Why was the Westpac share price sold off in March?

The Westpac Banking Corp (ASX: WBC) share price was out of form in March.

Australia’s oldest bank’s shares lost almost 4% of their value during the month.

Why was the Westpac share price sold off last month?

The Westpac share price was caught up in a broad selloff in the banking sector last month after rising interest rates inadvertently caused the sudden collapse of a number of international banks.

Among the casualties were Silicon Valley Bank and Signature Bank in the United States and Credit Suisse in Europe.

And while the crisis has not spread to Australia, that didn’t stop investors from reducing their exposure to the big four banks and regional players.

But every cloud has a silver lining. That silver lining is that investors will be able to buy Westpac shares in April at a meaningful discount to what they would have paid a month earlier.

This is something that analysts at Goldman Sachs are recommending investors do.

Goldman says buy Westpac shares

In response to the banking crisis, Goldman has done a health check on the Australian banking sector and given it the all-clear. The broker commented:

We remain confident in the health of the banking sector in Australia given: i) a single, national regulator, with most of the Australian listed banks subject to the Liquidity Coverage Ratio (LCR), ii) balance sheet mix, which sees only a relatively small part of their balance sheets in a marked-to-market environment, iii) Australian bank regulatory capital positions are MTM for the impact of rate rises, and iv) strong capital positions, with fully-loaded CET1 ratios at close to 18%.

In light of this, the broker has reiterated its conviction buy rating and $27.74 price target on the bank’s shares. Based on the latest Westpac share price of $21.66, this implies potential upside of 28% over the next 12 months.

The post Why was the Westpac share price sold off in March? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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