In this article we take a look at ANZ vs WBC and try and decide which is the better investment. Investors who were around for the Great Financial Crisis (GFC) of 2008 can remember waking up in the morning wondering which of the world’s banks were facing the unthinkable – closing their doors. Banks all over the world were in crisis, but not in Australia. We were blessed with what at the time was the envy of the world – the Big Four Banks:
- Commonwealth Bank of Australia (CBA)
- Westpac Banking
- National Australia Bank
- ANZ Group
The Big Four remain among the world’s most financially sound and safest banks on the planet. Once young Aussies learn the Australian Stock Exchange gives them the chance to become “owners” of one of the Big Four by buying shares, the questions begin – should I take out an ownership stake in a big company or a small one? Are there better big companies to look at? If I decide on the banks, which one should I buy?
Who are ANZ Group (ANZ) and Westpac Banking (WBC)
With a market capitalisation (current share price times number of shares outstanding) of around $133 billion dollars, Westpac is the second largest of the Big Four, just ahead of National Australia Bank with around $131 billion. ANZ group is the smallest at a market cap of around $100 billion dollars. All three are dwarfed by Australia’s banking behemoth – Commonwealth Bank with a market cap in excess of $290 billion dollars.
Biggest is not always best as evidenced by the current views of the majority of professional market analysts who consider CBA overvalued at its current share price. Somewhat surprisingly, the smallest bank – ANZ Group – currently has the most favorable ratings. Given a choice between ANZ vs WBC, what are the differences between them that might justify investing in one over the other?
All four of the Big Four are traditional commercial banks, catering to both retail and business customers, although there are differences in which customer group they favor and what services they offer. As an example, CBA is known best as the bank for consumers while NAB is known as the bank for business.
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The core business of all them remains traditional retail banking, offering home mortgages and personal loans, credit and debit cards, personal accounts, mobile and online banking, savings accounts and fixed income investments, and insurance.
Services offered to business customers include business transaction accounts for receivables and payables and cash flow management, business savings accounts, and industry-specific business accounts. Loans are more expansive than retail loans, including equipment and asset financing, and online and mobile payment solutions.
The two biggest differences between the two are their international footprint and institutional clientele. ANZ Group has a much larger exposure to international markets, reaching more than 30 global markets in Asia, New Zealand, and the Asia Pacific Region. Westpac remains a primarily domestically focused bank.
As a result, Westpac caters to fewer institutional clients than ANZ Group, where its Institutional Banking Division provides customised solutions to corporate and government clients, from trade finance, to markets, and transaction banking.
Some analysts point to ANZ as a leader in innovation, citing ANZ Group as the first to offer digital payments through the adoption of Apple Pay.
Westpac may have the edge with business customers via the bank’s client-assigned relationship managers tailoring the banks services to provide solutions to both SMES (small-to-medium enterprises) and large corporations. Westpac also offers similar digital payment services for both retail and business clients.
Westbank operates a multi-branded banking network with the subsidiary banks expanding Westpac’s branch locations to around 500 across Australia of mid-2024.
Until recently, Westpac had an edge with its banking services available through Australia Post locations, but ANZ will gain access beginning 1 October of 2025.
ANZ vs WBC: Dividends.
Both ANZ Group and Westpac Bank are major blue chip stocks and as such have been paying dividends for decades.
On the metric of current annual yield, the ASX website shows ANZ Group with a yield of 4.93% and Westpac Banking with a yield of 3.93%. Dividends paid out over the last five years give a slight edge to ANZ Group.
ANZ Group Dividend Payments
Source: ASX Website
Westpac’s lowest dividend payment was $0.70 while its highest was $0.90 compared to ANZ’s low of $0.81 and a high of $0.94.
Westpac Banking Corporation Dividends
Source: ASX Website
What are ANZ Group and Westpac Bank Shares Worth?
Methods for determining a stock’s worth vary, with complicated models like discounted cash flow analysis left for experts, with simpler models like ratio analysis and other tools of an approach called fundamental analysis. Would-be investors assess fundamental metrics of the company’s financial and operational performance, with an eye to the past but a focus on the future.
While fundamental analysis attempts to determine a stock’s intrinsic value, another method – technical analysis – focuses on future price movements to determine when to buy, hold, or sell, a stock. The prediction comes from a vast array of technical analysis tools used to study past and present price performance. In its simplest form, the price movement charts investors of all approaches consult are a technical analysis tool. Here is a one year price chart for Westpac Banking.
A button on the chart marked “INDICATOR” will access technical analysis tools to evaluate the price movement. Calculating the tool is automatic. Support and Resistance levels are complex tools that are not readily available. Investors must calculate them on their own and it is not a task for beginners. Here is a sample chart to explain the process.
Source: magicalanalysis.com
A support level is like a floor below which the stock price does not go, instead bouncing up when it hits support until it hits the “ceiling” – resistance, or the price above which it does not go. Technical investors look to buy at support and sell at resistance with breakouts setting new support and resistance. The green shaded area in the lower chart above shows the support and resistance.
In reality, when comparing ANZ vs WBC, most investors use both approaches, looking to fundamental analysis valuation ratios in conjunction with price charts. For example, the Price to Earnings Ratio is a favored tool of fundamentalists. ANZ has the better P/E – 15.11 – compared to 19.89 for WBC, with lower P/E’s considered indicators of potentially undervalued stocks. Price appreciation is an indicator of market favorability, as more investors are buying the stock. Comparing ANZ vs WBC over the same time period indicates the market favors WBC.
ANZ vs WBC: Which is the Better Investment?
Comparing ANZ vs WBC in reality boils down to an individual investors goals and risk tolerance, regardless of fundamental or technical analysis or analyst opinion. ANZ Group’s broader international presence makes it more exposed to volatility, making it suitable for investors with high risk tolerance and an appetite for the superior growth potential from the more diversified client base. Westpac’s dominant domestic presence means less volatility, but also with less growth potential, making it more suitable for risk averse investors looking for stable growth.
The Wall Street Journal has a consensus HOLD rating on ANZ, with 14 analysts reporting and 1 at BUY, 2 at OVERWEIGHT, 8 at HOLD, and 3 at SELL. The Journal shows a consensus UNDERWEIGHT rating on WBC, with 14 analysts reporting and 5 at HOLD, 5 at UNDERWEIGHT, and 4 at SELL.
ANZ Group and Westpac Banking are two of Australia’s renowned Big Four Banks. Both major blue chip stocks, each has decades long history of stable dividend payments. Although both are considered commercial banks with similar offerings, there are differences that cater to different investor preferences. Westpac is predominantly an Australian domestic bank, making it more stable as Australia has a long history of being spared the brunt of global economic pain. ANZ has a significantly higher exposure to international markets, making it move volatile, but with a higher growth potential from a broader customer base.
