The big four S&P/ASX 200 Index (ASX: XJO) bank shares have experienced their very own market rotation in FY26.
In FY25, Commonwealth Bank of Australia (ASX: CBA) was easily the outperformer of the group, with its share price soaring 45% and reaching a record $192 in late June.
This compared to a still impressive 24% lift for Westpac Banking Corp (ASX: WBC) shares in FY25, as well as a moderate 8.6% gain for National Australia Bank Ltd (ASX: NAB) shares, and just a 3.3% bump for the ANZ Group Holdings Ltd (ASX: ANZ) share price.
The trend has reversed in FY26.
ASX 200 bank shares in FY26
ANZ shares are leading the group in FY26, with the share price 21% higher at $35.15, up 0.06% today.
The ANZ share price also reached a new record of $38.93 this month.
The Westpac share price has risen 12% in FY26 to $37.80, down 0.2% today, after setting a new record at $41 this month.
NAB shares have increased 3% to $40.47, up 0.2% today, after also peaking at a new all-time high of $45.25 this month.
Meanwhile, the CBA share price has tumbled 17% to $154.01, up 0.3% today, and is now 20% off its historical peak.
How does Morgans rate the big four bank stocks?
After the big four supplied reports to the market this month, Morgans released new notes on each ASX 200 bank share.
Let's take a look.
ANZ shares
Morgans has a trim rating on ANZ shares with a 12-month price target of $33.09.
This implies a near 6% fall over the next year.
The broker recapped the ASX 200 bank share's recent 2H FY25 report:
Earnings were materially below market expectations, albeit consensus may not have fully adjusted for the significant items.
However, 12 month target price lifts 29 cps to $33.09/sh due to CET1 capital outperformance in 2H25.
We recommend clients TRIM into share price strength, with the share price and implied valuation multiples trading at or around all-time highs.
Westpac shares
Morgans says investors overweight on Westpac should sell following the ASX 200 bank share's strong gains in FY26.
The broker also noted various highlights from Westpac's 2H FY25 report:
In the 2H25 result we appreciated the strong business lending growth, resilient asset quality, relatively stable underlying NIM, and regulatory capital strength. Cost investment is being made to deliver long-term revenue and cost gains.
With the stock trading around all-time highs but with limited earnings growth over coming years we continue to recommend clients SELL overweight positions.
NAB shares
The broker has a sell rating on NAB and a price target of $31.46.
This implies a more than 20% potential downside over the next 12 months.
Morgans said NAB missed consensus expectations of flat earnings in 2H FY25 and instead reported a 2% decline.
The broker commented:
While NAB has loan growth and revenue momentum heading into 1H26, it also has momentum in costs and showed signs of asset quality deterioration and tightness in regulatory capital. This is likely to see limited (if any) DPS growth and constrain capital management over coming years.
NAB is trading at historical extremes of key valuation metrics. The 2H25 result and earnings outlook doesn't justify such pricing.
CBA shares
Morgans has a sell rating on CBA shares with a price target of $96.07.
This suggests a near 40% potential downside over the next 12 months (eek!).
CBA recently released its 1Q FY26 update, with the broker commenting:
While the market wasn't expecting much earnings growth (c.2% for 1H26, and we were more bullish than consensus), growth was weaker than these expectations.
We remain SELL rated on CBA, recommending clients aggressively reduce overweight positions given the risk of poor future investment returns arising from the even-now overvalued share price and low-to-mid single digit EPS/DPS growth outlook.
