Shares of Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) have continued to slide today, down 0.96% and 0.60%, respectively.
The latest selloff takes their share price falls for the week to 4.2% and 3.14%, ahead of the 3% fall in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
Since reporting their interim results a month ago, both Westpac and NAB have shed more than 10% from their valuations.
Whilst all of the big banks' profit announcements appeared good on first glance, the outlook and commentary provided by their management teams was concerning.
Moreover, both aforementioned banks sought to raise cash from investors and shareholders to boost their capital position. Raising capital by issuing shares is rarely a sign of financial health.
Then, the Reserve Bank of Australia's decision to keep interest rates at 2% yesterday again prompted investors to sell off high-yielding stocks such as the banks.
Lower interest rates fuel demand for dividend-paying stocks such as Westpac and NAB, but when interest rates aren't cut, as expected, shareholders can occasionally find their stocks being heavily discounted by the market.
Adding another layer of risk to the banks is the housing market. Whilst concerns over a property market crash could be overblown, the possibility of increased regulatory oversight may be hurting investor enthusiasm.
During this week's monetary policy statement RBA Governor, Glenn Stevens, said, "The Bank is working with other regulators to assess and contain risks that may arise from the housing market." According to APRA's monthly banking statistics for April 2015, Westpac controlled 24.8% market share of investment and owner-occupied housing loans, whilst NAB accounted for 16.9%.
Should you buy NAB and Westpac shares today?
Despite the selloff of their shares, investors would be wise to wait for a more compelling valuation point before buying shares because even at today's seemingly discounted prices, neither bank appears a worthwhile investment.
