The S&P/ASX 200 Index (ASX: XJO) slumped 7.8% in March, with two of the big four ASX 200 bank stocks outperforming those losses and two falling even harder.
March was a difficult month for most stocks following the onset of the Iran war at the end of February.
The resulting conflict in the Middle East saw the Brent crude oil price spike 48% over the month just past, soaring from US$72.50 on 27 February to US$107.50 on 31 March, according to data from Bloomberg.
That's likely to push inflation significantly higher over the coming months, which in turn could pressure global central banks, including the Reserve Bank of Australia, into raising interest rates.
As you're likely aware, the RBA already has hiked the official cash rate twice this year. The second interest rate rise was delivered on 17 March, with the 0.25% lift taking the benchmark rate to 4.10%.
Higher interest rates have the potential to support ASX 200 bank stocks by enabling a larger net interest margin (NIM). But if higher rates and rising inflation lead to a broader economic downturn in Australia, the banks – among other headwinds – could get hit with a material increase in non-performing loans.
With that picture in mind…
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ASX 200 bank stocks retreat in March
Commonwealth Bank of Australia (ASX: CBA) was the best performing big bank stock last month.
CBA shares closed out February trading for $174.62 and finished March at $167.70 each. That put the CBA share price down 4.0% in March, significantly outperforming the 7.8% loss posted by the benchmark index.
Westpac Banking Corp (ASX: WBC) shares also outperformed the benchmark.
Barely.
Shares in the ASX 200 bank stock closed on 27 February trading for $42.54. When the closing bell sounded on 31 March, shares were changing hands for $39.47 apiece. This saw Westpac shares down 7.2% over the month.
That was a better performance than we saw from ANZ Group Holdings Ltd (ASX: ANZ).
ANZ shares ended February at $40.04 and closed out March trading for $35.97. The 10.2% decline in ANZ shares over the month underperformed the benchmark.
Which brings us to March's laggard, National Australia Bank Ltd (ASX: NAB).
NAB shares closed out February trading for $49.02. On 31 March, shares ended the day changing hands for $41.44. That saw the NAB share price down 15.5% over the month, or almost twice the losses posted by the benchmark index.
Taking a step back
While March saw the big four ASX 200 bank stocks take a tumble, investors who bought any of the banks a year ago will still be sitting on some benchmark beating gains.
Here's how they've performed (as at time of writing today) over the past 12 months, not including dividends:
- NAB shares are up 21.6%
- CBA shares are up 11.0%
- Westpac shares are up 25.6%
- ANZ shares are up 22.6%
