Macquarie: Interest rate expectations could be advantageous for Australian bank performance.

Macquarie analysts believe that the increase in interest rates in Australia has increased the possibility of the country's banking sector outperforming in the short term. They informed clients that recent significant changes in the pricing of overnight funding rates and swaps could potentially create upward pressure on profit margins. Increased competition may partially or fully offset this benefit, but these analysts still believe that major lending institutions face upside risks to outperforming average expectations in early 2026. However, this is not entirely good news for bank stocks. They warned that rising interest rates also indicate downside risks to valuation multiples and the popularity of the real estate market.