Macro Intelligence: banking on it

In this week’s edition of IG Macro Intelligence, we take a deep dive into the Australian Securities Exchange (ASX)-listed 'Big Four' banks.

Priced in?

• Australia and New Zealand Banking Group (ASX:ANZ)

Analysts at Citigroup have this week upgraded their call on Australia and New Zealand Banking Group (ANZ) to a 'neutral' recommendation from a 'sell', citing that concerns over the bank’s chief executive officer (CEO) transition seem to have been priced in.

The upgrade comes just a week after analysts advised selling the Big Four due to overvaluation and deteriorating fundamentals.

Nuno Mantos will replace Shayne Elliott as CEO of ANZ from 12 May, following the lender's release of its half-yearly results.

According to Citi analysts, ANZ’s new leadership will closely follow its existing strategy as the bank finalises its digital transformation and integrates Suncorp Group.

Citi analysts have lifted their price target on ANZ by nearly 9% to $27.50, calling the stock their preferred pick out of the Big Four.

ANZ analyst price chart

According to Refinitiv data, the average price recommendation on the stock is a 'hold', with a current target price of $29.24, which is not far from where the shares are currently trading.

ASX Tradewatch technical data show there is little demand for the stock from investors, with the 200-day moving average (MA) sloping downward and recent weak price action.

Proceed with caution?

Overvaluation concerns on the Big Four are also troubling Morgan Stanley analysts, who are suggesting an imminent move away from the sector.

Upcoming half-yearly earnings from Westpac, ANZ, and National Australia Bank Limited (NAB) may reveal downside risks, according to analysts.

• Westpac (ASX:WBC)

Westpac has an average target price of $29.10, according to Refinitv, suggesting the stock can fall a further 10%.

Citi recently upgraded its price target by 5.7% to $27.75, which is below the average consensus, but maintains its 'sell' call on the stock.

Westpac historical trends and price targets

Only UBS recommends shareholders buy Westpac shares at current levels.

Westpac buy/sell indicators and analyst projections

• Commonwealth Bank of Australia (ASX:CBA)

Shares in Australia’s largest lender, Commonwealth Bank of Australia (CBA), have risen more than 40% over the past year, continually hitting records despite analyst suggestions the stock is overvalued.

CBA buy/sell indicators and analyst projections

Despite recently raising its target price by 10% to $100, Citi is among the most bearish of the analysts on CBA. They believe investors are buying the stock to avoid exposure to risks like tariffs, rather than valuing it for its current price.

According to Refinitiv, the average price target on the stock is $115.61, suggesting CBA could fall almost 30% from current levels.

CBA continues to defy the pessimists, recently touching an all-time high, while its return on equity (ROE) is 13.1%, above the sector average of 9.3%.

ASX Tradewatch data also show CBA is in a long-term uptrend with the 200-day MA sloping upwards and the 5-day MA above the 20-day.

CBA historical trends and price targets

Rate risks

Macquarie analysts advise caution for any investor looking to banks as a safe haven from tariff-fuelled market risks.

Macquarie has flagged downside risks to bank earnings as lower interest rates loom in fiscal year (FY) 2026. With markets already pricing in 150 basis points (bp) of cuts through 2025, analysts warn there's significant pressure on current margin forecasts.

• National Australia Bank (ASX:NAB)

Macquarie is 'neutral' on NAB shares, which are down around 3.5% year-to-date, about double the decline of the overall ASX 200.

NAB buy/sell indicators and analyst projections