On Thursday, ANZ Group Holdings Ltd (ASX: ANZ) shares had a relatively flat session after the release of the bank's first quarter update.
And while the big four bank had a solid quarter, it appears that broad market weakness overshadowed this.
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What did brokers say about the update?
Goldman Sachs has been running the rule over the ANZ update and was pleased with what it saw. It notes that the update implies that the banking giant is performing ahead of expectations in FY 2023. It commented:
ANZ released its Pillar 3 disclosure for the quarter ended 31-Dec-22. Overall the update was slightly stronger that what was implied by prior 1H23 forecasts, driven by better volumes and asset quality remaining strong. 1Q23 CET1 ratio of 12.2% was 12 bp ahead of what was implied by our prior our forecasts.
This has led to Goldman bumping its earnings forecasts higher for the coming years. It explained:
We move our FY23E/FY24E/FY25E EPS by +4.5%/+2.5%/+2.4%, driven by i) stronger balance sheet momentum particularly in Australian housing and offshore institutional, ii) improved other operating income, and ii) and lower BDDs, partially offset by iv) higher expenses.
Should you buy ANZ shares?
While Goldman sees value in ANZ shares at the current level, it isn't enough for a buy rating. Its analysts have responded to the update by retaining their neutral rating with an improved price target of $27.23.
Based on the latest ANZ share price, this implies potential upside of 5% for investors over the next 12 months.
Though, let's not forget that ANZ is a big dividend payer. As a result, the total potential return increases by 6.3% to 11.3% if you include the $1.62 per share fully franked dividend the broker is now forecasting in FY 2023.
Not bad for a neutral rating!
