that starting a whole new system and migrating people could come with issues, such as the costs of operating both systems at once. It notes this may hurt the bank’s ability to reduce costs.

What is ANZ Plus?

ANZ Plus is ANZ’s attempt to catch up with its banking rivals. ANZ said:

Smart, secure and designed to help improve financial wellbeing, the new ANZ Plus app makes managing your money simple (and fun!). With helpful tools and expert support, as well as easy ways to pay and save, this is a new way to bank.

The ANZ Plus app is expertly designed to give you more visibility and control over your money and help you achieve your financial goals.

How is the bank performing?

The latest that investors have heard from the bank is its market update for the three months ending 31 December 2021.

It said that the group net interest margin (NIM) was down eight basis points for the quarter, with the underlying NIM down five basis points. ANZ said this was largely driven by a lower exit rate at the full year (compared to the second half average) and a continuation of the structural headwinds impacting the sector.

ANZ noted the impact of rising rates, predominately in New Zealand, and recent deposit pricing changes that are expected to moderate these ongoing headwinds in the second quarter.

The big four ASX bank outlined that it has made solid progress in Australia to improve systems and processes for simple home loans with application times now in line with other major lenders.

However, efforts continue to improve response times for more complex home loan applications.

ANZ’s Australian home loans balance sheet grew slightly in the first quarter of FY22. Due to the high levels of refinancing activity in the sector, managing both attrition and margins remain key areas of focus for the bank.

Its ‘run the bank’ costs are expected to be broadly flat in the first half while it invests for growth.

Management said that the credit quality environment has remained “benign” with a total provision release of $44 million during the quarter.

ANZ said that its capital position continues to provide flexibility to return further surplus capital to shareholders. It’s considering increasing the size of the current on-market share buyback. The decision will balance the importance of capital efficiency against maintaining an appropriately strong balance sheet and continued monitoring of the economic situation.

Motley Fool contributor Tristan Harrison 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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