S&P/ASX 200 Index (ASX: XJO) bank shares have driven the S&P/ASX 200 Financials Index (ASX: XFL) higher over the last 30 days.
The financials sector has lifted close to 7% since this time last month compared to the 4.7% jump in the broader ASX 200 index. And ASX 20 bank shares have been among its biggest gainers.
Indeed, the Bank of Queensland Ltd (ASX: BOQ) share price has soared 14.7% in that time while that of Westpac Banking Corp (ASX: WBC) has lifted 13%.
Other top performers include Australia and New Zealand Banking Corp Ltd (ASX: ANZ), up 11.5%, Bendigo and Adelaide Bank Ltd (ASX: BEN), up 10.6%, and National Australia Bank Ltd (ASX: NAB), up 8.1%.
Finally, the share price of Commonwealth Bank of Australia (ASX: CBA) is lagging its peers, having risen 7.5% over the last 30 days.
But the party might be coming to an end for ASX 200 bank shares, Barrenjoey analyst Jon Mott reportedly warns. Let's take a look at why the expert is bearish on the Aussie financials giants.
Why is this expert bearish on ASX 200 bank shares?
The Bank of Queensland share price has outperformed its ASX 200 peers over the last month amid the release of the bank's full-year earnings, detailing a strong final quarter for its net interest margin (NIM).
The measure – which, simply put, reflects the profit a bank takes from interest offered and charged to its customers – reached 1.81% in the final quarter of financial year 2022 on the back of consecutive rate hikes.
That could bode well for other ASX 200 banks, many of which are due to report in the coming weeks.
On the other hand, Mott believes a near-term increase in NIMs is increasingly priced into bank shares. He continued, courtesy of The Australian:
However, the impact of higher rates on over-leveraged consumers is not being reflected in prices.
The analyst also reportedly thinks NIMs will likely spike in the near future before easing sooner than expected. He tipped them to peak before the start of financial year 2024. In the meantime, the market could shift its focus to the risks rate hikes might pose to banks.
Notably, higher rates could see more homeowners defaulting on their mortgages while other Australians may choose not to enter the housing market.
Beyond that, Mott reportedly said the big four could struggle to justify record NIMs while many Australians are in financial stress. Additionally, he is said to have warned an Optus-style cyberattack would pose a greater threat to a financial institution, according to The Australian.
Perhaps unsurprisingly, Barrenjoey is underweight on the banking sector.
