The surge in bank shares – especially Commonwealth Bank and Westpac – took investors by surprise in 2024 given already lofty valuations, restrained lending growth and concerns around higher bad debts as borrowers struggled amid a cost-of-living crisis.

Bank stocks, which were lumbered with sell ratings from brokers, became the pain trade for those who took the analysts’ advice: the sector had one of its strongest years on the bourse, wrong-footing the market and beating the ASX 200 by 24 per cent.