ANZ Banking Group (ANZ) Shares Recommendation

Submitted by Craig Strzelecki on 5 March, 2007 - 19:02

ANZ Banking Group (ANZ) has a Buy 1 shares recommendation and a price target of $33 per share from stock analyst UBS. UBS has observed that the banking group has released a solid trading update and that ANZ is on track to hit targets in 2007; the bank remains the analyst's preferred Play in the Banking sector. The ANZ 1Q07 Trading Update stated that: (1) Revenue growth is "particularly strong" at the top end of its 7-10% target (2) Costs are tracking to the top of its 5-7% band given investment (3) Underlying margin fall in line with 2H06 (-3bp) (4) Asset quality is strong (5) BDD will be higher given mix changes, less recoveries & lower oil release (6) NZD hedge, Stuct Fin run-off & higher tax to reduce EPS by 2%. Personal lending is continuing to "perform strongly" especially in deposits with good volume growth & better margins and is continuing to be the growth driver. Mortgages are being held back by margin pressure and Cash-90 spread. Cards are doing well but is held back by BDD. Institutional is also seeing solid revenue growth (in line with Group targets). Business Banking is doing well after a tougher 2006. NZ expects rev growth 7-9% driving earnings Trading Statement was broadly in line with the analyst's forecasts (FY07E EPS growth of 12.7%), which remain unchanged. We would expect to see only minor changes to consensus forecasts following this update. The analyst thinks that the stock is inexpensive at 5% sector discount, best 3 yr forecast EPSg. Positives for ANZ identified by UBS: (1) retail banking div'n growing 15%+ p.a (2) good execution (3) capex spend above peers (4) earnings upside risk.

ANZ Banking Group Limited is listed on the Australian Stock Exchange (ASX) under stock code ANZ. You can view their investor website here. ANZ was listed on the ASX on 30 September, 1969. John McFarlane is the CEO of ANZ and Charles B Goode the Chairman. ANZ is involved in general banking, mortgage and instalment lending, life insurance, property development, leasing, hire purchase and general finance, international and investment banking, investment and portfolio management and advisory services, nominee and custodian services. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. Check your charts and good luck with your share trading!