Insights

Why the ANZ (ASX:ANZ) share price has lagged the ASX 200

ASX 200 bank shares are charging higher but the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is…
The post Why the ANZ (ASX:ANZ) share price has lagged the ASX 200 appeared first on The Motley Fool Australia. –

ASX 200 bank shares are charging higher but the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is still a woeful underperformer.

The ANZ share price jumped 2% to $27.98 during lunch time trade, which is twice the gain of the S&P/ASX 200 Index (Index:^AXJO).

Other bank shares are also performing strongly. The Commonwealth Bank of Australia (ASX: CBA) jumped 4.1%, while the Westpac Banking Corp (ASX: WBC) share price and National Australia Bank Ltd. (ASX: NAB) share price added around 1.5% each.

The ANZ share price is lagging the pack

But before shareholders in ANZ rejoice, the bank is the only big four that’s nursing a loss over the past six months.

The ANZ share price is down around 1.5% over the period. In contrast, the CBA share price rallied 21.1%, NAB share price advanced 5.4% and Westpac share price increased 4.5%.

The ANZ share price fell out of favour as it’s the only one of the big banks that is losing market share in mortgages.

Can falling market share be offset by better margins?

This is despite strong demand for residential property during the COVID-19 pandemic with banks launching aggressive cash-back campaigns to win mortgage customers.

But ANZ resisted going down that path to arrest its declining share of the market. This should mean the bank will report stronger net interest margins when it hands in its full year results later this month.

If its better margins can offset the expected decline in mortgages, the ANZ share price could play catch-up.

ANZ share price looking overvalued

However, the market isn’t yet willing to make this bet. It doesn’t help that the bank’s valuation isn’t seen as a bargain despite its share price underperformance.

Citigroup took a close look at the sector’s valuation, and it found the ANZ share price and CBA share price are overvalued.

You can understand why CBA looks expensive due to its strongly rising share price. It’s more disturbing to have ANZ classified in the same category.

Which ASX big bank shares to buy and sell today

The broker used cost of equity (COE) and the more traditional return on equity (ROE) measure as a valuation yardstick.

“We believe that [ANZ’s] underlying ROE is expected to fall by ~70bps over FY21 to 9.8%,” said the broker.

“However, its share price has also recovered strongly over the past 12 months, up to ~$28 from ~$18. The market appears to be pricing in a significant recovery in underlying ROE.”

Citigroup has a “sell” recommendation on the ANZ share price and CBA share price.

The only big bank shares that it thinks is worth buying is the Westpac share price.  

The post Why the ANZ (ASX:ANZ) share price has lagged the ASX 200 appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

Why ASX 200 travel shares are having a bumper day

CBA (ASX:CBA) share price jumps following $6 bn share buy back completion
A budget blowout and a volatile ASX 200. Scott Phillips on Weekend Sunrise

Is the ASX open and trading today?

If you invested $1,000 in Flight Centre (ASX:FLT) shares a decade ago, here’s what it would be worth now

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!