The ANZ Group Holdings Ltd (ASX: ANZ) share price has been rising recently – it's up 4% since 21 August 2023 and up more than 10% since 26 June 2023, as we can see on the chart below. The S&P/ASX 200 Index (ASX: XJO) is close to where it was since those two dates.
Investor confidence seems to be rising about some ASX bank shares including Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB).
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Volatility with outlook
The last 15 months have seen plenty of disruption to the banking sector. The ANZ share price is meant to reflect the future potential of the business, so investors have had to guess what might happen with inflation, interest rates, competition and the possibility of rising arrears.
Things are still going quite well for banks – CBA recently reported its FY23 result and it hasn't seen much of an uptick in arrears, despite all of the interest rate hikes. We may be able to take those insights from CBA's loan book and apply them to ANZ. The ANZ financial year runs to the end of September, so it won't be long before we get a detailed look to see how profitability is going at ANZ.
In the quarterly update for the three months to June 2023, ANZ said that the gross impaired assets as a percentage of total loans and advances increased from 17 basis points to 18 basis points (0.17% to 0.18%).
In terms of the housing loans that were at least 90 days past due, in Australia, it increased by 3 basis points (0.3%) to 63 basis points (0.63%).
That update also included a total provision charge of $77 million, though it wasn't that big considering the overall size of ANZ.
In terms of the loan books, comparing the balance at June 2023 to March 2023, Australian retail increased 2% to $307 billion, Australian commercial increased 2% to $61 billion, the New Zealand division saw growth to NZ$130 billion and the institutional book saw a 1% decline to $207 billion.
It's not firing on all cylinders at all, but it seems to be holding up quite well. It'll be interesting to see what's happening with the net interest margin (NIM), considering competition is supposedly reducing.
Is the ANZ share price too cheap to pass up?
According to Commsec, the bank is valued at under 12 times FY24's estimated earnings, with a projected grossed-up dividend yield of 9.1%.
Looking at analyst ratings collated by Factset, there are currently eight buy ratings on ANZ shares, four holds and two sells. The 'average' rating would suggest that ANZ shares are a decent buy at the current level. However, I'm not very bullish on the ASX bank share's chances of delivering strong compounding capital growth due to its size and how much competition there is.
For both dividends and growth, there are other ASX dividend shares that I would rather put my money towards.
