ASX bank shares have climbed higher in the first few weeks of July as expectations of lower interest rates and stable earnings expectations pique investor interest.
Escalating geopolitical tensions and continued commodity price volatility have prompted many investors to rotate towards large ASX bank stocks for their long-standing dividends and predictable earnings.
But going forward, some bank shares are expected to fare better than others.
Here's a rundown of how the four major ASX bank shares are tracking today, and what brokers expect next.
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Hold ANZ Group Holdings Ltd (ASX: ANZ) shares
ANZ shares have tumbled into the red on Tuesday. At the time of writing, the shares are down around 1.5% and changing hands at $35.94. ANZ shares are still nearly 2% higher so far in July, and are around 19% higher than this time last year.
The banking giant posted a positive half-year update in May, including a 70% jump in its cash profit and 22% lower operating expenses.
ANZ also confirmed it has achieved 49% of its gross cost-savings target of $800 million for FY26.
Brokers are relatively optimistic about ANZ shares for FY27. TradingView data shows that 7 of 16 analysts have a hold rating on the stock. Another six have a buy or strong buy rating while three have a sell or strong sell rating.
The average $34.91 target price, however, implies a potential 3% downside at the time of writing.
Sell Commonwealth Bank of Australia (ASX: CBA) shares
CBA shares are also tumbling on Tuesday, down around 1% to $169 a piece. The shares have climbed nearly 3% so far in July, but are around 5% below levels seen this time last year.
It's been a volatile few months for the banking giant. The bank's most recent disappointing third-quarter capital update in mid-May caused some investor confidence to wane. The bank reported a flat operating income and 1% decline in unaudited cash NPAT.
But every time CBA shares fall, they seem to quickly rebound again. 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 of 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.
TradingView data shows the majority (11 out of 16) of analysts have a strong sell rating on CBA shares. Another three rate the stock as a sell, and two rate it as a hold. The average $126.51 target price implies more than 25% downside ahead, at the time of writing.
Hold National Australia Bank Ltd (ASX: NAB) shares
NAB shares are down around 1% on Tuesday and are trading at $39.63 each. The banking giant's shares are one of the best performers among the big four so far in July, though, up around 5% in the first two weeks of the month. The shares are roughly flat on the trading level this time last year.
NAB's half-year FY26 results in May were a miss versus market expectations, and investors reacted negatively. Despite posting a modest earnings growth, including a 6.4% increase in underlying profit and a 3.1% increase in revenue, the share price sell-off accelerated.
Intense mortgage competition has also put pressure on the bank's profit margins and raised concerns about future earnings.
The share price has rebounded slightly from a dip in mid-June, most likely reflecting slightly improved market sentiment. But the experts are still cautious.
TradingView data shows that eight out of 16 analysts now rate the ASX bank stock as a hold. Another five have a sell or strong sell rating, and three rate NAB shares as a strong buy. The average $37.72 target price, however, now implies a potential 5% downside, at the time of writing.
Sell Westpac Banking Corporation Ltd (ASX: WBC) shares
Westpac shares are also down around 1% at the time of writing, to $36.50 a piece. The bank shares are around 4% higher so far in July and around 9% higher than 12 months ago.
Westpac posted a solid first-half result in early May. There was a brief share price uptick after the result was announced, but then investor sentiment reversed, and the sell-off resumed.
The bank's shares came under even more selling pressure after a court ruling related to ongoing compliance risk weighed on sentiment.
Westpac is the most mortgage-exposed of the big four bank shares, with approximately 69% of its loan book in residential mortgages. So, while forecasts of lower interest rates are positive news for the bank, its shares have been depressed by earlier hike announcements.
TradingView data shows that analysts are quite pessimistic about Westpac's outlook over the next year. The majority (nine out of 16) have a sell or strong sell rating on the bank shares. Another seven have a hold rating. The average $33.41 target price implies a potential downside of around 9% at the time of writing.
