Can the Westpac Banking Corp share price go higher from here?

Credit: Kiwiteen123

The Westpac Banking Corp (ASX: WBC) share price is up 5% in a month.

Source: Google Finance

Source: Google Finance

In fact, shares of Australia’s second-largest bank are up around 8.6% since the beginning of September and it paid a dividend.

So what

Westpac has the country’s largest exposure to investor loans, which have been a key point of concern for the banking regulator. Therefore, I find it a little surprising that the bank’s share price has performed so strongly, especially since the broader S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has returned just 4% over three months.

Then there’s the forecast slowdown in local credit markets, which the major banks heavily rely upon to generate outsized returns for shareholders.

Now what

Together, increased regulation on investor loans, a slowing economy and the requirement to increase their capital buffers for economic shocks, could place further pressure on Westpac’s share price over the medium term (two to three years).

Given Westpac shares appear fairly valued today, I’m not a buyer of shares.


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Motley Fool contributor Owen Raszkiewicz has no position in any stocks mentioned.

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Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.

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