Macquarie cuts Australian bank revenue forecasts

Macquarie has lowered its revenue projections for Australian banks by 1-2% for the fiscal year 2027, following weaker-than-expected bank results in August 2026. The banks' revenues generally fell below consensus estimates by 0-2%, although lower costs helped mitigate some of the shortfall. Only Commonwealth Bank managed to meet expectations with an in-line underlying result, while other banks failed to meet consensus pre-provision operating profit projections by 1-2%.

Despite tailwinds from rate hikes and replicating portfolios, underlying margins improved but fell short of market expectations. Macquarie reduced its fiscal 2027 pre-provision operating profit estimates by 0-3%. ANZ outperformed expectations when excluding one-off items and market income, while Westpac suffered the largest shortfall against consensus.

Mortgage applications have dropped by 12-20% across all banks since the budget, with investor applications decreasing by 17-28%. Industry feedback suggests the slowdown will likely persist through 2026. Macquarie anticipates credit growth to decelerate to around 3.5% and projects margins to decline by 3-5 basis points in fiscal 2027, as tailwinds from replicating portfolios moderate from 2-8 basis points in fiscal 2026 to 3-4 basis points in fiscal 2027.

Macquarie maintains an underweight outlook on the sector and recommends ANZ and National Australia Bank over Commonwealth Bank and Westpac.