S&P/ASX 200 Index (ASX: XJO) bank stocks are joining in the market rally today.
After US President Donald Trump announced a 90-day hiatus on increased tariffs planned for dozens of nations, the Aussie benchmark index is up 4.8% at the time of writing.
And with the banks rallying, the S&P/ASX 200 Financials Index (ASX: XFJ) is up 4.7% at this same time.
Which may present an opportune time to sell two ASX 200 bank stocks.
That's according to Bell Potter Securities' Christopher Watt, who issued a sell recommendation on the banks in Monday's The Bull.
ASX 200 bank stock facing rising cost growth
The first ASX 200 bank stock Watt has a bearish outlook on is Bendigo and Adelaide Bank Ltd (ASX: BEN). The Bendigo share price is up 3.7% today at $10.28.
Watt noted:
The bank's first half result in fiscal year 2025 missed expectations, with a concerning disconnect between asset growth and net interest margin, which fell 6 basis points on the previous six-month period.
And Bell Potter is concerned over rising cost growth at the bank.
"According to our analysis, cost growth may outpace revenue growth during the next 18 months, and core earnings may bottom in fiscal year 2026," Watt explained.
With today's intraday gains factored in, the Bendigo Bank share price remains down 23% since 14 February. But Watt thinks it could have further to fall.
He said:
Despite a sharp recent sell-off, the stock still trades above book value, but the return on equity falls short of expectations. In our view, investors may want to consider selling as we see limited near-term earnings upside amid valuation concerns.
Also on the chopping block
The second ASX 200 bank stock Bell Potter believes could come under further selling pressure in 2025 is Judo Capital Holdings Ltd (ASX: JDO).
The Judo share price is up 7.2% today at $1.71. But shares remain down more than 18% from the recent closing highs posted on 19 February.
"This Australian lender focuses on small and medium size enterprises," said Watt, adding that Judo could also face headwinds from growing costs.
According to Watt:
Judo has delivered on fiscal year 2025 guidance so far, assisted by margin expansion and cost control. However, cost growth may resume in fiscal year 2026, according to our analysis. The stock has re-rated significantly, pricing in execution success without factoring in future risk.
And with Judo trading at a price-to-earnings (P/E) ratio north of 30 times, Watt concluded, "The valuation appears stretched relative to its maturing growth profile."
