MENU

Australian banks plunge to multi-year lows: Are they in the bargain bin?

With the All Ordinaries (Index: ^AXAO) (ASX: XAO) sinking notably lower today it will come as little surprise to learn that several shares have fallen to 52-week lows.

But what may come as a surprise is the number of bank shares that have hit this unwanted milestone. No less than four major banks have drifted to 52-week lows or worse today.

The Bank of Queensland Limited (ASX: BOQ) share price has fallen 1.5% to a multi-year low of $9.72 on Wednesday. This extends the regional bank’s year-to-date decline to over 23%.

The Commonwealth Bank of Australia (ASX: CBA) share price has tumbled over 1% to a multi-year low of $68.04. This means Australia’s largest bank has now lost 15% of its value since the turn of the year.

The National Australia Bank Ltd (ASX: NAB) share price touched on an 18-month low of $26.05 today, stretching its 12-month decline to a disappointing 13.5%.

The Westpac Banking Corp (ASX: WBC) share price has dropped to a five-year low of $27.25 on Wednesday. Australia’s oldest bank is now down 13% since the start of the year.

It is worth noting that while the Australia and New Zealand Banking Group (ASX: ANZ) share price has not quite hit a new 52-week low today like its peers, it is trading within a whisker of this level. As is the Bendigo and Adelaide Bank Ltd (ASX: BEN) share price.

Why are the banks at new lows?

Bank shares have come under significant selling pressure over the last 12 months due to a series of negative events. These include the budget levy on bank profits, the Royal Commission, and the current state of the housing market.

Unfortunately, none of these issues are likely to disappear in the near term, which could mean that the banks remain under pressure for a little while to come.

Though in the medium term I would be surprised if the banks remained at these levels. Not only are many of their shares trading at historically lower than average multiples, they offer some of the most generous dividend yields on the market. Which in this low interest environment is certainly hard to say no to.

Although I don’t expect it to be a smooth ride and their shares could still dip lower from here, I would be a buyer of the banks today if I didn’t have exposure to them.

If you’re not sure which bank to invest in, I would suggest you consider the BetaShares S&P/ASX 200 Financials Sector ETF (ASX: QFN). This ETF contains the largest financial shares on the ASX, including the big four banks, and allows holders to benefit from dividends and franking credits.

But if you're not convinced that the banks are going to turnaround their fortunes any time soon, this high-flying dividend share could be a great alternative.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of National Australia Bank Limited. 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.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now