It's been a rough month for S&P/ASX 200 Index (ASX: XJO) bank shares, with declines across the board reversing many gains made earlier this year.
It looks like investor sentiment has turned negative amid concerns about falling mortgage demand, a weakening housing market, and tight competition squeezing margins.
It didn't help that inflation data came in higher than expected in August, sending major banks into a tailspin. Recent July inflation data showed underlying inflation remained at 3.6%, above the Reserve Bank's 2% to 3% target. The update has prompted several major banks to forecast another hike as early as September.
Image source: Getty Images
What happened to the ASX 200 big four major banks in August?
Australia's banking sector is dominated by the big four banks: Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), and ANZ Group Holdings Ltd (ASX: ANZ).
Together, they make up around a quarter of the ASX 200 Index by market capitalisation.
There was a flurry of results announcements from the ASX major banks this month, which didn't exactly instil confidence.
CBA reported a record cash profit, while NAB, Westpac and ANZ also delivered resilient quarterly earnings. However, all four majors showed signs of weaker mortgage demand.
At the time of writing, with only a couple more trading days left of the month, CBA shares are changing hands at $155.68 a piece. The ASX 200 major bank's shares have fallen around 12% in August.
NAB shares are trending lower at the time of writing, down around 8% over the month to $38.06 per share.
ANZ shares are down around 2% for the month of August and are changing hands at $36.54 per share at the time of writing.
Meanwhile, Westpac shares are trading for $33.83 each, having fallen around 11% throughout the month.
What about the mid-tier banks?
It's more of the same for ASX 200 mid-tier banks too.
Bendigo and Adelaide Bank Ltd (ASX: BEN) fell around 8% to $10.50, at the time of writing.
Bank of Queensland Ltd (ASX: BOQ) shares have fallen a slightly lesser 4% to a current trading price of $6.38 each.
While Macquarie Group Ltd (ASX: MQG) shares suffered the least, they are still in the red for the month, at the time of writing. The ASX bank shares are down around 1% for the month and trade at $251.59 per share.
Which ASX bank shares are a buy for September?
Macquarie shares were the least affected by the ASX bank stock sell-off in August, and brokers are bullish on the prospect of a near-term rebound. TradingView data shows that the majority (nine out of 12) have a buy/strong buy rating on Macquarie shares. The average $268.69 target price now implies a potential upside of around 7% at the time of writing.
Which ASX bank shares to brokers rate as a hold?
TradingView data shows the majority of brokers have a hold rating on ANZ shares. But the $35.92 average target price implies a potential 2% downside at the time of writing.
The data also shows the majority of brokers rate NAB shares as a hold. The $38.07 average target price is largely flat relative to the trading price at the time of writing, with a small potential 0.2% upside ahead.
Brokers are also neutral on Bendigo Bank shares. TradingView data shows that the majority have a hold rating, but again, the $10.33 average target price implies a potential 2% downside at the time of writing.
And which ones have a sell recommendation?
Then there are the ASX bank shares that brokers are most bearish on.
CBA shares still the least favoured ASX bank stock. TradingView data shows the majority have a strong sell rating on the banking giant's shares. The latest $127.86 target price implies a potential 18% downside ahead for investors, at the time of writing.
The majority also have a sell rating on Westpac shares. The latest $33.38 average target price now implies a potential 1% downside, according to TradingView data.
BOQ shares are also expected to keep falling. Most brokers rate the ASX bank as a sell, and the $6.09 average target price on TradingView now implies around a 5% downside ahead.
