Top broker picks best ASX 200 bank shares to buy coming out of reporting season

Investors shouldn’t view ASX 200 bank shares as a homogenous group and last month’s reporting season can help you pick…
The post Top broker picks best ASX 200 bank shares to buy coming out of reporting season appeared first on The Motley Fool Australia. –

Investors shouldn’t view ASX 200 bank shares as a homogenous group and last month’s reporting season can help you pick the next winners.

While the share prices of ASX banks have performed well against the S&P/ASX 200 Index (Index:^AXJO), JPMorgan believes this could be about to change.

The broker reviewed the sector following the August profit season and made changes to its recommendations.

ASX 200 banks reporting season trends

Mind you, not all of the ASX 200 bank shares posted full year results last month. In fact, only Commonwealth Bank of Australia (ASX: CBA) and Bendigo and Adelaide Bank Ltd (ASX: BEN) did.

The other ASX big banks issued updates instead. That was enough for JP Morgan to identify some key themes.

“Margin trends were mixed this quarter/half and we expect mortgage margin headwinds to re-emerge, supporting our preference for more business-exposed banks,” said the broker.

The ASX 200 bank upgraded to “buy”

This is one reason why JPMorgan upgraded its recommendation on the National Australia Bank Ltd. (ASX: NAB) share price to “overweight”.

At the same time, the broker cut its rating on the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price to “neutral” from “overweight”.

“We have become more concerned about ANZ’s struggles in the Australian mortgage market, and think the turnaround will be more protracted than we first thought,” said JPMorgan.

“When combined with the pushback of rate rises by the RBNZ due to the NZ COVID-19 outbreak, we struggle to see the near term catalysts to re-rate the stock despite valuation support.”

Why the NAB share price can outperform

In contrast, the broker reckons that NAB is well positioned to grow revenues. The bank has strong customer satisfaction scores with both consumers and businesses. NAB is also the leader among the ASX big banks for business lending.

This should mean more stable margins as the residential lending market is more competitive compared to small and medium business loans.

“AUSTRAC issues remain to be resolved, but we already incorporate AML investment in our forecasts with plenty of capital headroom to absorb any one-off hit,” added JPMorgan.

“Prolonged lockdowns may impact SME asset quality but provisions look solid.”

Best ASX 200 bank shares to buy now

However, NAB is not the broker’s top pick for the sector. The ASX bank that represents the best buy is the Macquarie Group Ltd (ASX: MQG) share price, according to JPMorgan.

This is followed by the NAB share price then the Bank of Queensland Limited (ASX: BOQ) share price.

The post Top broker picks best ASX 200 bank shares to buy coming out of reporting season appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

Why the Rio Tinto (ASX:RIO) share price is down 17% in a month
ASX 200 midday update: Metcash update, Wesfarmers goes ex-div

How did the ASX 200 shares perform compared to the FTSE 100 shares in August?

These were the best performing ASX 200 shares in August

These were the worst performing ASX 200 shares in August

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Macquarie Group Limited, and National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!