ASX bank shares make up an important part of many investors' portfolios. Surprisingly, it is ANZ Group Holdings (ASX: ANZ) that has brought the best returns amongst the big four banks this year.
Since the start of the year ANZ shares have risen more than 22%.
For context, the S&P/ASX 200 BANKS (ASX: XBK) is up 8.7% in the same period.
Why the strong rise?
In January, ANZ shares were trading at roughly $28 and hit a yearly high in November of almost $39.
That's an increase of more than 35%.
This was driven by strong business credit, real estate credit growth and investor mortgage growth.
However since then, the share price has slid almost 10%.
Analysts at Macquarie indicate this could be due to early signs of revenue underperformance.
Is there any upside left for ANZ shares?
After such a strong year, investors may feel they have missed the boat on ANZ shares.
Sentiment is seemingly mixed amongst experts.
Yesterday, The Motley Fool's Samantha Menzies reported that Macquarie has neutral rating on ANZ shares with a target price of $35
This indicates the share price is hovering close to fair value.
However, Greg Burke, Equity Strategist at Wilsons Advisor/Canaccord Genuity said in November that ANZ shares are comfortably the 'best value' bank on all key valuation metrics, while offering the most attractive yield.
ANZ has reset its cost base lower and has a strong capital position. ANZ's 2030 strategy offers a clear pathway to a structurally lower cost-to-income ratio, an improved ROE, and growth in dividends over time. Recent EPS revisions momentum is another relative appeal vs CBA and NAB.
The sentiment out of the Canaccord Genuity Group last month was that outside of CBA shares, valuations in ASX bank shares are more reasonable.
When excluding index heavyweight CBA, valuations are more reasonable – especially relative to a fully priced ASX 200.
On average, the Big 4 ex-CBA trade at a modest discount to the market and sit within their historical relative P/E range (vs the ASX 200), albeit towards the upper end. This suggests bank sector valuations are elevated, but not extreme, outside of CBA.
How have the other big four banks performed?
After a bull run to start the year, Commonwealth Bank of Australia (ASX: CBA) shares have cooled off considerably.
Australia's largest bank is now relatively flat across 2025, up just 1.2%.
National Australia Bank Limited (ASX: NAB) has performed better than CBA, rising approximately 9% since the start of the year.
The second best performing big four bank share this year has been Westpac Banking Corporation (ASX: WBC).
Westpac shares have risen 18%.
