However, it would take some time for the upside to be realised, given ongoing capital requirements, global financial market risks and pressure from funding costs, bad and doubtful debts and low credit growth.
"We would use share price weakness as an opportunity to gain into CBA, a high-quality franchise. And we believe ANZ should outperform outside of these macro factors, given its turnaround under way."
Only the Commonwealth Bank of Australia (CBA) would report a full-year result in the coming reporting season but trading updates would be issued by ANZ and National Australia Bank, he said.
CBA was expected to report a "relatively benign" result.
Craigs was anticipating good loan growth and the benefit of the full year of mortgage repricing to help margins.
Strong equity markets in April and May could also provide a boost to earnings.
But the result might be affected by a rise in one-off bad and doubtful debts — as reported by other banks earlier this year — as well as some pressure on margins from rising wholesale costs and competition on lending products.
The outlook for bad and doubtful debts appeared to be on the rise from cyclical lows, and the outlook for capital requirements in the face of more onerous legislation, would be of the most interest, Mr Timms said.
Any negative news on those two fronts was likely to put downward pressure on share prices across the sector.
ANZ had revised its dividend policy at its last result and would now pay out 60% to 65% of annual cash profits, from 65% to 70% previously, to ensure its dividend was sustainable.
CBA had the highest capital ratios and was under the least pressure. NAB could follow ANZ’s lead to reduce pressure from funding requirements.
