Australia’s four major banks — Commonwealth Bank (CBA), ANZ, Westpac (WBC), and National Australia Bank (NAB) — are among the largest companies on the ASX and are a core holding in most Australian share portfolios (directly or via ETFs). Macquarie Group (MQG) is also a major financial services company. This article explains what to consider when evaluating ASX bank stocks, without making specific buy or sell recommendations.
Overview of Major ASX Bank Stocks
| Company | ASX code | Market cap (approx.) | Typical dividend yield | Franking |
|---|---|---|---|---|
| Commonwealth Bank | CBA | $250B+ | 3.0–4.5% | Fully franked |
| ANZ Group | ANZ | $75–$90B | 5.0–7.0% | Fully franked |
| National Australia Bank | NAB | $90–$110B | 4.5–6.0% | Fully franked |
| Westpac | WBC | $80–$100B | 5.0–7.0% | Fully franked |
| Macquarie Group | MQG | $70–$90B | 2.5–3.5% | Partially franked |
| Bank of Queensland | BOQ | $3–$5B | 4.0–7.0% | Partially franked |
| Bendigo and Adelaide Bank | BEN | $4–$6B | 5.0–7.5% | Partially franked |
Market caps and yields are approximate and change continuously. Check current data on asx.com.au.
Commonwealth Bank (CBA)
CBA is Australia’s largest bank by market capitalisation and consistently trades at a premium to its peers (higher P/E ratio). It has a strong retail banking franchise, market-leading home loan book, and consistently high return on equity.
CBA typically offers a lower yield than the other Big Four banks because its share price is higher relative to its earnings — the market pays a premium for CBA’s quality.
ANZ Group (ANZ)
ANZ has the largest international presence of the Big Four, with significant operations in New Zealand and Asia-Pacific. It completed the Suncorp Bank acquisition in 2024, significantly growing its Australian retail banking book.
ANZ typically trades at a lower P/E ratio than CBA, resulting in a higher dividend yield.
National Australia Bank (NAB)
NAB has the strongest business banking franchise of the Big Four — a significant advantage when business lending grows. It divested several international businesses in the 2010s to refocus on Australia and New Zealand.
NAB typically offers a competitive dividend yield and is the largest business bank in Australia by lending volume.
Westpac (WBC)
Westpac is the oldest bank in Australia (founded 1817). It has undergone significant transformation following the AUSTRAC money laundering scandal (2019 settlement: $1.3 billion fine) and subsequent remediation program. It retains a large retail banking base and a significant mortgage book.
Westpac typically trades at a lower P/E than CBA, offering a higher yield.
Macquarie Group (MQG)
Macquarie is an investment bank and global asset manager — fundamentally different in business model to the retail-focused Big Four. It generates revenue from infrastructure asset management, commodities, and investment banking rather than traditional deposit-taking and lending.
Macquarie offers lower yield but has delivered strong earnings growth, particularly from global infrastructure fund management.
How to Evaluate ASX Bank Stocks
Key metrics for evaluating Australian bank shares:
| Metric | What it shows | What to look for |
|---|---|---|
| Price-to-book ratio (P/B) | Share price vs net assets | Lower = cheaper relative to assets |
| Return on equity (ROE) | Profit generated on shareholders’ equity | Higher is better; 12–15%+ is strong for Australian banks |
| Net interest margin (NIM) | Difference between lending rates and deposit costs | Wider margin = more profitability per dollar lent |
| CET1 ratio | Capital adequacy (safety buffer) | APRA requires ~10.5%; higher is safer |
| Payout ratio | Dividends paid as % of earnings | 60–80% is typical for Australian banks; above 90% may be unsustainable |
| Non-performing loans | Bad loans as % of total loan book | Rising non-performing loans signal credit stress |
Risks of Bank Stocks
- Housing market exposure — the Big Four have enormous residential mortgage books. A significant fall in property values or a spike in unemployment would increase loan defaults and put pressure on earnings
- Interest rate sensitivity — while banks generally benefit from rising rates (wider margins), rapidly rising rates can cause mortgage stress in their customer base
- Regulatory risk — APRA and ASIC regulation can restrict lending growth or require higher capital holdings
- Concentration risk — holding multiple bank stocks means high exposure to a single sector and a single macro risk (property market and interest rates)
Automatic Exposure via ETFs
Investors who hold broad ASX ETFs (VAS, A200) already have significant exposure to the Big Four banks — the financials sector makes up approximately 28–32% of the ASX 200 index. An investor considering buying individual bank stocks should recognise they may already hold significant bank exposure through their ETFs.
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Frequently Asked Questions
Which Big Four bank has the highest dividend yield? Yields change constantly with share prices and profit announcements. Historically, ANZ, Westpac, and NAB have offered higher yields than CBA, which trades at a premium. Verify current yields on asx.com.au or your broker platform before making any decisions.
Are Australian bank shares safe? The Big Four banks are among the most stable large companies on the ASX, backed by APRA prudential oversight and a strong regulatory capital framework. However, they are not risk-free — their share prices can fall significantly during economic downturns or financial system stress, and dividends can be cut (as occurred during COVID-19 in 2020). No investment is risk-free.
Should I buy bank shares or a bank ETF? Broad Australian ETFs (VAS, A200) already include significant bank exposure. If you want more concentrated bank exposure, you can buy individual bank shares — but this concentrates your risk further in the financial sector. A diversified ETF approach avoids the need to select between CBA, ANZ, NAB, and WBC individually.
This article provides general financial information only. Company mentions are for educational context and do not constitute a recommendation to buy or sell. Past performance is not a reliable indicator of future performance. For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.