The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has been hit pretty hard over the last month amid interest rate rises.
Is the big four bank now a major opportunity for investors? Some experts have been evaluating the situation and do believe that the ASX 200 share is worth looking at.
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What's going on with the ANZ share price?
The ANZ share price has fallen by approximately 17% over the last month.
There is an intense market focus right now on the high inflation levels in Australia, the United States and elsewhere in the world. While inflation alone is problematic, with spiralling costs for households and businesses, it's also forcing central banks to enact significant interest rate rises to cool the economy.
For example, the US Federal Reserve just increased its interest rate by 75 basis points in June. Earlier this month, the Reserve Bank of Australia (RBA) increased the Australian interest rate by 50 basis points.
While the ANZ share price is down materially, so are plenty of other ASX shares. For example, shares in former tech darling Xero Limited (ASX: XRO) have dropped around 50% in 2022.
Financial commentary for some time has noted that higher interest rates would benefit bank net interest margins (NIM). A higher profit margin could help net profit after tax (NPAT), and that in turn could benefit the ANZ share price.
But, experts such as Morgans have noted that higher interest rates could hurt the bank loan books with potential higher debts. If safer investments like term deposits can provide higher returns, it could also mean that the dividend yields from banks are less popular.
However, with how far the ANZ share price has dropped, is the valuation and ANZ dividend yield now too good to ignore?
Broker ratings on the ANZ share price
The big four ASX bank is rated as 'equal-weight' by Morgan Stanley, with concerns that higher interest rates could detract from margins as banks will pay higher interest rates to savers.
Morgan Stanley's price target on ANZ shares is $28.90. That's a potential upside of around 35%.
The broker Credit Suisse is more optimistic, rating ANZ a buy with a price target of $30.80 – that implies a potential rise of more than 40%.
Macquarie is another broker that rates it a buy, with a price target of $29.50. That's a possible rise of almost 40%. This broker thinks that ANZ shares are worth buying in this dip.
How big could the dividend be?
Let's look at two of the broker forecasts.
Morgan Stanley has pencilled in a grossed-up dividend yield for ANZ of 9.6% in FY22 and FY23.
However, the broker Credit Suisse thinks that the ANZ grossed-up dividend yield could be 9.4% in FY22 and 11.1% in FY23.
