Westpac Banking Corp (ASX: WBC) shares have fallen almost 24% in just 12 months.

Look away now if you own shares…

Source: Google Finance

Source: Google Finance

The above graph starts at a time when the Westpac share price was almost $40 (it reached an all-time higher of $39.75, last year) and was arguably ripe for a setback.

In early 2015, fears of a slowdown in China were finally beginning to emerge and investors were scrambling for the exits of richly-priced bank shares like Westpac, Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB).

Then came changes to the amount which the four major banks must hold against mortgages, another decision by APRA to lift the banks’ capital buffers (which led to Westpac raising $3.5 billion of new capital) and a slowing of property market growth.

So after all that it’s easy to see why the Westpac share price has fallen so quickly.

The concern now, however, is whether or not the worst is yet to come. We’ve seen the ANZ share price continue to fall hard in recent months as a slowdown in the resources sector impacts credit quality. This is likely to affect all major banks.

Foolish takeaway

It’d be just educated speculation to suggest the banking sector may be at a turning point. Indeed, bank shares are cyclical (like their profits after them). Obviously – the sharemarket is now pricing in less growth for Westpac.

Therefore, it’s now more important than ever to maintain a diversified portfolio. Start by asking yourself if you are overexposed to banks and property (they’re practically one-and-the-same in Australia).

At the end of the day, nobody knows for sure if the worst is over for Westpac. However, personally, I'd rather look for other - faster growing - dividend shares to consider buying, such as the one The Motley Fool's expert analysts hand-picked as their best dividend share idea for 2016.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.