MENU

Why the Westpac Banking Corp (ASX:WBC) share price sank lower today

One of the worst performers on the ASX 200 on Tuesday has been the Westpac Banking Corp (ASX: WBC) share price.

In morning trade the banking giant’s shares are down almost 5.5% to $26.25.

Why are Westpac’s shares sinking lower?

Although the market is a sea of red today and peers such as Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA) have dropped lower, the majority of Westpac’s decline can be attributed to something else.

This morning the bank’s shares went ex-dividend for its fully franked 94 cents per share final dividend. Eligible shareholders can now look forward to receiving this generous dividend in their nominated accounts on December 20.

Federal Court news.

In addition to this, news that that the Federal Court has refused to approve a $35 million penalty given to Westpac after it admitted to breaking responsible lending laws could be weighing on its shares.

According to the ABC, the settlement that was negotiated between Westpac and the Australian Securities and Investments Commission has been declined and the two parties will have to return to court on November 27 for directions.

This was not completely unexpected, though. Last month the AFR reported that former solicitor general Justin Gleeson, SC, told the Federal Court that the $35 million penalty agreed between the regulator and Westpac was not sufficient.

He suggested that the banking giant should pay at least $100 million if it breached lending laws.

What now?

While a penalty of $100 million isn’t overly material for the banking giant, these penalties soon add up and are likely to have a knock on effect on investor sentiment.

And although I still see Westpac as a good investment option due to the low multiples its shares trade on, it certainly isn’t a low risk on anymore.

Because of this, income investors may be better off with this top dividend share which is growing at a strong rate.

OUR #1 dividend pick to grow your wealth now is revealed for FREE here!

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 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.