When it comes to investing in the banking sector, it might seem like all the options are equal.
However, changing trends in lending due partly to rising interest rates means that this may not be the case at the moment.
But which ASX bank share should you be buying over others? Let's take a look at what Bell Potter is saying.
Which ASX bank share is the best to buy?
According to a note, the team at Bell Potter believes that ANZ Group Holdings Ltd (ASX: ANZ) is the best big four bank to buy right now.
This is due to largely to its strong position in institutional banking, which it expects to perform better in the current environment. It explains:
While we note there are challenges from continued mortgage competition and tight wholesale funding market, ANZ is exhibiting strong trends in lending growth and asset quality. Furthermore, with the RBA's tightening cycle, ANZ's margins are benefiting from deposits repricing and gains in replicating portfolio. We forecast fully franked dividend yields of ~7% through to at least FY25. ANZ remains our top pick in the sector, and we expect the lending momentum, particularly in institutional, to continue to differentiate versus its peers.
Good returns ahead
The note reveals that Bell Potter has a buy rating and a $27 price target on the company's shares.
Based on the latest ANZ share price of $25.66, this implies a potential upside of 5.2% for investors over the next 12 months.
But as mentioned above, the broker is forecasting dividend yields of approximately 7% through to at least FY 2025.
If we add this into the equation, the total potential 12-month return stretches beyond 12%.
