ANZ Group Holdings Ltd (ASX: ANZ) shares will be on watch this week.
That's because the banking giant is scheduled to release its eagerly anticipated half-year results on Friday 5 May.
Ahead of the result, let's take a look to see what the market is expecting from the bank.
What to expect from ANZ's half-year results
According to a note out of Goldman Sachs, its analysts expect ANZ to report cash earnings (before one-offs) of $3,978 million. This represents an impressive 27.8% increase over the prior corresponding period.
However, the market consensus is for slightly softer growth and cash earnings of $3,769 million for the six months.
As for dividends, Goldman is expecting this profit growth to underpin an 11.1% increase in ANZ's interim dividend to 80 cents per share.
What else should you look out for?
There will be a lot of focus on margins during this banking earnings season. So, it certainly is worthwhile understanding what the market is expecting from ANZ's net interest margin (NIM). After all, anything softer than expected (or better) could have a big impact on the performance of ANZ's shares.
Goldman Sachs revealed that it is expecting the bank to report a NIM of 1.82%. It also believes that this will be the peak during the current cycle. It explained:
The key feature of ANZ's FY22 result was its NIM outlook, in which it noted that i) its Sep-22 exit NIM was 1.80%, well ahead of the 2H22 NIM of 1.68% and ii) the environment will continue to be supportive for margins in 1H23. However, management also noted that only recently have rates become attractive enough for customers to start switching from at-call transaction accounts to term deposits (TDs).
In our recent analysis (here) we highlighted that current term deposit betas have averaged c. 0.75 this cycle, versus the 1.0 (currently assumed in our forecasts) seen in previous rate cycles. We will therefore be keen to get an update on how flows into TDs have tracked since then and commentary on where ANZ believes deposit mix could settle. We currently forecast the 1H23E NIM to increase by 13 bp hoh to 1.82%, and peak this half.
Are ANZ shares good value?
Goldman Sachs currently has a neutral rating and $26.48 price target on ANZ shares. This implies potential upside of 8.75% from current levels.
Analysts at Citi are more positive. They recently named ANZ as their top pick with a buy rating and $27.25 price target.
