It's been a tough start to the week for ASX banks shares. National Australia Bank Ltd (ASX: NAB) shares were placed in a trading halt yesterday after posting a $1.4 billion half-year profit.
On its own, that seems like a good result. But everything in the share market is relative and the bank's $1,436 million in cash earnings represents a 51.4% slump from the previous year.
I would expect to see the NAB share price fall lower on the back of the weak result. Clearly, the coronavirus pandemic is going to have at least a short-term impact on the ASX bank shares.
But does that mean you should steer clear or is now the perfect time for a bargain buy?
Should you buy ASX bank shares in 2020?
It's worth keeping in mind that Commonwealth Bank of Australia (ASX: CBA) had already reported its earnings before the COVID-19 impact really kicked in. That doesn't make Australia's biggest bank immune but we just won't see the numbers for a little while.
NAB is looking to raise equity to shore up its balance sheet and maintain its capital adequacy ratios. The big issues I see for ASX bank shares like NAB are a deteriorating loan book and potential loss of earnings from a weaker residential property market.
Now, no one has a crystal ball so we don't know what's ahead in 2020. But I don't think we should let short-term movements drown out the potential for a bargain buy.
Beyond the daily share price moves, it's worth considering structural changes for ASX bank shares in the future. The popularity of neobanks is rising and we could see a shift away from the Big 4 to a more decentralised banking system.
That may mean that the big banks never return to their former glory, but that doesn't mean now isn't a good time to buy. The CBA and NAB share prices are down 26.31% and 36.01%, respectively, in 2020.
However, ASX bank shares are still churning out consistent profits and could be solid dividend shares for quite some time in my view.
