The banking sector has been having a tough time of late after a number of high profile collapses across the globe.
While this is disappointing for bank shareholders, it could be a buying opportunity for those that don't already have exposure to the sector.
But which ASX 200 bank shares should you buy now?
Two that have recently been named as top picks by analysts are named below. Here's why they rate these bank shares as buys:
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ANZ Group Holdings Ltd (ASX: ANZ)
ANZ could be the ASX 200 bank share to buy according to analysts at Citi. The broker believes it is performing ahead of expectations during the first-half of FY 2023 based on its recent quarterly update. It commented:
Likely a strong quarter for institutional ANZ's 1Q23 disclosures exhibited strong trends in both lending growth and asset quality. No earnings disclosure was provided, but we think that after backing out RWA movements from capital, it comfortably implies above market earnings. […] ANZ remains our top pick in the sector, and we expect the lending momentum, particularly in institutional, to continue to differentiate vs peers.
Citi currently has a buy rating and $29.25 price target on its shares and is forecasting a fully franked 166 cents per share dividend in FY 2023. Based on the latest ANZ share price of $24.14, the latter will mean a sizeable 6.9% dividend yield.
Westpac Banking Corp (ASX: WBC)
Over at Goldman Sachs, its analysts believe that Westpac is the ASX 200 bank share to buy right now.
Its analysts like Australia's oldest bank due to its cost reduction plans and strong leverage to rising interest rates. The broker explained:
We are Buy-rated (on CL) and continue to see WBC as our preferred exposure to the A&NZ Financials reflecting: i) its strong leverage to rising rates, ii) despite WBC revising its FY24E cost target to A$8.6 bn (from A$8.0 bn), the bank's performance on cost management remains strong in this inflationary environment with a 9% step down in costs expected over the next two years, iii) the business is still investing effectively in its franchise, and iv) we note the stock is trading at a notable discount to peers, versus the historical average discount of 2%.
Goldman has a conviction buy rating and $27.74 price target on its shares and is forecasting a 147 cents per share dividend in FY 2023. Based on the current Westpac share price of $22.23, the latter will mean a fully franked 6.6% dividend yield for investors.
