Westpac Banking Corp (ASX: WBC) shares have been under pressure, falling around 9% over the past 12 months. At the current share price of $34.91, the $117 billion ASX bank stock is trading close to its 52-week low.
The pullback has made the valuation more appealing, but is it enough to make Westpac shares a buy? Let’s see what the experts think.
Solid financial results, but…
Westpac is certainly not a bad bank. It has millions of customers, a huge deposit base, and is one of Australia’s largest mortgage businesses. It is also investing in improving its technology and strengthening areas such as business banking.
The latest quarterly profit itself was reasonably solid. Westpac shares reported $1.8 billion of net profit excluding notable items, up 2% compared with the first-half quarterly average. Net interest margin was also steady at 1.89%.
However, there are some warning signs beneath the surface. Mortgage application volumes declined as competition intensified and borrowers continued to navigate interest-rate uncertainty. Westpac also expects margins to come under further pressure in the near term.
For a major bank whose profitability is heavily influenced by lending margins, that’s not exactly music to shareholders’ ears.
Westpac’s investor presentation showed mortgage applications slowing noticeably. Average monthly applications were around 29,000 during the third quarter, with the post-budget run rate dropping further to approximately 26,000.
That’s important because home lending is a huge part of Westpac’s business.
Concerns about the growth outlook
There is an upside for investors, though. Westpac shares trade at a lower price-to-earnings ratio than Commonwealth Bank of Australia (ASX: CBA) and offer a higher dividend yield. That could appeal to investors who prioritise income or want to pay a lower multiple for a major Australian bank.
The market’s hesitation appears to centre on the growth outlook. The key question is whether slowing lending growth and margin pressure can be offset by continued cost discipline and strong credit quality.
Westpac expects the operating environment to remain highly competitive, particularly in mortgages. Management will also be watching consumer spending, credit risks and regulatory changes closely.
What do analysts think?
TradingView data shows nine of 16 brokers rate Westpac shares as sell or strong sell, while six have a hold rating and just one has a strong buy rating. The average price target is $33.38, below the current share price.
The team at Red Leaf recently named Westpac shares as a sell. It highlights the increasingly competitive environment as a reason for caution, particularly given Westpac’s valuation. Red Leaf commented:
The bank remains well capitalised and continues to generate solid earnings, but the operating environment is becoming increasingly competitive. Mortgage pricing is aggressive, deposit competition remains intense and the scope for sustained margin expansion appears limited. Westpac’s dividend remains attractive, but investors should also consider opportunity cost. We believe there are more compelling opportunities on the ASX, which offer stronger structural growth or more attractive valuations.
Foolish takeaway
For income-focused investors, Westpac’s dividend and lower valuation could make the recent weakness in the share price interesting.
But with mortgage competition intensifying and margins under pressure, the case for buying the dip isn’t quite as clear-cut as the cheaper share price might suggest.
The post Westpac shares are under pressure: Is it time to buy the dip? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Westpac Banking Corporation right now?
Before you buy Westpac Banking Corporation shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Westpac Banking Corporation wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 1 August 2026
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- A broker just put a sell rating on CBA shares. Is Australia’s biggest bank finally too expensive?
- Australia’s economy just grew faster than expected. What does this mean for ASX shares?
- Down 12% in a month: Is the rally finally over for CBA shares?
- How much is needed in superannuation for $1,500 in weekly passive income?
- How to earn $10,000 in passive income a month with these ASX dividend shares
Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.