ASX 200 financial shares performed well despite a heavy second-half fall for sector leader Commonwealth Bank of Australia (ASX: CBA).
The S&P/ASX 200 Financials Index lifted 7.97% in 2025, with total returns (including dividends) of 12.05%.
By comparison, the benchmark S&P/ASX 200 Index (ASX: XJO) lifted 6.8% and provided total returns of 10.32%.
This made financials the third best performer among the 11 market sectors last year.
Commonwealth Bank of Australia (ASX: CBA), the largest company on the ASX, reached its peak in late June at $192 per share.
After a long run, which began in November 2023 and delivered about 85% capital growth for CBA investors, a correction was inevitable.
CBA shares fell 16% from their high point during the second half of the year to finish at $160.57 apiece on 31 December.
Overall, CBA shares managed a 12-month gain of just under 5%.
This pales in comparison to the capital gains of the financial sector's top performers.
Let's take a look at those stocks.
Which ASX 200 financial shares delivered the best capital growth?
1. Generation Development Group Ltd (ASX: GDG)
The Generation Development Group share price rose 66% to finish the year at $5.89 per share.
Generation Development Group is a market leader in retirement and investment solutions, including bonds.
For FY25, the company reported a 191% year-over-year lift in revenue to $141.3 million.
The underlying net profit after tax (NPAT) was $30.2 million, up 170% on FY24.
Macquarie has an outperform rating on this ASX 200 financial share for the new year.
The broker gives Generation Development shares a 12-month price target of $6.70.
2. Challenger Ltd (ASX: CGF)
The Challenger share price lifted 57% to finish the year at $9.41 per share.
Challenger's CEO, Nick Hamilton, says the company built on its strong FY25 performance with a solid first quarter of FY26.
Hamilton said there was "continued momentum in annuity sales" and progress with several strategic initiatives to support future growth.
In 1Q FY26, total life sales totalled $2.5 billion, up 4%.
Fixed term annuity sales rose 29% to $1.1 billion, while lifetime annuity sales lifted 16% to $320 million.
Citi has a buy rating on this ASX 200 financial share with a price target of $10.25.
3. Hub24 Ltd (ASX: HUB)
The Hub24 share price rose by 38% to finish the year at $96.25 per share.
HUB24 operates an investment and superannuation platform.
After the company's Investor Day in December, Bell Potter retained its buy rating with a slightly lowered target of $125.
The broker noted upside risk to the company's funds under administration (FUA) guidance as it continues to expand its offering.
However, management also warned of higher expenses with cost growth guidance revised to 18% to 20%.
4. Insignia Financial Ltd (ASX: IFL)
The Insignia share price ascended 28% to close at $4.56 per share on 31 December.
Insignia is a financial services company.
Last year, two takeover suitors pursued Insignia — Bain Capital Private Equity and CC Capital Partners.
In July, Insignia announced it had entered into a Scheme Implementation Deed with CC Capital for $4.80 per share.
The company is yet to schedule a shareholders' vote, saying regulatory processes are still underway.
Morgan Stanley has a hold rating on this ASX 200 financial share with a price target of $5.
5. ANZ Group Holdings Ltd (ASX: ANZ)
The ANZ share price rose 27% to close at $36.34 on 31 December.
The ASX 200 bank share reached a new record of $38.93 per share in November.
Morgans has a sell rating on ANZ shares with a price target of $32.57.
