It certainly hasn't been easy being a shareholder of Australia's big four banks this year.
The negative impacts of the Royal Commission, rising rates in the United States, and falling house prices have weighed heavily on bank shares.
So much so, the shares of Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) were trading at five-year lows today.
Fellow big four banks National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ) weren't much better. National Australia Bank saw its shares fall to a 52-week low and ANZ Bank's shares were at a two-year low.
While I don't necessarily expect things to change overnight and feel their shares could still drift even lower, I do feel patient investors could do very well with an investment in many of these banks.
Which bank should you buy?
Based on its current valuation and its generous yield, my pick of the banks right now is Westpac Banking Corp.
At present the banking giant's shares are changing hands at just 11x earnings and under 1.5x book value. This is far lower than normal for its shares, even accounting for the sector's issues, and at a level that I think offers compelling value for investors.
Especially given how Westpac's shares now offer a trailing fully franked 7.2% dividend. Pleasingly, as I expect the bank to be able to keep its dividend on hold at $1.88 per share in FY 2019, this yield may be on offer again over the next 12 months.
But there are of course risks to consider before investing. These include a housing market collapse and rising bad debts. If these were to occur then they could weigh heavily on bank shares, their earnings, and their dividends. I'm optimistic that they won't occur, leaving the banks to grow modestly over the coming years.
