ANZ Bank

ANZ Bank has seen their shares outperform the other banks in the sector last week as observed by sharemarket analyst Macquarie Research Equities. The banks fell 1.7% last week: This was in line with the broader market following a sell off on inflationary fears on the back of rising bond yields. Among the majors, ANZ Bank was the only one to outperform, gaining 0.6%. ANZ Bank is still trading at a 7% PE discount to its peers, which the analyst believes represents a short term value opportunity. In addition to this, yesterday the bank announced that Michael Smith will become the new CEO, effective 1 October 2007, which they believe is a low risk, and very solid appointment. Michael Smith fits ANZ Bank's requirements well: Mr Smith was previously head of HSBC's Asian business and global head of Commercial Banking for the HSBC Group. He has strong Asian banking experience and is not a change agent. On paper Mr Smith's experience fits well with the requirements set by ANZ Bank's Chairman – his strong experience in Asian banking fits well with ANZ Bank desires to continue to expand in the region, while his experience in institutional banking also fits well with ANZ Banking needs to focus on its underperforming institutional division. Relative lack of hands on retail banking experience could assist in retention of key staff. Given ANZ Bank's announcement last week of a new head for its underperforming institutional division and Mr Smith's relative lack of hands on retail banking experience, they would be surprised to see further change in key divisional heads in the short term. Indeed, while only personal head Brian Hartzer will have known his true intentions, Mr Smith’s relative lack of hands on retail banking experience could well assist in ensuring retention of current retail banking strategies and thus in maintaining ANZ Bank's key retail banking team in place. Initial reaction likely to be moderately positive. Mr Smith's background would appear to place him as a lower risk option for ANZ, both in terms of ability to execute in Asia and Institutional and potential to retain key staff. Potential 'negatives', if you were to call them that, really relate to ANZ's aim to look for someone who is not a change agent. Mr Smith is regarded as an experienced banker, but also as a low profile quiet achiever. That in itself is not necessarily a bad thing, but it is a potentially significant change from CEO McFarlane to which investors will have to become accustomed. ANZ Bank provides a short-term value opportunity relative to peers at a 7% discount. The analysts see this as a relatively low risk appointment for ANZ, both in terms of providing experience in the areas ANZ required and retaining key staff. Accordingly, we would see this appointment as adding mildly to the case for a partial, valuation driven re-rating of ANZ relative to peers.

ANZ Bank (ANZ) has a Buy 1 share recommendation and a share price target of $33 from stock analyst UBS. The share price target was reached through DCF, SOP and comparing with International Peers. UBS believes that ANZ's investmenr in Asia may provide upside to long term earnings. Key drivers to the ANZ stock price according to UBS: "(1) Strong retail bank momentum (2) weak institutional division (3) NZ economic risk (4) Potential CEO succession uncertainty." " ANZ acquired a 19.9% stake in Shanghai Rural Commercial Bank (SRCB) for US$252m (A$328m).

UBS has rated the ANZ Banking Group (ANZ) with a Buy 1 recommendation and a share price target of $33.50 based on an upgrade of Earnings Per Share (EPS) estimate. ANZ Banking Group is listed on the Australian Stock Exchange under stock code ANZ. Check your charts.

Following ANZ’s AGM on Friday, Macquarie Research Equities (MRE) have upgraded their FY06 EPS numbers by 0.5%, to reflect the improvement in New Zealand margins and the improvement in the outlook for the bank’s wealth management division. ANZ is MRE’s preferred stock in the sector as (1) NZ pressures easing, (2) the bank’s Australian and institutional businesses are targeting double digit growth (3) the stock is trading at a 7–8% discount to its peers, and (4) its share price offers 7% upside against MRE’s 12-month target price.

[ANZ] UBS Buy 1– A$23.26 Target: A$27.00: More positive outlook commentary

At ANZ's AGM it stated "We are seeing a similar rate of growth in earnings in the first two months of 2006 to that which we experienced in 2005 and our current expectation is that this will continue for the balance of the year". Management appears more comfortable with the earnings outlook than with its previous FY result comments of "continued good results in the year ahead".

Growth expected in NZ. Margin contraction less than 2005