In anticipation of Australian Finance Group's 1H results on February 25, Morgans estimates reported profit of $29.78m and an fully franked interim dividend of 6.7cps.

While earnings are expected to impress, driven by volume growth for both the aggregation business and the AFG Securities business, the broker remains wary of the effect of monetary policy tightening. Due to heightened risk the target price falls to $3 from $3.60.

Sector: Banks.

Target price is $3.00.Current Price is $2.46. Difference: $0.54 - (brackets indicate current price is over target). If AFG meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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