Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy?
ANZ is a leading Australian and New Zealand banking institution, with a presence throughout the oceanic region. ANZ is one of the Big Four Aussie banks and derives much of its revenue from mortgages, personal loans and credit.
Is The ANZ Share Price A Buy?
ANZ is one of the major ASX banks alongside Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB).
All of the big banks have been through a rough time over the past year due to the Royal Commission hearings. Although the major banks appear to be winners from the report, they have had to make their own changes.
Lending standards have become a lot tougher on borrowers. Banks like ANZ aren’t as willing to lend as many high loan to value (LVR) ratio loans and borrowers have to supply more information in regards to proof of their income and information about their liabilities.
ANZ CEO Shayne Elliott himself has recently said that his bank may have been too conservative with its lending, although he may have been referring (partly or largely) to small business lending. Its Australian division’s lending volumes declined in the quarter, with the housing portfolio contracting 0.2%.
ANZ is in a good position with its balance sheet, at the end of December 2018 its Common Equity Tier 1 (CET1) ratio was 11.3% and continues to meet APRA’s ‘unquestionably strong’ requirements well ahead of the 2020 implementation.
Over the next few years, ANZ’s profit growth will largely depend on what the Australian housing market does and whether that leads to people having to sell. House prices continuing to fall will not be a good thing for banks.
If I were interested in ANZ shares I would want to keep a close eye on the Australian employment rate, which is at a very healthy level at the moment.
Time To Buy ANZ Shares?
According to CommSec, ANZ is valued at 11 times the estimated earnings for the 2020 financial year. Including franking credits the dividend yield stands at 8.5%.
I would rather wait until there’s ‘blood in the streets’ before considering ANZ shares. I think one of the ASX shares in the free report below could be a better pick instead.
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