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ASX bank shares have experienced a horrible financial year

The end of the 2020 financial year is upon us (yes, already). At this point of the year, I always like to take a look at my investments as well as all ASX shares and see what’s been hot and what’s been not and 1 ASX sector stands out to me as firmly in the ‘not hot’ category: ASX bank shares.

Yep, to put it mildly, ASX banking shares have had a shocker over the last 12 months. Even though there are technically still 3 trading hours left in the financial year, I think it’s fair to say we can assess how ASX shares have performed over the past 12 months.

So, exactly how bad have things been for the big 4 ASX banks in FY20?

Want a bad bank like these?

So let’s start with Commonwealth Bank of Australia (ASX: CBA). CBA shares were asking $82.32 on 1 July last year. Today, a single CommBank share will set you back $69.72 (at the time of writing). That translates into a 15.31% loss for the last 12 months. Even if you factor in the dividends CBA has paid out over the year, investors are still down at least 10% from where they were a year ago.

Let’s now look at Westpac Banking Corp (ASX: WBC). Westpac shares were asking $28.37 on 1 July last year. Today, they are asking just $18.14. That’s a yearly return of -36.18% (ouch).

Turning to National Australia Bank Ltd. (ASX: NAB), we can see that a year ago on 1 July, NAB shares were asking $26.80. Today, those same shares will only cost you $18.44. That translates into a 31.19% loss over the past 12 months. As a longtime NAB shareholder myself, I can tell you it hasn’t been a fun ride on this one.

Finally, let’s check out Australia and New Zealand Banking GrpLtd (ASX: ANZ). ANZ shares were commanding a price tag of $28.28 on 1 July last year. Today, one ANZ share will cost you $18.78. That means that ANZ shareholders are down around 33.6% in FY20.

What’s next for ASX bank shares?

As we just saw, it has been a very painful year for ASX banks and their shareholders. For some context, the S&P/ASX 200 Index (ASX: XJO) was down 11.4% over the last 12 months, so all 4 of the majors have significantly underperformed the broader market.

So, are things looking up from here?

Unfortunately, I don’t see a major recovery for the ASX banking sector anytime soon. The economy is still struggling in the wake of the coronavirus pandemic, which means that credit growth is likely to remain subdued for some time yet. Further, interest rates don’t look likely to be raised off of their current record lows anytime soon, which doesn’t bode well for the banks’ profitability outlook. If there are any issues in the housing market over the next year or 2, it might result in yet another headwind the banks will have to navigate.

All in all, I see a lot of potential downsides without too much upside thrown in. Therefore, I’ll be staying away from the ASX banks for the foreseeable future and looking elsewhere for returns in FY21.

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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. 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.

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