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Throughout 2023, the ANZ Group Holdings Ltd (ASX:ANZ), a notable ASX financial stock, has witnessed share price fluctuations, with a 4.6% increase year-to-date and a 6.7% decline since November 9, 2023. However, fixating on short-term share movements may overlook the inherent volatility in the ASX financial stock market over brief periods.
For long-term investors, weathering the volatility is encouraged, while prospective investors may find strategic entry points by exercising patience. The suggestion that the ANZ share price could reach $28 isn't unfounded, considering its brief attainment of that valuation in 2022 and multiple instances in 2021.
Delving into ANZ's FY23 results reveals a stable statutory net profit after tax (NPAT) at $7.1 billion, accompanied by a 14% surge in the continuing operations cash profit to $7.4 billion. The continuing operating cash profit before credit impairments and tax also witnessed a substantial 20% increase to $10.75 billion, and the annual dividend per share exhibited a noteworthy 20% rise to $1.75.
A notable development is the 5% growth in gross loans and advances, reaching $710.6 billion, with ANZ Plus, its new retail business, garnering over 500,000 customers. Impressively, the cost of operating ANZ Plus is markedly lower than its existing retail business, indicating positive customer engagement and satisfaction.
Further boosting ANZ's performance is the Australian commercial segment, its highest returning division, which achieved an 11% revenue growth, accompanied by lending expansion to $62 billion. The bank's strategic focus includes efficient cost management and the facilitation of growth in its commercial business. However, ANZ acknowledges an anticipated challenging external environment, attributing to the full impact of higher interest rates affecting economic activity and household/business budgets.
Despite a shift in UBS's rating to neutral with a $25 price target, suggesting a modest 4% rise over the next year, expectations of the ANZ share price reaching $28 in two months might be optimistic. UBS raises concerns over potential impacts on net interest margin (NIM) as ANZ seeks to expand its mortgage market share, coupled with pricing pressure on term deposits and rising arrears. Nevertheless, UBS envisions an improved ANZ share price, anticipating a grossed-up dividend yield of over 8% for FY24.
