The Big Four banks after the interest rate hike

Following the February policy meeting, the RBA raised interest rates to 3.85% and the big 4 banks are set to hike to their variable loan interest rates soon which should boost profitability.

Commonwealth Bank of Australia (ASX: CBA) 

has surged over 7% in the past one week after the RBA rate hike and it has a dominant position in Australian home lending and business banking.

The bank said that new variable home loan rate changes will take effect from February 13 which will help to deliver strong returns on equity compared to peers.

This scale allows the bank to generate consistent profits even when economic conditions become difficult.

The current annual dividend yield stands at 3.03% and unaudited cash NPAT for the September 2025 quarter came in at $2.6 billion while total operating income rose by 3% year-on-year.

Customer momentum remained strong as more than 175,000 new retail transaction accounts were added during the quarter and deposits grew by $17.8 billion while business banking also improved with transaction accounts up 7% year-on-year.

Westpac Banking Corporation (ASX: WBC) 

has surged 3% over the past one week and also announced that new variable home loan rate changes will take effect from 17 February

The bank’s New Zealand banking group reported net profit attributable to owners of $1.24 billion for the year ended 30 September 2025 supported by stable net interest income of $2.90 billion and strict cost control.

Westpac offers a current annual dividend yield of 3.83% which appeals to income-focused investors who want exposure to a major Australian bank.
Total assets rose to $140.8 billion while deposits and other borrowings increased to $82.8 billion and the current market cap is $136.80 billion.

The capital and liquidity position remains strong which gives Westpac flexibility to meet regulatory needs and supports lending across key segments.

National Australia Bank Limited (ASX: NAB) 

has risen by around 7% over the past one month as improved sentiment around major banks and resilient earnings supported the share price.
For FY25, NAB reported cash earnings of $7.09 billion which shows largely stable profitability despite higher operating costs and a more difficult credit environment.

The bank also announced that new variable home loan rate changes will take effect from February 13 while capital strength remains a key pillar with a CET1 ratio of 11.70% which sits comfortably above regulatory requirements and provides balance sheet flexibility.
Management continues to focus on technology and expansion in higher return areas such as business banking and home lending.

NAB expects steady credit growth, stable margins and disciplined capital management to support shareholder returns as economic conditions gradually normalise.

Australia and New Zealand Banking Group Limited (ASX: ANZ) 

has surged 5.5% over the past one month and the bank said that new variable home loan rate changes will take effect from February 13.

ANZ reported a statutory profit of around $6.03 billion for FY2025 which is lower than $6.59 billion in the previous year and cash profit came in at about $5.93 billion which is down roughly 13% year-on-year.

Operating costs rose 19% to $12.7 billion due to the Suncorp Bank acquisition, restructuring charges of $579 million and a one-time ASIC settlement of $271 million.

The current annual yield is 4.41% and net interest income increased 12% to $17.9 billion while the net interest margin eased by 3 basis points to 1.54% and ANZ maintained solid capital strength with a Common Equity Tier 1 ratio of 12%.

The Suncorp Bank acquisition adds scale to ANZ’s retail and commercial banking footprint in Australia and management expects FY2026 to focus on stability and execution with steady loan growth across housing and business segments.

(Source: Company Reports)