The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price has been rising recently. It closed 1.18% higher on Friday at $10.30 and is now up around 10% in the past month. But could the regional bank be an opportunity for investors?
It has been an interesting last couple of months for the banking sector. Interest rates have shot higher in Australia, while one big four ASX bank share announced it wanted to buy another regional bank.
The Reserve Bank of Australia (RBA) has been increasing interest rates to try to control inflation, while Australia and New Zealand Banking Group Ltd (ASX: ANZ) has launched a $4.9 billion bid to buy the banking division of Suncorp Group Ltd (ASX: SUN).
Bendigo Bank is an interesting consideration with all of this excitement going on. Let's look at how brokers rate the regional bank.
Expert views on the Bendigo Bank share price
One of the latest views on the ASX bank share comes from Credit Suisse. It rates it as 'outperform' with a price target of $11.10, implying high-single-digit potential for the share price.
The broker thinks banks like Bendigo can benefit from higher interest rates, leading to stronger net interest margins (NIMs). However, it could also be negative in terms of increasing bad and doubtful debts.
However, others are less optimistic. Morgan Stanley is 'equal-weight' on the regional bank, though it has increased its profit expectations for FY23 because of higher margins. But, FY24 could be impacted by the higher arrears as well as slower growth of its loan book.
The broker Macquarie has a 'neutral' rating on the business, with a price target of $10. While profitability is expected to be helped in the short term, the medium term is less optimistic.
Bendigo Bank is due to release its FY22 earnings on 15 August.
Dividend expectations
One of the main reasons that investors may be interested in ASX bank shares and the Bendigo Bank share price is the potential dividend income.
On CMC Markets, the estimate for the potential FY23 Bendigo Bank grossed-up dividend yield is 7.8%.
Morgan Stanley's estimate for the FY23 grossed-up dividend yield is 7.7%. The Macquarie estimate for FY23 is 7.9%.
My view
Bendigo Bank isn't typically going to be the type of business that delivers rapid compound growth, so the its important to choose the right time. Considering the Bendigo Bank share price has risen by almost 20% since mid-June, I don't think it's at a cheap price.
If it went back to around $9 (or below), then that could be an opportunistic time to jump on Bendigo Bank, though I'm looking at different areas of the ASX share market for opportunities.
