The Westpac (ASX:WBC) share price has trailed the ASX 200 over the last 3 months

This banking giant has been underperforming recently…

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dissapointed man at falling share price

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The Westpac Banking Corp (ASX: WBC) share price is out of form on Tuesday. In afternoon trade, the banking giant’s shares are down 0.5% to $25.41.

This decline means the Westpac share price is now down 6.3% since peaking at a high of $27.12 in June. As a result, Westpac’s shares are underperforming the benchmark S&P/ASX 200 Index (ASX: XJO) during the same period.

In addition to this, the bank’s shares are trading flat over the last three months, compared to a 5% gain by the ASX 200.

Why is the Westpac share price underperforming?

The Westpac share price has come under a spot of pressure over the last few weeks following a series of developments.

One of those was news that the banking giant will not be offloading its Westpac New Zealand business.

At the time, analysts at Citi suggested that this decision was likely due to the complexities of divesting from a liquidity and capital perspective. Essentially, it just became too hard for Westpac to demerge the business efficiently.

Over at Ord Minnett, its analysts appeared disappointed with the news. The broker notes that the business has been losing market share and has poor net promoter scores (NPS). As such, it feels the business will require significant investment.

What else?

Also weighing on the Westpac share price recently has been news that the bank has uncovered significant potential fraud. This relates to a portfolio of equipment leases with Westpac customers arranged by Forum Finance, which were referred to Westpac’s Institutional Bank.

The bank notes that it has a potential exposure of around $200 million after tax. Though, the extent of any loss will be dependent on the outcome of its investigations and recovery actions underway.

Is this a buying opportunity?

One leading broker that may believe the recent weakness in the Westpac share price is a buying opportunity is Morgans.

According to a note from last week, the broker has retained its add rating and $29.50 price target on the bank’s shares. Based on the latest Westpac share price, this implies potential upside of 9% over the next 12 months.

Morgans believes Westpac shares offer compelling value for investors and sees significant capital management potential.

Should you invest $1,000 in Westpac right now?

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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