Major Australian bank stocks were mostly up, shortly after the Reserve Bank of Australia’s (RBA) decision to raise interest rates.
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Banks can make increased profits in a high rate environment by being able to charge higher interest on loans than the interest they pay on deposits.
The RBA announced a 0.5% interest rate hike this afternoon, marking the fifth consecutive monthly increase, and pushing the cash rate up to 2.35% from 1.85%.
The rake hikes are part of the Reserve Bank’s efforts to curb inflation. The RBA is seeking to bring down inflation to 2% to 3% over time.
Aussie bank movements, following the rate hike
The big four Australian banking stocks moved soon after the RBA announcement.
ANZ Bank (ASX:ANZ) shares rose almost 0.30% following the afternoon news.
National Australia Bank (ASX:NAB) and Commonwealth Bank of Australia (ASX:CBA) also saw gains, rising 0.26% and 0.11% respectively.
However, Westpac Banking Corporation (ASX:WBC) was down about 0.093% following the rate hike.
ANZ stands out among Aussie bank stocks
Among Australia’s big four banks, TipRanks insights are most favourable to ANZ Bank. According to TipRanks’ analyst rating consensus, ANZ stock is a Moderate Buy. The average ANZ price target of AU$25.66 implies over 13% upside potential.
ANZ scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Moreover, ANZ stock is a favourite bank stock for both insiders and financial bloggers. TipRanks’ Insider Trading Activity shows that Insider Confidence Signal is currently Very Positive, with corporate insiders purchasing $133,700 shares in the past three months.
ANZ stock is also gaining favourable mentions from financial blogs. TipRanks data shows that financial blogger opinions are 84% Bullish on ANZ, compared to a sector average of 69%.
Final thoughts
Although bank stocks like ANZ may benefit from higher interest rates, they are also face a greater number of loan defaults among those struggling under the tightened financial conditions.
