The big four banks have traditionally been seen as safe havens for Australian investors. However, a new research report from broker Jarden argues that they are all overvalued at current share prices.
Jarden only has an overweight recommendation on ANZ Group Holdings Ltd (ASX: ANZ). Meanwhile, it has sell ratings on Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corporation (ASX: WBC).
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Federal Budget having an impact
The broker argues that the federal government's changes to capital gains tax and negative gearing rules for property investors will at least halve the rate of home loan growth, which could have implications for dividend policies at the banks.
Jarden said Macquarie Group Ltd (ASX: MQG) continues to outperform the big four banks with its simplified digital offerings.
The broker also said AI threatens to change the way people interact with banking, and inertia may no longer be enough to retain customers.
While Jarden prefers ANZ to the other banks with its overweight rating, its price target of $35.50 is still below the current level of $37.36.
ANZ is also paying a 4.5% dividend yield.
The bank recently announced that its cash profit for the quarter ended 30 June was up just 1% on the quarterly average of the half-year ended 31 March.
At the time, ANZ Chief Executive Officer Nuno Matos said:
As we release our third quarter update, we remain on track to meet our Return on Tangible Equity and Cost-to-Income targets. In the quarter, we continued to improve productivity, margins and business volumes, including accelerating growth in business banking and returning home lending to system growth. Beyond our immediate priorities, we are investing now in customer experience, propositions, channel uplift and transaction banking. This will position us well for the second phase of our strategy beyond 2027, to accelerate growth and outperform the market.
Commonwealth Bank could drop sharply
Regarding Commonwealth Bank, Jarden is predicting a very steep share price fall from $151.18 currently to $90.
When releasing its FY26 results, CBA warned of difficult times ahead.
It said:
The Australian economy has remained resilient, supported by historically low unemployment and longer-term investment. However growth is slowing, with higher interest rates and inflation placing uneven pressure on household incomes and economic activity. Housing activity has softened from a high base. Application volumes appear to have stabilised in recent weeks. Businesses continue to manage higher input costs and supply uncertainty.
For National Australia Bank, Jarden is forecasting a share price of $29, compared to $38.55 currently. Meanwhile, for Westpac, it is predicting its share price to fall from $34.26 (at the time of writing) to $31.
