The Westpac Banking Corp (ASX: WBC) share price is almost the lowest it has been over the past year at $30.08, so it's worth considering if it's a buy.
Everyone knows that Westpac is a member of the Big Four banking group, but it operates quite differently to the other three. It operates under several brands, thanks to its acquisition spree from the GFC era.
It obviously operates Westpac, but it also runs RAMS, St. George Bank, Bank of Melbourne and BankSA. Between these subsidiaries it has over 13 million customers.
I always say that people should invest for the long-term. Westpac is supposedly Australia's oldest bank and company, tracing its origins back 200 years.
Westpac should be applauded for its strategy and vision regarding its sustainability. It is regularly recognised as one of the most sustainable companies in the world.
The best reason to like Westpac is its large, fully franked dividend. It has grown or maintained its dividend every year since the GFC, which is impressive in my opinion. Its grossed-up yield currently sits at 8.93%.
The main worry I have for Westpac is that it appears to have a more risky loan book compared to its peers, with its interest-only book a significantly higher percentage. There have been reports of loan holders struggling to pay the new repayment schedule after the capital repayment kicked in, which increases the monthly repayment by 30% or more.
Previously, those interest-only people would look to re-finance, but lending standards are much higher now and the indebted borrower may struggle to get another loan. Therefore, they might have to sell. This is only playing out in small pockets in some capital city suburbs, but Westpac would suffer were it to spread to more people.
Foolish takeaway
Westpac has been an excellent investment for shareholders since it listed on the ASX. I don't believe it offers market-beating returns over the medium-term, but it may still be a decent option for income-seeking investors.
