URGENT UPDATE: Australian bank stocks faced a significant downturn yesterday, with all major players closing in the red. The Commonwealth Bank of Australia (ASX: CBA) plummeted by 2.95%, while the National Australia Bank Ltd (ASX: NAB) dropped 2.37%. Westpac Banking Corporation (ASX: WBC) fell 2.2%, and Australia and New Zealand Banking Group (ASX: ANZ) decreased by 1.96%.
This alarming drop raises urgent questions for investors as the dominance of these banks in the Australian economy often influences overall market portfolios. With 2025 performance showing promising gains for some banks, experts are now suggesting caution as they forecast a bearish outlook for 2026.
In 2025, ANZ shares emerged as the standout performer, soaring 24% over the year, while Westpac also saw gains of nearly 17%. National Australia Bank and Commonwealth Bank are up 10% and remain nearly even, respectively. However, with the recent downturn, analysts are now reevaluating their positions.
Morgans has issued a sell rating on NAB, projecting a price target of $31.46, indicating a potential 24% decline from current levels. For Westpac, the average one-year price target is set at $33.41, which is 12% below its current trading price. Meanwhile, ANZ’s disappointing second-half results have led to a reduced price target of $33.09 from Morgans, while CBA’s price targets from major firms like Morgan Stanley and Jefferies suggest further declines, with targets of $144.80 and $143.87 respectively.
Given the bleak outlook for the big four banks, investors are urged to consider alternatives. One promising contender is Judo Capital Holdings Ltd (ASX: JDO), which, despite experiencing a 5% drop over the past year, is gaining traction among experts. This fast-growing challenger bank focuses on servicing small and medium enterprises (SMEs) and is projected to deliver impressive profits in 2026. UBS has set a price target of $2.20 for Judo, signaling an upside potential of nearly 28%.
As experts weigh in on these developments, potential investors are left to ponder: Is it time to pivot away from the traditional banking giants? With the shifting landscape and new opportunities arising, now is the moment to reassess investment strategies.
Stay tuned for further updates on this evolving situation, as the implications for both investors and the broader economy become clearer.
