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.
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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.
