ASX 200 bank shares forged ahead today. The National Australia Bank Ltd (ASX: NAB) share price hiked 1.98% while Macquarie Group Ltd (ASX: MQG) climbed 0.49%.
Meanwhile, Bank of Queensland Ltd (ASX: BOQ) shares gained 1.95% and Australia and New Zealand Banking Group Ltd (ASX: ANZ) closed up 1.37%.
Let's take a look at why ASX 200 bank shares had such a good Valentines Day?
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ASX 200 bank shares rise
While all ASX 200 bank shares finished ahead today, there were two standout performers.
The Westpac Banking Corp (ASX: WBC) share price jumped 4.83% and Bendigo and Adelaide Bank Ltd (ASX: BEN) leapt 4.43%.
Westpac's share price stormed ahead on news it had bought back 167.5 million of its shares, worth $3.5 billion. A share buyback can improve shareholder returns because the company's profits are spread across fewer shares.
Meanwhile, the Bendigo and Adelaide Bank share price lifted after it reported a nearly 32% jump in statutory net profit in its half-year results.
For perspective, the S&P/ASX 200 Financials Index (ASX: XFJ) also finished higher today, up 1.54% at market close.
What's behind the bank share surge today?
Helping ASX 200 bank shares could be news of the major banks raising their home loan rates. ANZ, NAB, and Westpac all upped their fixed home loan rates in the past week, personal finance website savings.com.au reported. Meanwhile, Bank of Queensland has reportedly bumped up its variable rates.
Continuing speculation about measures to curtail rising inflation also could be helping ASX 200 bank shares. As my Foolish colleague Bernd reported last week, central banks, including the US Federal Reserve, are looking to raise rates to keep inflation in check. Analysts also expect the Reserve Bank of Australia could lift its official cash rate.
Rising interest rates tend to help the ASX 200 banks due to larger lending margins. However, on the flip side, higher rates can also depress new lending in mortgage markets.
Investors may also be turning to value shares such as banks, energy, and the utilities sector amid the tech sell-off. As Motley Fool Australia reported last week, ASX value shares have been outperforming growth shares, including technology shares, this year amid potential interest rate hikes.
