How you can value the ANZ share price

Core Viewpoint - ANZ Banking Group is a significant player in the Australian and New Zealand banking sectors, with a focus on mortgages, personal loans, and credit, and its share price evaluation is influenced by various financial metrics and market conditions [2][5]. Group 1: Company Overview - ANZ is one of the Big Four banks in Australia and a leader in the New Zealand banking market [2]. - The bank derives a substantial portion of its revenue from lending activities, with 78% of its total income coming from this source [7]. Group 2: Financial Metrics - The net interest margin (NIM) for ANZ is 1.57%, which is below the ASX major bank average of 1.78%, indicating a lower return from lending compared to peers [6]. - ANZ's return on equity (ROE) stands at 9.3%, slightly below the sector average of 9.35% [8]. - The common equity tier one (CET1) ratio for ANZ is 12.2%, which exceeds the sector average, providing a strong capital buffer [9]. Group 3: Valuation and Dividends - The total dividend for ANZ last year was $1.66, with projected growth rates between 2% and 4% leading to an estimated average valuation of $35.10 per share using a dividend discount model (DDM) [11][12]. - An adjusted dividend payment of $1.69 per share raises the valuation to $35.74, compared to the current share price of $33.05, suggesting that the shares may appear expensive based on this model [12][13].