ASX bank shares have benefited from higher interest rates because of the higher earnings on products with no interest, such as transaction accounts. What will happen as the RBA cuts rates? Investment bank Macquarie has given its thoughts on the situation.

There's a lot going on in the financial world, predominately with the US putting tariffs on a lot of goods from most countries.

Macquarie thinks that direct impacts from US tariffs on Australia are small, of less than 0.1% of GDP, though indirect impacts are uncertain and "potentially more significant". The effects will depend on the impact on trading partners and whether stimulus can offset the headwinds.

The most likely problem could be lower commodity prices, reduced business investment and a potential hit to consumer confidence.

However, on the positive side, export re-direction could "see more goods deflation, giving the RBA more room to ease rates."

Which ASX bank shares could be hurt the most?

Macquarie noted that since US tariffs were announced on 2 April 2025, banks have performed "broadly in-line" with the market. This, along with investor feedback, suggests "the banks are being seen as a safe haven from tariffs, at least in the short-term."

But, the investment bank sees risks in the medium-term because of downside risks to earnings and "stretched valuations", particularly for Commonwealth Bank of Australia (ASX: CBA).

Macquarie thinks there is a risk if there are multiple rate cuts because of how that could impact bank's margins. Volume demand could also be impacted because there is "likely to be downside risk to business credit growth, albeit upside to housing credit given lower rates and increased borrowing capacities."

In terms of the ASX bank shares, CBA and Westpac Banking Corp (ASX: WBC) are more exposed to lower rates, according to Macquarie, with "meaningful risk" to the margin. Those banks are seen as having a larger allocation to mortgages than ANZ Group Holdings Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).

However, if an economic slowdown is worse than expected, bad and doubtful debts could rise, or at least become a concern for the market. In that case, Macquarie suggested NAB and ANZ could underperform because of their higher exposure to business lending.

Macquarie pointed out that most analysts are only forecasting a minor decline in the profit margins from FY25 to FY27 and low impairment charges too. The investment bank sees risk with the market's optimistic forecasts. Let's see what happens.