Which are the best bank stocks to buy in Australia? [2025]

Which Big 4 bank stock is performing best in Australia?

Australia's banking sector is dominated by the Big Four banks. Commonwealth Bank, Westpac Banking Corp, National Australia Bank Ltd and ANZ Group are major players for retail and business customers in the country.

Bank stocks have performed well over the past year given high interest rates. The S&P/ASX 200 Banks Index is up 18% over the last 12 months. Commonwealth Bank has been the standout performer with a gain of 32%. $CBA has benefitted from its strong retail and business banking market shares. Earnings updates in February raised concerns that banks are enduring a margin squeeze, this prompted a pullback. 

However, many investors are focused on the dividends paid out by the Big Four banks, rather than capital growth. These regular, high dividend payments mean they're still a popular choice for ASX investors despite largely negative share price performances.

Watch these ASX-listed bank shares in 2025

Data as of 21 February 2025. Source: Stake, Google.

*The list of bank stocks mentioned are ranked by market capitalisation. When deciding what stocks to feature, we analyse the company's financials, recent news and earnings, upcoming dividends, and whether or not they are actively traded on Stake.

Decide which Australian banking stock to add to your watchlist

1. Commonwealth Bank of Australia ($CBA)

• 18,593 Stake customers watching
• 17,736 orders executed on Stake

Commonwealth Bank of Australia ($CBA) is the largest banking stock in the nation, with a market cap more than double its nearest competitor as of February 2025. Commonwealth’s H1 cash profit increased 2% YoY to $5.13b. CBA held a 34.6% share of the retail banking market in H1 2025. It has 11.4m retail transaction accounts. CBA is Australia’s largest home lender with a 24.6% share of the market. Home loans grew 6% YoY to $584b in H1 FY25. 

The bank is also a large lender to businesses. Around 26% of businesses have a Commonwealth account. It has 1.3m business accounts. Business lending grew 12% YoY to $152b in H1 FY25.

CBA is making additional investments to further enhance its AI capabilities and data infrastructure. The bank targets a dividend payout ratio of 70%-80%.

🆚 Compare CBA vs NAB stock comparison→

2. National Australia Bank Ltd ($NAB)

• 9,217 Stake customers watching
• 10,277 orders executed on Stake

National Australia Bank ($NAB) was formed in 1982 through the merger of the National Bank of Australasia and the Commercial Banking Company of Sydney. NAB is known for its relatively high exposure to business banking and lower levels of residential mortgages compared to the other Big Four.  

Q1 cash earnings fell 2% to $1.74b, but the bank noted a ‘small decline’ in net interest margin with drags from funding costs, lending competition and deposits, partially offset by the benefits of a higher interest rate environment. Business lending balances rose 2% including 1% growth in small and medium-sized business lending.

Andrew Irvine became CEO in April 2024, taking over from Ross McEwan who lead the company for 4 years.

🆚 Compare NAB vs ANZ stock comparison→

3. Westpac Banking Corp ($WBC)

• 187,251 Stake customers watching
• 16,613 orders executed on Stake

Westpac Banking Corporation ($WBC) began its journey as the Bank of New South Wales in 1917 and is considered the country's oldest bank. Anthony Miller became the CEO in December 2024 after having run the bank’s wealth and business division. He replaced Peter King who simplified the bank’s structure and implemented the UNITE technology overhaul in his five years as CEO.

Westpac’s Q1 net profit fell (9% to $1.7b, with revenue down 4%. Core net interest margin fell to 1.81%, down 2 basis points. The net interest margin (NIM) decline reflected ongoing mortgage competition and further deposit mix shift towards lower spread savings and term deposits. Higher earnings on capital and hedged deposits partly offset these impacts.

4. Macquarie Group Limited ($MQG)

• 7,802 Stake customers watching
• 11,372 orders executed on Stake

Known as the millionaire's factory, Macquarie is a diversified financial group with four operating divisions: Macquarie Asset Management, Banking and Financial Services (BFS), Commodities and Global Markets and Macquarie Capital. Net profit after tax (NPAT) for the nine months to 31 December 2024 was ‘broadly in line’ with the nine months to 31 December 2023. 

Macquarie's annuity-style businesses – Macquarie Asset Management and Banking and Financial Services – combined December 2024 quarter profit contribution was substantially up on the prior corresponding period, mainly due to continued volume growth in BFS. Macquarie's markets-facing businesses – Commodities and Global Markets and Macquarie Capital – combined 3Q25 net profit contribution was substantially down on the prior corresponding period, mainly due to subdued conditions in certain commodity markets.

5. Australia and New Zealand Banking Group ($ANZ)

• 9,864 Stake customers watching
• 12,916 orders executed on Stake

Australia and New Zealand Banking Group ($ANZ) can trace its history back to 1828, with the opening of the Cornwall Bank in Launceston, Tasmania.

Nuno Matos will become the new CEO in July and joins the bank from HSBC, where he was the CEO of Wealth and Personal Banking.

ANZ’s Q1 customer deposits rose 2%, while lending rose 4%. Higher lending was driven by its institutional bank, where loans increased 13% to $238 billion. Gross impaired loans had increased by $200 million to $1.9 billion. ANZ provided no guidance on its net interest margin.  

6. Bendigo and Adelaide Bank Limited ($BEN)

• 2,276 Stake customers watching
• 2,933 orders executed on Stake

Bendigo and Adelaide Bank can trace its history back to the Victorian gold fields in 1858. Bendigo Bank and Adelaide Bank merged in 2007. Retail banking is the largest segment, but it also lends to business and agribusiness. It has 2.7m customers. 

Bendigo and Adelaide Bank H1 cash profits fell 1.1% to $265.2 million, or 9.7% down on the previous half. Net interest margin fell 6 basis points to 1.88%. The decline in net interest margin came after strong lending through mortgage brokers forced the bank to increase funding from the capital markets. Home lending growth was twice the pace of the financial system in H1. Residential lending grew 5.3% from the prior half to $65.2m.

7. Bank of Queensland ($BOQ)

• 2,395 Stake customers watching
• 4,938 orders executed on Stake

Bank of Queensland ($BOQ) was founded in 1874 and is one of Australia's leading regional banks with 140 branches across the country, with retail and business banking services.

BoQ acquired ME Bank in 2021 and Virgin Money Australia in 2013 and recently has been restructuring its business to lower costs. The bank will reacquire 114 owner-managed branch outlets and convert them to corporate BoQ branches at a cost of up to $125m.

It will sack up to 400 full-time staff at a cost of nearly $35m. FY24 cash net profit fell 24% to $343m.

8. BSP Financial Group Limited ($BFL)

• 350 Stake customers watching
• 252 orders executed on Stake

BSP has the largest branch network in Papua New Guinea, Cook Islands, Fiji, Solomon Islands, Samoa, Tonga and Vanuatu. The Bank commenced operations in Port Moresby on 1 May 1957.

The Papua New Guinea-based banks reported a FY24 net profit after tax of K1.038 billion ($408m), a 17% increase compared to FY23. Profit growth was driven by a strong lift in volumes and revenue in nearly all its businesses.

9. Judo Capital Holdings ($JDO)

• 679 Stake customers watching
• 1,673 orders executed on Stake

Judo Capital was founded in 2016 and is focused on lending to small and medium-sized companies. It operates in 26 locations nationally after opening in five more regions during the H1 FY25. The lender expects to open another five locations by the end of FY25. 

H1 underlying profit before tax was up 33% to $56.7m, supported by growth in its loan book and cost management. Net interest margin of 2.81% was in line with guidance. Judo upgraded 2H FY25 and FY25 net interest margin guidance to the top end of its previously provided range of 2.80%-2.90%, supported by strong lending margins.

10. MyState Limited ($MYS)

• 170 Stake customers watching
• 320 orders executed on Stake

MyState completed a merger with Austwide Bank in February, giving the Hobart-based bank greater exposure to the eastern states, particularly Queensland. The combined group has 272,000 customers, $12.7b in home lending and $9.9b in customer deposits, with 23 branches. The merger is expected to deliver pre-tax cost synergies of between $20m-$25m a year by the end of FY27.

The underlying net profit of the merged group would have been $22.9m in H1 FY25, with a net interest margin of 1.46%. About one-third of its home loans are in Queensland, followed by 21% in Victoria and 20% in Tasmania.

What are the benefits of buying bank shares?

Some see bank shares as a relatively stable option that provides regular dividends payouts to shareholders. Some ASX bank shares are well known brands and seen as integral to upholding the nation's financial system. They could see extensive government support in the case of a crisis in order to maintain the system’s stability.

Investors might want to look at the net interest margin of banks. This compares the total interest a bank generates from credit products like loans and mortgages, with how much it pays in outgoing interest, for offers like savings accounts. Banks tend to adjust lending rates in line with RBA decisions, while the figures for savings and term deposits tend to lag.

This can help support their revenues in an environment with rising interest rates.

However, some borrowers could struggle with repayments in this situation. Investors can also check whether bad debts are rising, with declining or delayed payments potentially becoming a larger problem for a bank. Lower interest rates can squeeze margins, especially if there is an increase in mortgage lending competition as rates fall.

Which Australian bank stocks pay the best dividends?

Bank of Queensland and Bendigo, ANZ and Adelaide Bank offer dividend yields over 5% as at 21 February 2025. NAB and Westpac offer dividend yields above 4%.

💡Related: Looking for other ASX dividend stocks?→

💡Related: Top 10 Dividend ETFs in Australia→

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This article was written by Robert Guy - Senior Markets Writer at Stake.

Disclaimer

The information contained above does not constitute financial product advice nor a recommendation to invest in any of the securities listed. Past performance is not a reliable indicator of future performance. When you invest, your capital is at risk. You should consider your own investment objectives, financial situation and particular needs. The value of your investments can go down as well as up and you may receive back less than your original investment. As always, do your own research and consider seeking appropriate financial advice before investing.

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