The banking sector was a great place to be invested in 2021, with the majority of the big four banks outperforming the market.
But which ASX 200 bank shares performed best? Here are the top five performers from 2021:
Macquarie Group Ltd (ASX: MQG)
The Macquarie share price was the best performing ASX 200 bank with a gain of 48% in 2021. A key driver of this was the investment bank's first half results for FY 2022. Those results revealed a whopping 107% jump in first half profit to $2,043 million. Particularly strong performances from its Commodities and Global Markets (CGM) and Macquarie Capital businesses underpinned this stellar result.
National Australia Bank Ltd (ASX: NAB)
The NAB share price was some way behind as the next best performer with a gain of 27.6%. This banking giant's shares were in demand with investors after it returned to form in FY 2021. In addition, due to its overweight exposure to business and commercial banking, it has some level of protection from the margin pressures being caused by aggressive home loan competition.
Commonwealth Bank of Australia (ASX: CBA)
The CBA share price was on form and charged 23% higher over the 12 months. This was despite a blip at the end of the year following the release of a weaker than expected first quarter update. While CBA's margins are being impacted by the aforementioned increase in competition for home loans, it wasn't enough to put investors off. This is despite a number of brokers calling its shares overvalued.
Australia and New Zealand Banking GrpLtd (ASX: ANZ)
The ANZ share price wasn't far behind with a 21.2% gain in 2021. As with NAB, ANZ returned to form in FY 2021 and deliver strong profit growth. In addition, the bank appears relatively well-placed in FY 2022 thanks to its strong business banking franchise.
Westpac Banking Corp (ASX: WBC)
The Westpac share price rounds out the top five after outperforming the regionals with its 10.2% gain. Australia's oldest bank was the worst performer of the big four due to concerns over its margin outlook and cost cutting plans. In respect to the latter, there are doubts that Westpac will be able to meet its cost base reduction target of $8 billion by FY 2024. However, Morgans believes it can achieve this and sees 2021's underperformance as a buying opportunity in 2022.
