Sell alert! Why this expert is calling time on Westpac shares

Westpac Banking Corp (ASX: WBC) shares are outperforming today.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $38.22. In early afternoon trade on Thursday, shares are changing hands for $38.44 apiece, up 0.6%.

For some context, the ASX 200 is down 0.2% at this same time.

Taking a step back, Westpac shares have gained 17.1% over the past 12 months, outpacing the 6.6% one-year gains posted by the benchmark index.

Atop those capital gains, Westpac paid out two fully franked dividends totalling $1.53 a share over the full year. The ASX 200 bank stock trades on a fully franked trailing dividend yield of 4.0%.

While you’re unlikely to hear investors who bought the stock 12 months ago complaining, Westpac has had a more difficult run in 2026.

Year to date, the Westpac share price is down 1.3%, trailing the 0.7% losses posted by the ASX 200 over this same period.

And looking ahead, Morgans’ Damien Nguyen foresees more potential headwinds for the big four Aussie bank (courtesy of The Bull).

Westpac shares facing growth challenge

“Westpac has made progress simplifying its business, but returns continue to lag peers,” said Nguyen, who has a sell recommendation on Westpac shares.

According to Nguyen:

Growing revenue is a challenge in a competitive and mature banking market, while execution risk persists. Cost control and balance sheet strength offer some support, but growth drivers are limited in a slowing credit environment. The valuation doesn’t offer a clear margin of safety given these challenges.

With a nod to Westpac’s solid dividend record, Nguyen concluded, “Income may appeal to some investors.”

What’s the latest from the ASX 200 bank stock?

Westpac released its first quarter (Q1 FY 2026) results on 13 February.

Highlights included a statutory net profit of $1.9 billion, up 5% on second half FY 2025 average.

The quarter also saw Westpac reported deposit growth of $12 billion and lending growth of $22 billion.

Commenting on the bank’s performance and outlook, CEO Anthony Miller said:

We are optimistic on the outlook for the economy and expect demand for both business and household credit to remain resilient. Our strong financial foundations provide us with the stability and capacity to support our people, customers, shareholders and the broader economy.

Westpac shares closed down 1.2% on the day of the Q1 results release.

The bank is scheduled to report its half year results on 5 May.