Commonwealth Bank of Australia (ASX: CBA) shares have been fairly resilient so far this year.
At the time of writing, the ASX bank stock is down slightly, around 0.1%, to $164.57 a piece. For the year to date, however, the shares are still around 2% higher.
CBA shares rocked higher in mid-February after the bank posted an unexpectedly-positive half-year FY26 result. The bank shares were relatively unchanged over the next few months, even in the face of higher inflation and headwinds flowing out from volatility in the Middle East.
But then, in early-May, CBA shares tanked following a disappointing third-quarter capital update. Investors were spooked by the results at the time and rushed to sell up their shares.
The downturn was short lived though. CBA shares rebounded by the end of May and have stayed relatively consistent since.
It's clear that CBA shares are still in favour. It's likely CBA's safe-haven appeal that continues to appeal to investors. In times of market chaos, investors typically flock to well-known and large-scale stocks.
The problem is that CBA shares have been widely considered overvalued for some time now. CBA is currently trading at a price-to-earnings (P/E) ratio over 26, making it one of the most expensive banking stocks globally. The bumper price tag isn't supported by the bank's core strength or earnings either.
Brokers are bearish, with some expecting CBA shares to fall to just $90 a piece over the next 12 months.
I wouldn't add CBA shares to my portfolio right now. But the good news is that there are two other ASX bank shares tipped to outperform this year.
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I'd buy these ASX bank stocks instead
Analysts expect all the big four banks' shares, and some mid-tier bank stocks, to decline throughout the second half 2026.
Data shows that experts think CBA shares carry the most downside risk, with a downside of up to 45% at the time of writing, to $90 each.
But there are two ASX bank shares tipped to travel in the opposite direction this year.
Macquarie Group Ltd (ASX: MQG) is the only S&P/ASX 200 Index (ASX: XJO) bank share that brokers think can keep climbing higher over the next 12 months. Market Index data shows the majority of brokers have a buy rating on Macquarie shares. The $253.54 average target price implies a potential 1% upside, at the time of writing.
And then there is Judo Capital Holdings Ltd (ASX: JDO). Brokers are very bullish on the outlook for Judo Bank shares, with the majority holding a buy rating, according to Market Index data. The average $1.60 target price currently implies an impressive 80% potential upside ahead over the next 12 months.
What sets Macquarie and Judo Bank apart from the rest?
Macquarie is the fifth-largest ASX 200 bank by market capitalisation, and it is incredibly diversified. The bank does more than just banking; it also provides financial, advisory, investment, and fund management services across 34 markets globally.
That means it has exposure to commodities trading, infrastructure deals, asset management, and capital markets across multiple regions.
Unlike CBA, Macquarie isn't reliant on lending margins. Its diversity also means that it can remain stable, or even benefit, when markets are going through periods of volatility.
Meanwhile, Judo Bank works differently to its peers. Unlike many other banks in the sector, Judo Bank was built to focus on providing financial services and lending to small and medium enterprises (SMEs). These SMEs have annual turnovers of up to $100 million.
The bank was founded in 2016 and received its banking license in 2019. That means it's relatively new in comparison to the majors. It was listed on the ASX in 2021.
The bank provides business lending starting at $250,000 and touts itself as providing more flexibility than major banks. It also offers personal term deposit products and home loans.
