Australian Banks

Research evidence excerpt

Australian Banks

Macquarie Equity Research

17 July 2026

Banks

AustraliaAustralian Banks

Money Talks - The other side of the AI trade?

Carlos Victor

Key Points Cacho German

• Combination of internalisation and underwritten DRP drove domestic

buying of banks ($2.7bn) despite the housing downturn

• Domestic institutions bough CBA ($1bn), NAB ($1.3bn) and WBC JasonShao, CFA

($0.5bn) while offshore bought CBA ($1.3bn) and NAB ($0.8bn)

• Banks appear to be a funding leg of the AI trade, with short-interest

(and performance) rising and falling with the KOSPI Figure 1 - Change in short interest

and shareholder profile

Short

Interest• Internalisation and DRP drives large bank buying: Despite the sharp Bank Retail Domestic Offshore

deterioration in the housing market and lending (see No country for ANZ

new landlords), institutional investors were net buyers of the banks over

the quarter. NAB saw the largest net buying, but this was partly due to CBA

its ~$1.8bn underwritten DRP. Adjusting for the proportional uptake

of the DRP, NAB still saw notable, but more modest, buying. Domestic

institutions were also large net buyers of CBA and WBC. However, NAB

based on separate (albeit lagged) ABS data, we think this buying partly

reflects transitions of investments from external managers to internal/ WBC

passive strategies (in March, super funds bought ~$2.1bn of banks, while

domestic investors sold ~$1.8bn). With evidence of a material housing Source: Company data, FactSet, IRESS, MRE, July 2026

and lending slowdown continuing to build, we remain negative on the

Figure 2 - Net buying/selling by

banks and expect the sector to underperform. institutional investors

%• Following the flows:

Þ Domestic: Domestic institutions saw meaningful net buying of 3.53.0

major bank shares (~$2.7bn).