Macquarie has downgraded its rating on Australian banks to ‘underweight’, citing cost pressures due to rising expenses.

The brokerage anticipates cost growth to be 1-5% above the consensus estimate of a 2-3% increase for the financial years 2024-2025, driven by escalating wage costs.

Staff costs reportedly constitute around 55% of bank expenses.

Earnings estimates for ANZ Group Holdings (ASX:ANZ), CBA (ASX:CBA) and NAB (ASX:NAB) have been cut by approximately 1% each, projected through to FY25.

Westpac Banking Corp (ASX:WBC), however, is the exception with a lower expense forecast.

Macquarie has also lowered recommendations on regional lenders Bendigo and Adelaide Bank (ASX:BEN) and Bank of Queensland (ASX:BOQ) to ‘underperform’ from ‘neutral’.

Among the ‘big four’ banks, so far this year ANZ has seen a rise of 5.9%, while CBA, NAB and WBC shares have fallen 2.5%, 4.4% and 10.1% respectively.

Macquarie Group is a global financial services firm providing banking, financial advisory, investment and funds management services.