So far today the shares of Australia’s oldest bank Westpac Banking Corp (ASX: WBC) are the best performers amongst the big four with a solid 1.5% gain to $30.01.

This is still quite a distance from its 52-week high of $33.74, but could its shares reach that level again this year?

Whilst I believe it is possible, a lot of this will depend on its full year results which are due out next month. Opinion is largely divided on how the bank will fare, with many concerned about its rising bad and doubtful debts.

Last month Westpac released an update to the market on its capital position and asset quality as of the end of June. This update revealed a rise in bad loans across both its business and its household lending. The proportion of loans at least one month behind in repayments rose to 1.39% from 1% in September of last year.

This caused a sharp sell off in its shares initially, with many investors appearing to be concerned that this could put pressure on margins and ultimately its ability to maintain its dividend.

Personally I believe this sell off was a bit of an overreaction, so I’m pleased to see that its shares have now almost retraced these declines in full.

Earlier this year seemingly against all odds Westpac reported a 3% rise in half year cash profit to $3.9 billion. This was all the more impressive considering the bank’s unfortunate exposure to the likes of embattled law firm Slater & Gordon Limited (ASX: SGH), struggling steel maker Arrium, and haulage company McAleese.

I fully expect a similar story next month when its full year results are released. If that is the case then I wouldn’t be surprised to see its share price start to make a run for a new high. But I wouldn’t suggest investing purely on that basis. I would make a long-term investment in Westpac for its strong dividend.

Its shares are expected by analysts to provide a fully franked 6.3% dividend in FY 2017 according to CommSec, which I believe makes it a better option than Commonwealth Bank of Australia (ASX: CBA) for investors with limited exposure to the banking sector currently.

Finally, if you already have reasonable exposure to the banking sector then I would probably avoid investing in Westpac for the sake of maintaining a diverse portfolio. Instead these three fantastic shares could be better options for your portfolio in my opinion.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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.