I think ANZ Group Holdings Ltd (ASX: ANZ) shares could be worth a closer look following its recent full-year results.
The banking giant has made some encouraging progress with its turnaround strategy, and I believe there's more to come.
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A more efficient bank
With its shares sitting below $40, here are three reasons I'd be happy to buy.
The first reason I'd buy ANZ shares is the progress it is making in becoming a more efficient business.
For several years, ANZ has struggled to generate returns comparable to some of its major banking rivals. However, I think management is finally making meaningful improvements.
During FY26, the bank delivered $902 million in productivity benefits, helping reduce its cost base by 7% compared with the previous year, excluding significant items.
And these improvements are starting to show up in profitability. ANZ's cash profit increased 10% to $7.59 billion on a comparable basis, while its return on tangible equity improved to 11.56%.
I believe this could be the beginning of a longer period of improving returns.
Management is targeting a cost-to-income ratio in the mid-40s by FY28, compared with 49.3% in FY26. If ANZ achieves that target while continuing to grow revenue, I think earnings could increase considerably over the next few years.
Opportunities to grow its Australian business
Another reason I'm optimistic is that ANZ has opportunities to strengthen its position in Australian banking.
I think the bank has spent too long underperforming in areas where it should have been more competitive.
But its latest results suggest that could be changing. For example, ANZ's Australian retail division increased revenue by 5% in FY26 while reducing costs by 16%.
Meanwhile, its Business and Private Banking division increased profit by 14%.
I think there's room for further improvement as ANZ invests in attracting customers and strengthening its relationships with existing ones.
And two important projects could help. The bank is targeting completion of its Suncorp Bank customer migration by June 2027, followed by the rollout of a unified digital customer experience by September.
I believe bringing these operations together could simplify banking for customers, reduce duplication, and give ANZ a stronger platform for future growth.
Management is also planning to increase its number of business bankers by approximately 50% by 2030. I think that could help ANZ compete more effectively for business customers, an area where I'd like to see it continue growing.
A reasonable ANZ share price valuation
Finally, I think ANZ shares are trading at a reasonable valuation given the improvements underway.
At around $39.60, the bank trades at a forward price-to-earnings (PE) ratio of 15.5 times, based on CommSec consensus earnings per share estimates of $2.55 for FY27.
That's not necessarily cheap, but I think it is a price worth considering if management can continue improving profitability.
There's also a reasonable dividend on offer. According to consensus forecasts, ANZ is expected to pay dividends totalling $1.66 per share in FY27.
That represents a forward dividend yield of approximately 4.2%, before franking credits.
Of course, higher interest rates and cost-of-living pressures could lead to increased bad debts, while ANZ still has plenty to prove with its transformation.
However, I believe the opportunities outweigh those concerns at today's valuation.
Foolish takeaway
I think ANZ is becoming a stronger business, and its latest results give me more confidence in management's strategy.
With further cost savings and opportunities to grow its Australian operations, I believe earnings could continue improving.
And at under $40, I'd be happy to buy ANZ shares and hold them for the long term.
