Australia’s four largest lenders—ANZ Group, Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Westpac—show divergent fundamentals as the Reserve Bank of Australia maintains a restrictive policy stance.
ANZ emerges as the most attractively valued among the group, trading 11.9% below its estimated fair value of AUD 42.08. The bank’s forward price-to-earnings ratio stands at 15.1x, the lowest in the cohort, alongside a price-to-book multiple of 1.6x. Its beta of 0.57 indicates the lowest volatility among peers. ANZ also matches Westpac with the highest dividend yield at 4.4%, supported by a 47-year streak of consecutive payouts. Over the past five years, revenue grew 21% from AUD 18.0 billion to AUD 21.8 billion, though net interest margins compressed from 34.3% to 27.1% and ROE declined from 9.9% to 8.4%. The stock has delivered a 20.2% return over the past year.
CBA retains a premium valuation, reflecting its scale as the largest of the Big Four with a market capitalization of AUD 271.9 billion. The lender’s ROE of 13.9% remains the highest in the group, though its trailing P/E of 24.9x and forward P/E of 24.1x leave it trading 16.8% above fair value. Westpac, with a market cap of AUD 118.4 billion, offers a 4.4% dividend yield but has seen essentially flat revenue growth over five years. NAB, valued at AUD 120.9 billion, trades at a forward P/E of 19.0x with a dividend yield of 2.2%.
The Reserve Bank of Australia has held its cash rate at 4.35% for two consecutive meetings, following 75 basis points of increases since February 2026. Deputy Governor Hauser has cautioned that further tightening remains possible if inflation risks—including geopolitical tensions in the Middle East, the global AI boom and weak domestic productivity—materialize.
