Last month the S&P/ASX 200 index managed to carve out a small gain of approximately 0.2%.
Whilst this was a touch underwhelming, it was notably better than the performance of the Westpac Banking Corp (ASX: WBC) share price in March.
During the period the banking giant's shares tumbled 4% lower.
Why did the Westpac share price drop lower last month?
Westpac pleased the market last month when it announced the reset of its wealth strategy. This reset saw the company announce plans to realign its major BT Financial Group businesses into the Consumer and Business divisions and exit the provision of personal financial advice by Westpac salaried financial advisers and authorised representatives.
In order to achieve this the bank advised that it had signed a sale agreement with Viridian Advisory, which will see many BT Financial Advice ongoing advice customers offered an opportunity to transfer to Viridian.
The reset is expected to impact its profits in FY 2019 but be earnings per share accretive in 2020.
However, offsetting this positive was an announcement a few days later revealing that its cash earnings in the first half of FY 2019 will be reduced by an estimated $260 million due to provisions arising from further work on its customer remediation programs.
These provisions relate to issues identified in previous financial years, with around half of the provisions relating to the financial advice business. The remainder relate to business and consumer banking and includes costs associated with implementing the remediation programs along with interest on fees to be refunded.
This announcement, combined with a sharp drop in government bond yields, appears to have spooked investors and sent many to the exits.
Should you buy the dip?
Whilst I continue to have a preference for Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) shares, I still feel that Westpac's shares are trading at an attractive level.
As a result, I would suggest investors consider Westpac if they don't already have meaningful exposure to the banks.
