Are you wondering whether ANZ Group Holdings Ltd (ASX: ANZ) shares are a buy following its third-quarter update?
Well, the team at Goldman Sachs has given its verdict on the banking giant's shares. Let's see what its analysts are saying.
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Are ANZ shares in the buy zone?
According to a note from this morning, Goldman Sachs has responded to the update by retaining its conviction buy rating with an ever so slightly improved price target of $27.55.
Based on the current ANZ share price of $24.61, this implies potential upside of approximately 12% over the next 12 months.
In addition, the broker is forecasting fully franked 6.5% dividend yields each year through until at least FY 2025.
This boosts the total potential 12-month return on offer with ANZ shares to beyond 18%.
What did the broker say?
In respect to its update, Goldman notes that ANZ revealed either better than expected or in-line metrics. It said:
ANZ released its Pillar 3 disclosure for the quarter ended 30-Jun-23. Quarterly BDDs (A$77 mn charge) were better than what was implied by prior 2H23 forecasts, and we note that while asset quality has continued to normalize, the process is slow and indicators remain better than pre-Covid levels. 3Q23 CET1 ratio of 13.5% was broadly in line with what was implied by our prior forecasts.
In light of this, the broker continues to remain positive on ANZ and its shares. It adds:
We remain Buy rated (on CL) on ANZ given: We have seen evidence of success for ANZ in improving the profitability of its Institutional business (the division's 1H23 PPOP RoRWA increased to 2.2%, from a 2H16 trough of 1.2%). Coupled with current market competitive dynamics, which we would characterize as a relative tailwind for Institutional NIMs, vis-à-vis Retail, ANZ's business mix appears well-placed.
