ANZ Bank Update

Submitted by Share Trading on 8 April, 2008 - 13:33

ANZ Bank (ANZ) have a maintained Neutral recommendation and a $24.72 12 month share price target from Australian shares analyst Macquarie Research Equities.

ANZ: Banking Sector News

Another thorn in the banking sector’s side was revealed yesterday as the ANZ bank guided the market towards an A$975m 1H08 impairment charge. Macquarie Research Equities (MRE) estimates that consensus downgrades will likely exceed their 6.5% revision for FY08 cash NPAT. And, whilst ANZ was not the “Pick-of-the-Crop” for MRE, and nor has it been of late, this view has been reinforced by this additional provisioning. So, what are the banking sector picks from MRE? Click inside for more…

ANZ Bank: The News

- Encompasses A$350m of provisions for its institutional banking arm – driven by downgrades in commercial property and broking (-A$175m), growth in institutional balances (-A$70m) and secondary impact from market turmoil (-A$105m);
- A$367m of identified individual provisions;
- MRE downgraded banking sector earnings in FY09 by 9 – 12% last week predominantly on the back of slower economic growth;

ANZ Bank:Action and Recommendation

MRE highlight that ANZ is still trading toward the high-end of their 12-month band of 9.9 – 11.9 x FY09 EPS. They expect further uncertainty around future impairment costs and the company’s capital position. MRE maintain their Neutral recommendation with a 12-month price target of $24.72. They also emphasise their sector picks as WBC, due to its cleaner balance sheet, or NAB for value. They also believe CBA may pertain similar earnings risk as ANZ.