7 reasons it may NOT be time to sell your Big Four bank shares

Negative commentary is never far away when you are holding bank shares like Commonwealth Bank of Australia (ASX:CBA) and Westpac Banking Corp (ASX:WBC).

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Negative commentary is never far away when you are holding bank shares like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).

Don't get me wrong, I'm not buying ASX-listed bank shares.

You can read my disclaimer in the link below. I own shares in the European owner of ING Direct, ING Groep; US bank Wells Fargo and…(one moment as I check my portfolio because it has been months since I logged in)…Lloyds Bank. In addition, in the future of banking space I own Apple and PayPal. Although, I wouldn't buy PayPal shares today.

Anyhow, I'm not a buyer of ASX bank shares because I think there are better opportunities elsewhere, including overseas.

However, I think it is worth at least trying to present a somewhat balanced argument.  

Reasons to Sell Big Bank Shares in 2017

  • House prices are eye-watering and the implications for a market crash or meaningful correction are significant
  • Wages growth is lacklustre and likely to stay that way, affecting loan serviceability and demand for credit
  • Interest-only loans are a now a significant part of the big bank loan portfolios
  • Household debt levels are at a record high
  • The interest rate cycle may have bottomed
  • Bad debts are at record lows
  • Competition is increasing, forcing the banks to move rates higher out of cycle
  • Regulation is increasing
  • Everyone hates the banks
  • Their dividends are cyclical
  • Their earnings streams are correlated (that's finance for 'not as diversified as they could be')
  • Shares are modestly overvalued
  • If you are like most Aussies, you could be overexposed to the domestic property and banking system
  • Finally, Australia has gone 26 years without a recession — that's a world record

Ok, breathe… here are some of the reasons not to sell your Big Bank shares…

Reasons to Hold Your Bank Shares in 2017

  • If you're a long-time shareholder you will be forced to split your profit with the ATO
  • The big banks are profit machines defying the odds with their cartel-like control of the market
  • They pay big fully franked dividends
  • The potential to lower costs with technology provides some dry powder
  • Shares are not that expensive
  • No-one knows when property or the economy will crash
  • The banks have an implicit guarantee from the Government

Foolish Takeaway

The Big Banks have been great investments over the past two decades in a recession-less Australia. In that time they were deregulated, went out and acquired every competitor they could, then ramped up their lending. Now, the seasons are turning.

I'm not buying Aussie bank shares today or this year. But, as always, it is your decision whether or not to sell your shares based on the facts.

Owen Raszkiewicz owns shares of Apple, ING Groep, PayPal Holdings, and Wells Fargo. You can follow him on Twitter @OwenRask The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Apple and PayPal Holdings. 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.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »