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Why this ASX 200 bank stock could face a hard slog in 2025

Up 44% in a year, should I sell this ASX 200 bank share today?

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The S&P/ASX 200 Index (ASX: XJO) and banking stocks Bendigo and Adelaide Bank Ltd (ASX: BEN) are in the red today.

Bendigo Bank shares closed at $13.46 yesterday. In afternoon trading, the stock was trading at $13.26 per share, down 1.52%.

Specifically, the ASX 200 index fell 0.58 during the same period.

But it wasn’t just Bendigo Bank shares that were underperforming today.

Here’s how the big four ASX 200 banks performed on Tuesday:

  • Commonwealth Bank of Australia (ASX: CBA) share price fell 1.81%
  • Australia and New Zealand Banking Group Holdings Ltd (ASX: ANZ) share price fell 1.57%
  • National Australia Bank Ltd (ASX: NAB) share price fell 2.45%
  • Westpac Banking Corp (ASX: WBC) share price fell 2.05%

All major Australian banks were affected today by China’s Politburo meeting on Monday.

Why?

Well, President Xi Jinping’s government is signaling significant new stimulus measures in 2025. With iron ore and copper prices rising and sentiment improving in the new year, investors have piled into ASX 200 mining stocks such as BHP Group Ltd (ASX: BHP.

Now, as more money pours into Australia’s big mining companies, some of that cash is being pulled out of ASX 200 bank stocks.

Despite today’s pullback, Bendigo Bank has still posted huge gains over the past 12 months.

As the chart above shows, the Bendigo Bank share price has surged 44% since this time last year. In addition to these capital gains, the stock has a fully franked dividend yield of 4.8%.

That puts it in the top half of the best performing ASX 200 banking stocks for the year.

However, Catapult Wealth’s Dylan Evans believes the regional bank could face more challenging times in 2025 (courtesy of Bull).

Time to sell this ASX 200 bank stock?

“Lack of scale and higher costs make it difficult for Bendigo Bank to compete with the major banks on interest rates without sacrificing margins,” said Evans, who has a sell rating on the ASX 200 bank stocks. “As a result, regional banks, including Bendigo Bank, are likely to see lower profits in the long term.”

Mr Evans said Bendigo Bank’s 2024 financial year results raised some warnings:

The statutory net profit after tax in fiscal year 2024 increased by 9.7% compared with the same period last year, but the cash income after tax decreased by 2.6%. The net interest margin was 1.9%, a decrease of 4 basis points, and the cash return on equity decreased by 44 basis points.

Mr Evans said Australia’s big four banks – Commonwealth Bank, ANZ, NAB and Westpac – were likely to outperform Bendigo Bank by 2025.

“We believe that the major banks will have greater earnings potential than Bendigo Bank in the future,” he said.

Motley Fool contributor Bernd Struben does not own any of the stocks mentioned. Motley Fool Australia’s parent company, Motley Fool Holdings Inc., does not own any of the stocks mentioned. Motley Fool Australia owns shares in Bendigo And Adelaide Bank and recommends the bank. Motley Fool has a disclosure policy. This article contains general investment advice only (AFSL 400691). Authorised by Scott Phillips.

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