ASX 200 Outlook: Record Bank Profits Mask a Brutal Reporting Season for Tech and Healthcare

Australia's February reporting season is delivering one of the most polarised sets of results in recent memory. The Big Four banks are posting record profits and lifting dividends. Meanwhile, the technology and healthcare sectors have suffered double-digit sell-offs that have wiped billions from the market.

The ASX 200 briefly pushed back above 9,000 this week, coming within 10 points of its all-time high, before retreating sharply as global tech fears intensified. That swing captures the tension running through this reporting season and raises questions about what the ASX 200 outlook really looks like beneath the surface.

Record Bank Earnings Are Carrying the Index

Financials have been doing the heavy lifting. Commonwealth Bank reported record first-half cash earnings of A$5.45 billion, roughly A$200 million above expectations, and declared an interim dividend of A$2.35 per share, beating the A$2.31 consensus. CBA shares surged 6.8%, the strongest one-day gain since March 2020.

ANZ delivered a 6% increase in first-quarter cash profit, sending shares up 8.7% to a record high. Westpac hit a new record after reporting a 2% rise in net interest income, supported by A$22 billion in new lending. National Australia Bank reports next week, keeping the market's attention firmly on the banking sector.

The driver is straightforward. The RBA's February rate hike to 3.85% has widened net interest margins, particularly for lenders with large low-cost deposit bases. With inflation still at 3.8% and the RBA flagging that further tightening remains possible, this margin tailwind may persist through 2026.

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Tech and Healthcare: A Very Different Story

While banks celebrate, ASX tech stocks have declined more than 23% over the past month. Fears that AI will disrupt incumbent software businesses accelerated after Anthropic launched tools targeting legal, finance, and analytics workflows. JP Morgan called the sell-off "indiscriminate", while Goldman Sachs warned the disruption could mirror what the internet did to newspapers.

WiseTech Global plunged 13.3% in a single session to a four-year low. Pro Medicus cratered 22.7% despite record results, with revenue up 28.4% and EBIT up 30%, simply because it missed elevated expectations.

Healthcare fared even worse in some cases. CSL has fallen more than 17% since announcing the sudden departure of its CEO and reporting an 81% decline in half-year net profit to US$401 million, driven by one-off restructuring costs and asset impairments. At around A$150, CSL is now trading at an eight-year low. Temple and Webster crashed 31.8% despite 20% revenue growth, as margin compression spooked investors.

The pattern is clear: in a market where the RBA is tightening, companies priced for perfection are being punished for any miss. Reasonably valued businesses with strong cash flows, like the banks, are being rewarded.

What This Means for the ASX 200 Outlook

This reporting season is reinforcing several themes likely to shape the rest of 2026.

Concentration risk is real. The Big Four banks account for over 20% of the ASX 200 by market capitalisation. When they rally, and tech sells off simultaneously, the index can look healthier than the average portfolio actually is.

Valuation discipline is back. The ASX 200 trades at a P/E of 27.8x, above its three-year average of 24.9x. At that premium, the market is leaving little room for earnings misses. Investors are paying for delivery, not promises.

Sector rotation is accelerating. Capital is flowing out of growth and into value and income. Resources and small-cap stocks have quietly reclaimed attention as blue-chip premiums widened.

For investors looking to navigate this divided market with data-driven research, ASR's Investing Report covers both growth and value opportunities across the ASX, including the stocks best positioned as this reporting season reshapes market leadership.

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