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the Australia and New Zealand Banking Group Ltd (ASX: ANZ) the stock price rises on Wednesday.
In afternoon trading, shares of the banking giant rose 0.6% to $27.43.
Why is ANZ stock price pushing up?
The catalyst for ANZ’s share price rally today was the release of half-year earnings which showed earnings ahead of market expectations.
According to the release, the bank reported cash profit from continuing operations of $3,113 million. This represents an increase of 4% compared to the previous corresponding period, but a decrease of 3% compared to the second half of fiscal 2021.
It was also well ahead of what Goldman Sachs analysts expected from the bank thanks to a drop in bad and bad debts (BDD).
Goldman commented: “ANZ reported 1H22 (business basis) cash profit from continuing operations of A$3,113 million, up 4.1% on pcp and 4.6% on GSe. , with the pace being driven by the outperformance of the BDD load.”
And while ANZ’s CET1 ratio, which fell 81 basis points to 11.53%, was weaker than the broker had expected, it was not enough to prevent ANZ’s share price from falling. increase today.
Finally, ANZ’s fully franked interim dividend of 72 cents per share was in line with expectations.
Takeaways from the analyst call
Goldman Sachs also released a separate note with key takeaways from its analyst call.
Starting with a positive, ANZ spoke positively about its net interest margin.
Goldman said: “ANZ believes its strong margin performance in 2H22 was achieved through discipline in the pricing of new loans throughout the half-year, as well as deposit repricing. While price competition in AU and NZ remained intense, ANZ saw a significant decline in flows into fixed rate loans (26% in Mar 22 vs an average of 41%). “
A negative, which could impact broker valuations for the ANZ share price in the coming days, related to its cost base.
The broker said the bank was effectively dropping its cost base target of $8 billion by fiscal year 2023.
He explained: “ANZ no longer believes the current environment is supportive of an absolute cost target and so it is effectively moving away from its exit cost base of A$8 billion by FY23E. Additionally, ANZ expects its 2H22 costs to be roughly in line with those of the 1H.
“Management would not be drawn to where operating and capital expenditures will ultimately settle, but expect the extent to which capital expenditures are spent will be more consistent with levels of 1H22 (i.e. 88%) than historic levels (70 -75%), given the nature of upcoming investments, will be less focused on asset creation and more focused on businesses cloud-based.”
Are ANZ shares in the buy zone?
As things stand, Goldman Sachs sees a lot of value in ANZ’s share price. He currently has a buy rating and a price target of $32.51 on the bank’s stock.
However, as mentioned above, once analysts update their financial models, this recommendation and valuation may change.