ANZ Group Holdings Ltd (ASX: ANZ) shares were on form on Friday.
The banking giant's shares rose 1.5% to $23.80 after the market responded positively to its half-year results.
As a reminder, ANZ reported a record half-year cash profit for the six months ended 31 March.
Its first-half cash earnings from continuing operations came in 12% higher than the prior half at $3,821 million. This was thanks to solid performances across the board and allowed the bank to declare an 81 cents per share fully franked dividend.
What did analysts say about the result?
Goldman Sachs has been looking over the result. While ANZ's result was slightly ahead of consensus estimates, it was short of its own. It commented:
ANZ's 1H23 cash earnings were up 23% on pcp and 4% below GSe, with the miss driven by higher expenses, partially offsetting a lower BDD charge, with revenues broadly as expected. The proposed final DPS of A81¢ implied a payout ratio of 64% (non-discounted DRP, which is to be neutralised via an on-market purchase), while the 1H23 CET1 ratio was 13.2% (12.1% on a pro-forma basis; 18.9% globally-harmonised).
In light of this, the broker has revised its earnings estimates lower for "FY23/24/25E EPS by -2.1%/-2.3%/-1.0%."
Can ANZ shares keep rising?
Although Goldman only has a neutral rating on the bank's shares, it does appear to believe they could be undervalued.
According to the note, the broker has a neutral rating and $26.17 price target on its shares. This implies potential upside of 10% from current levels.
In addition, Goldman is forecasting fully franked dividend yields of 6.8% per annum all the way through to at least FY 2025.
The broker summarises:
Today's result provided further evidence of success for ANZ in improving the profitability of its Institutional business. Coupled with current market competitive dynamics, which we would characterise as still a tailwind for NIMs in Institutional, against a rising headwind for NIMs in Retail, ANZ's business mix appears well-placed positioned.
That said, previous cycles have shown us that ANZ's Institutional profitability can inflect suddenly, albeit we note the business mix today has evolved significantly versus where it was through the Global Financial Crisis. Risks appear evenly balanced and with our revised TP offering only 14% upside (ex-dividend adjusted; middle of ANZ Financials), we stay Neutral.
Overall, Goldman isn't rushing in to buy ANZ shares, but appears to believe they could rise from here.
