Analysts at Morgan Stanley expect shares of Australia's big four banks to be undervalued in 2026 against the backdrop of continued inflation and possible interest rate hikes. These Morgan Stanley analysts have observed that the price-earnings ratio of these banks has been re-valued by an average of six basis points since the end of 2023, which they say reflects the Bank of Australia's move to lower overnight loan interest rates. They told customers in a report that they believe this trend will reverse in 2026. They added that at the end of December, Commonwealth Bank of Australia's one-year forward price-earnings ratio was the highest of the four banks, 25.1 times. ANZ has the lowest price-earnings ratio of 14.7 times.

Analysts at Morgan Stanley expect shares of Australia's big four banks to be undervalued in 2026 against the backdrop of continued inflation and possible interest rate hikes. These Morgan Stanley analysts have observed that the price-earnings ratio of these banks has been re-valued by an average of six basis points since the end of 2023, which they say reflects the Bank of Australia's move to lower overnight loan interest rates. They told customers in a report that they believe this trend will reverse in 2026. They added that at the end of December, Commonwealth Bank of Australia's one-year forward price-earnings ratio was the highest of the four banks, 25.1 times. ANZ has the lowest price-earnings ratio of 14.7 times.