The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is trading in the bargain bin right now, according to one top broker.
Citi has tipped shares in the smallest of the 'big four' banking giants to surge 27%, as my colleague James reports. It's also slapped the stock with a buy rating.
The ANZ share price closed Friday's trade at $22.75.
Let's take a closer look at why Citi believes now is a good time to jump on board the bank.
Citi slaps ANZ shares with $29 price target
Broker Citi tips the ANZ share price to add another quarter – and then some – after the bank announced its plan to snap up Suncorp Group Ltd (ASX: SUN)'s banking operations.
The two S&P/ASX 200 Index (ASX: XJO) financial giants announced the planned acquisition in July.
ANZ is expected to buy Suncorp's banking business for $4.9 billion. It will also likely pay Suncorp a baseline of $50 million to continue using its brand for at least five years following the acquisition.
The ANZ share price rose 2.1% when it returned to trade following a $1.7 billion capital raise to help fund the purchase.
On announcing the acquisition, ANZ CEO Shayne Elliott said it represents "a cornerstone investment for ANZ". And it will provide a decent boost to the bank's loan book.
Suncorp Bank will come with $47 billion of home loans, $45 billion of deposits, and $11 billion of commercial loans, my Fool colleague Tristan reported at the time.
Elliott also told a media conference:
We're acquiring a 1.2 million customer base, 700,000 of whom live here in Queensland, 400,000 of whom consider Suncorp Bank their main bank. That's a very, very valuable franchise … Since March 2020, Queensland has recorded better economic growth, better workforce participation, and more interstate migration than any other state or territory in Australia. It contributes 18% to Australia's GDP and we believe we can use the resources at our disposal to further contribute to its continued success.
Citi says the deal makes strategic sense and offers a reasonable price tag. The broker slapped ANZ shares with a $29 price target following its announcement.
It also tips the big four bank to offer $1.44 per share in dividends for financial year 2022 (ending 30 September) and $1.65 per share for financial year 2023.
