ANZ Bank (ANZ): The levee is NOT dry

ANZ’s 1H15 results were: (1) cash NPAT $3,676m (BP $3,705m, consensus $3,647m); (2) cash EPS 134cps (BP 134cps, consensus 132cps); (3) Interim dividend 86cps (BP 87cps fully franked, consensus 87cps); (4) cash ROE 14.7% (BP 15.1%); (5) NIM 2.04% (BP 2.05%, consensus 2.05%); and (6) BDD charge $510m or 18bp of GLA (BP $508m, consensus $505m). The drivers include strong performances in the Australia and International divisions (including the latter’s Institutional banking component) in addition to solid increases in overall top line growth (despite competitive pressures on NIM) and cost discipline right across all businesses. Off the back of this result and the recent sharp share price pullback by approximately 8% over the past month or so, we increase our price target to $37.00 (closed at $34.12 yesterday) and we reinstate our Buy recommendation. We forecast a dividend yield of 5.7% in fiscal 2016.