Source: Kapitales Research

Highlights:

• Australian banking stocks steadied after heavy selling pressure hit the sector
• Commonwealth Bank rebounded following its latest quarterly trading update and capital disclosure
• Investors continued monitoring macroeconomic risks, loan quality, and earnings resilience across major lenders

Australian banking stocks recovered on Thursday after a sharp sell-off in the previous session weighed heavily on the financial sector, with Commonwealth Bank of Australia rebounding after releasing its latest quarterly trading update.

CBA shares rose 0.3% to $154.19 after tumbling 10.4% on Wednesday in the bank’s biggest one-day decline on record. The recovery helped improve sentiment across the financial sector as investors reassessed the lender’s earnings outlook, balance sheet strength, and provisioning strategy amid growing macroeconomic uncertainty.

ANZ Group Holdings gained 0.3% to $34.67, while Westpac Banking Corporation edged 0.04% higher to $35.58 as broader banking stocks stabilised.

However, not all major lenders participated in the rebound, with National Australia Bank falling 1.4% to $36.34, making it the weakest performer among the big four banks during the session.

Stocks mentioned:

• Commonwealth Bank of Australia (ASX: CBA) rose 0.3% to $154.19
• ANZ Group Holdings Limited (ASX: ANZ) gained 0.3% to $34.67
• Westpac Banking Corporation (ASX: WBC) edged 0.04% higher to $35.58
• National Australia Bank (ASX: NAB) fell 1.4% to $36.34, making it the only major ASX bank stock to close lower during the session.

CBA trading update draws investor attention

The market reaction followed Commonwealth Bank’s ASX announcement for its third-quarter FY26 trading update, where the lender highlighted resilient earnings, strong deposit funding, and increased provisioning against future economic risks. CBA reported unaudited cash NPAT of approximately $2.7 billion for the quarter ended March 31, 2026, down 1% on the first-half quarterly average but 4% higher than the prior corresponding period.

The lender said revenue trends were largely steady in the quarter, with growth in loans and customer deposits helping balance the effect of a shorter trading period. At the same time, expenses moved higher due to increased spending on cloud infrastructure, software platforms, and ongoing artificial intelligence investments. CBA also warned that many Australian households and businesses continued facing pressure from elevated interest rates, rising energy prices, and geopolitical instability linked to ongoing Middle East conflict disruptions. The bank lifted its collective provisioning levels during the quarter as it prepared for rising macroeconomic and market-related risks. Importantly, the bank maintained a CET1 capital ratio of 11.6%, comfortably above APRA’s minimum regulatory requirement of 10.25%, reinforcing confidence in its balance sheet resilience.

Institutional activity remains in focus

Westpac also attracted attention after a substantial holder notice revealed State Street Corporation held voting power of 7.55% in the bank. The filing underscored ongoing institutional interest in major Australian lenders despite recent volatility in the sector. Investors are continuing to monitor funding conditions, asset quality, and interest-rate expectations as Australian banking stocks navigate an uncertain economic environment.

Outlook for ASX Banking Stocks

For ANZ Group Holdings, Westpac Banking Corporation, and National Australia Bank, future performance may depend on their ability to manage margin pressure, sustain lending growth, and navigate evolving economic conditions. NAB’s weaker performance during the session also highlighted lingering investor caution around the banking sector despite the broader rebound in financial stocks.

Note- All data presented is based on information available at the time of writing.

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