Why Commonwealth Bank of Australia (ASX:CBA) shares are sinking lower

The Commonwealth Bank of Australia (ASX: CBA) share price has slipped lower today with the rest of the big four banks.

At lunch the shares of Australia’s largest bank are down over 1% to $73.93.

Why are Commonwealth Bank of Australia’s shares sinking lower?

While general weakness in the banking sector has emerged today after Corelogic reported a 1.6% decline in house prices over the last 12 months, Commonwealth Bank of Australia’s shares may also be under pressure after becoming the subject of a broker note out of Goldman Sachs.

According to the note, Goldman has updated its estimates after marking-to-market its forecasts for the latest system credit growth data and the bank’s lending and deposit market shares.

This has resulted in the broker holding firm with its neutral rating but lowering its price target to $72.72, implying potential downside of approximately 1.7% for its shares.

Instead of buying Commonwealth Bank of Australia’s, the broker thinks investors should be buying two of its rivals – Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Corp (ASX: WBC).

It has buy ratings and price targets of $32.91 and $36.60, respectively, on the shares of the two banks.

Goldman likes Westpac partly due to its lead in customer deposits growth. It estimates that Westpac leads its rivals on a 3-month annualised basis at 2.2x system average.

Whereas with ANZ the broker likes ANZ Bank for its sizeable share buyback plans, potential for cost declines, and lower bad debt exposure.

Incidentally, the remaining member of the big four, National Australia Bank Ltd (ASX: NAB), has been given a neutral rating by the broker with a price target of $33.97.

Which bank shares should you buy?

Due to their heavy declines in recent months, I think all four banks are reasonably priced right now and attractive options. However, my preference continues to be Westpac. I think its cheap price and generous dividend make it a great option for investors with little exposure to the sector, especially given Goldman Sach’s lofty price target.

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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.

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