Most S&P/ASX 200 Index (ASX: XJO) bank stocks appear to be in for a more difficult year ahead than they enjoyed over the past 12 months.
That's according to the latest research report into the Aussie banking sector, released by Macquarie Group Ltd (ASX: MQG) on Friday.
In fact, the broker only has one outperform rating on the ASX 200 bank stocks for FY 2026.
Any guesses which bank Macquarie favours over the rest?
What's the best ASX 200 bank stock to buy for FY 2026?
If you said Commonwealth Bank of Australia (ASX: CBA), guess again.
CBA shares have surged 45.5% over the past 12 months, currently changing hands for $183.55 apiece.
But Macquarie has an underperform rating on Australia's biggest bank, with a price target of $105.00. That represents a potential looming downside of some 43% from the current CBA share price.
Commenting on the rather bleak outlook for most ASX 200 bank stocks in FY 2026, Macquarie said it expects "earnings headwinds" from pending interest rate cuts from the Reserve Bank of Australia (RBA).
"With the RBA now expected to cut rates at least three more times, we have reduced our base case for the cash rate to 3.1%," the broker noted.
According to Macquarie:
While most analysts and investors acknowledge the negative impact of rate cuts on margins, it appears this is not yet reflected in consensus earnings.
Share prices benefited from earnings resilience and minor upgrades throughout this year, but we see a 2-5% downside risk to EPS [earnings per share] in FY26, which should weigh on share prices.
The broker rather ominously added, "The divergence between bank share price performance and the earnings outlook continues to grow."
If not CBA shares, which Australian bank is Macquarie tipping to outperform?
Moving on down the list of ASX 200 bank stocks, Macquarie has a neutral rating on ANZ Group Holdings Ltd (ASX: ANZ) shares.
ANZ shares are just about flat today, trading for $29.19 each. This sees the ANZ share price up 2.6% in a year. As for the year ahead, Macquarie has a 12-month price target of $27.50 a share, or almost 6% below current levels.
The broker also has a neutral rating on National Australia Bank Ltd (ASX: NAB) shares, with a $35.00 price target. The NAB share price is up 9.4% in a year, currently at $39.47. Meaning Macquarie expects shares to decline by more than 11% in FY 2026.
And Westpac Banking Corp (ASX: WBC) could take an even steeper hit.
Westpac shares are up 0.4% today, changing hands for $34.03. That puts this ASX 200 bank stock up 25.1% over the past year. But with an underperform rating and a price target of $27.50, Macquarie forecasts the Westpac shares could tumble more than 19% from here.
Both Bendigo and Adelaide Bank Ltd (ASX: BEN) and Bank of Queensland Ltd (ASX: BOQ) also earned an underperform rating from Macquarie.
The broker has a 12-month price target of $10.25 on Bendigo Bank shares, or some 20% below the current share price of $12.79.
Macquarie's price target for Bank of Queensland shares – up 31.9% over the last year to $7.81 a share today – is $5.75. That's more than 26% below current levels.
The expected FY 2026 ASX 200 bank stock outperformer is…
Which brings us to the only ASX 200 banks stock that Macquarie expects to outperform in FY 2026, Judo Capital Holdings Ltd (ASX: JDO).
With its focus on lending to small & medium sized enterprises (SMEs), the Judo share price is up 24.8% over the last 12 months to $1.56.
The broker has a 12-month price target on Judo shares of $1.75. That represents a potential upside of more than 12% from current levels.
