It certainly has been a turbulent couple of weeks for the Australian banking sector due largely to the Royal Commission.
This has weighed heavily on the shares of Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), and the rest of the big four banks, leading to sizeable declines across the sector.
In fact, prior to this week the S&P/ASX 200 Financials (Index: ^AXFJ) (ASX: XFJ) was down over 12% over the last 12 months, with a good portion of this decline coming over the last few months.
As a comparison, the S&P/ASX 200 was marginally higher during the same period despite the financials weighing heavily on its performance.
Is a change coming?
I think a change could be coming and believe there are signs that the banks’ shares could now have bottomed.
Take for example the Commonwealth Bank of Australia (ASX: CBA). It admitted to losing almost 20 million customer account records this morning and its share price has actually pushed 0.6% higher today.
In addition to this, the Westpac share price is up 4% since this time last week despite there being no news out of the bank.
Perhaps the market believes that the worst is over from the Royal Commission and that things weren’t quite so bad as many had feared for the big four.
Should you invest?
While the banks are certainly a lot riskier than they used to be for investors, I do see a lot of value in Westpac’s shares right now.
Not only are they changing hands on some of the lowest multiples in recent years, they provide one of the more generous dividend yields on the local market.
At present Westpac’s shares offer investors a trailing fully franked 6.4% dividend. Which I think is hard to say no to in this low interest environment.
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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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 Scott Phillips.