In a recent report from UBS, stocks from ANZ Banking Group, Commonwealth Bank of Australia, Westpac Banking Corp and National Australia Bank ranked as the most expensive in the world.

However, stocks from these 'big four' remained attractive for the investors because of high dividends, the report said.

These banks had offered dividend yield of 5.6 per cent to investors, at par from the 3.4 per cent from British banks, 1.6 per cent from US banks and 3.1 per cent from global banks.

ANZ Banking Group, Commonwealth Bank of Australia and Westpac Banking Corp hit the records highs in the past months.

National Australia Bank, on the other hand, remained in its highest status quo in the last five years.

According to the UBS report, the big four are trading on a forecast price to earnings ratio of 14times as compared to Japan at 10.6 times, to Britan at 11.7 times, to US at 13.1 times, to Europe at 13.3 times and to all global banks at 11.1 times.

UBS had also upgraded stocks from the big four from "underweight" rating to "neutral" because of its strong balance sheets and the strong show of debts decline amid low interest rates.

"Reflecting our preference for - developed market banks over - emerging-market banks, we are overweight on banks in the US, Britain, the Nordic [countries] and France, and upgrade Australia to neutral from underweight. In contrast, we remain underweight in emerging [markets], being most cautious on banks in Brazil, India, Indonesia, South Africa and Turkey," the UBS reported.

"Rate cuts, and booming housing and commercial real estate markets are enabling the banks to clear residual non-performing loans at good prices, while new non-performing loans remain subdued. This should enable the banks to deliver another year of super low bad debt charges," according to the UBS.

Although UBS ranked Australia below banks from the US and Britain in terms of their appeal to international investors, Australia was way ahead as compared to the banks from emerging countries like Brazil and India.

"Within a domestic context, we are 'market-weight' [on] the Australian banks. Although the earnings growth outlook is subdued, earnings risk is relatively low, provided there are no systemic shocks. In absolute terms, the valuations of the Australian banks are stretched."