Forget CBA shares, this bank is going to outperform

This bank is the one to buy according to Bell Potter.

| More on:
A woman wearing a yellow shirt smiles as she checks her phone.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

The big four banks have released their latest updates this month, revealing how they are tracking in 2025.

While the results were largely well-received, that doesn't necessarily mean that investors should be backing up the truck.

In fact, one leading broker thinks that investors should be staying clear of the big four and has named an alternative for them to buy.

Which ASX bank stock is a buy?

Bell Potter has been running the rule over the banking sector and given its verdict on Commonwealth Bank of Australia (ASX: CBA) and the big four. It said:

Post the 1H25 bank reporting season, we continue to be underweight the banks. Persistent Net Interest Margin (NIM) headwinds, elevated and ongoing cost pressures, and intensifying competition, particularly as the battleground shifts towards business and institutional banking, collectively paint a challenging picture.

Stretched valuations, especially for CBA, and a muted earnings growth outlook, keep us cautious the sector. On a relative valuation basis, ANZ, NAB and WBC are broadly preferred over CBA.

And while the broker acknowledges that CBA is a quality bank, it just doesn't think its shares deserve such a premium valuation. It adds:

While CBA's quality is undeniable, again highlighted in its 3Q25 update where they delivered in-line results giving the market no reason to sell the stock, the significant premium at which it currently trades relative to its own history, and its peers is difficult to justify.

Instead of the big four, Bell Potter thinks that Macquarie Group Ltd (ASX: MQG) is where investors should be looking to invest.

Why Macquarie?

The broker has named a number of reasons why it thinks Macquarie shares are the best option for Aussie investors right now. This includes its multiple growth drivers and potential for its shares to outperform the big four banks from here. It explains:

Looking more broadly within the financial sector, our preference is MQG over the traditional domestic banks. MQG offers a diversified global business model with multiple growth drivers. Its balance sheet flexibility is set to be enhanced upon the completion of its exit from international public markets businesses, providing capacity for both organic and inorganic growth optionality.

While MQG's recent FY25 result did lead to downward revisions in consensus earnings expectations, we view the current estimates as more achievable. Despite a strong share price performance since its results, we believe there is still potential for upside, and critically, we expect MQG to outperform the traditional banks on a relative basis from here.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Opinions

Where I'd invest $5,000 into ASX shares today

I’m excited by what these stocks can achieve.

Read more »

Broker looking at the share price.
Share Market News

5 things to watch on the ASX 200 on Monday

It could be a tough start to the week for Aussie investors.

Read more »

Business man at desk looking out window with his arms behind his head at a view of the city and stock trends overlay.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A Santos oil and gas worker wearing a hard hat stands in a yellow field looking at blueprints with an oil rig and blue sky in the background
Share Market News

Energy shares rip amid Middle East tensions while ASX 200 surges 20% from April low

ASX energy shares roared 6.49% higher while the ASX 200 lifted 0.37% and set a new record last week.

Read more »

A young man wearing a black and white striped t-shirt looks surprised.
Broker Notes

These ASX 200 shares could rise 25% to 80%

Analysts think big returns could be on offer from these shares.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors were nervous this Friday, ending the week on a sour note.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Market News

Where to invest $5,000 into ASX 200 shares this month

The team at Bell Potter is bullish on these names. But why?

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
52-Week Highs

8 ASX 200 shares hitting multi-year highs today

These shares have defied the trend, hitting new price milestones amid a day in the red for the ASX 200.

Read more »