Up 30% this year: Is there more upside ahead for ANZ shares?

Here's one broker's view.

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Key points
  • ANZ shares rose 0.16% to $36.89, up 30% this year, despite a $1.1 billion H2 FY25 charge.
  • Macquarie maintains a neutral rating with a $34.00 target, suggesting a 7.8% downside but sees value compared to peers.
  • Additional charges may muddle investor consensus per Macquarie's note.

ANZ Group Holding Ltd (ASX: ANZ) shares are trading in the green on Wednesday morning. At the time of writing the shares are 0.16% higher and changing hands at $36.89 a piece.

Over the past month the shares have climbed 8.41%, and for the year-to-date they're an impressive 30% higher.

Late last week the banking giant announced an update on significant items. These are expected to impact the bank's second half profits.

ANZ said its H2 FY25 statutory and cash profit will be impacted by several significant items with a net after tax charge of $1.1 billion.

The charges comprise a $285 million charge for an impairment loss for its equity-accounted investment in PT Bank Pan Indonesia, a $585 million pre-tax charge for staff redundancies, and a $271 million pre-tax charge for Australian Securities and Investments Commission (ASIC) settlement.

The bank also said it has finalised the acquisition accounting related to adjustments for its acquisition of Suncorp Bank. This will see an increase to the goodwill of $141 million that was disclosed on 31 March.

Following last week's update, analysts at Macquarie Group Ltd (ASX: MQG) have written to investors with their latest expectations for ANZ shares.

A man in a suit looks surprised as he looks through binoculars.

Image source: Getty Images

Macquarie confirms its stance on ANZ shares

The broker has maintained its neutral rating and $34.00 target price on ANZ shares. This means the major bank is still Macquarie's preferred big four Aussie bank pick. 

At the time of writing, however, the target price represents a potential 7.8% downside for investors over the next 12 months.

"We reduce ANZ's FY25 EPS by 7% reflecting significant items. No changes to future earnings….We leave ANZ price target unchanged given the short term nature of the earnings impacts," the broker said in its investor note.

We believe it is unlikely that ANZ will achieve its stated medium-term targets. However, short-term targets appear achievable and provide upside potential. We see relative value in ANZ, underpinned by its valuation discount to peers (~14–43% discount to peers). Neutral.

ANZ is due to release its H2 FY25 result next week on 10 November.

What else did the broker have to say about ANZ's latest update?

Macquarie noted that ANZ increased its previously guided large notable items and included additional items. This is expected to impact its H2 FY25 earnings by -17%.

Combined items resulted in an additional 6 basis point reduction in CET1 capital, and a total reduction of 19 basis points. 

"Although these changes weren't a surprise, their late arrival is likely to muddle consensus estimates and complicate result interpretation, which is generally unfavourable in the eyes of investors," it said.

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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