As most ASX investors would be at least somewhat aware of, the S&P/ASX 200 Index (ASX: XJO) has enjoyed a very decent run of returns in 2021 so far despite the recent bout of market volatility. The ASX 200 closed today up a miserly 0.07% to 7,367 points, placing its year to date gains at a still-robust 11%. But how has the Westpac Banking Corp (ASX: WBC) share price fared?
Westpac is, of course, one of the ASX 200's major shares, as well as being one of the big four ASX banks. It hasn't exactly amassed a reputation as a consistent market-beating share either. You could have bought Westpac shares for their current price of $25.56 way back in 2007. That's a long time to go nowhere.
But let's not dwell on Westpac's past and focus on the bumper year shareholders have enjoyed in 2021 so far. Westpac has managed to deliver a year to date gain for investors of 30.36%. That's roughly triple what the ASX 200 has delivered over the same period.
It also tops the other major ASX banks. Commonwealth Bank of Australia (ASX: CBA) has 'only' returned 23.8% year to date so far. National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) are up 25.1% and 22.5% respectively.
So why this outperformance from Westpac?
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Westpac share price tops ASX banking shares in 2021 so far
To understand that, let's go back to the horror year this bank had in 2020. Firstly, we had the coronavirus-induced share market crash. Like most ASX shares, Westpac suffered heavily in the early months of 2020, falling more than 40% between 20 February and 23 March.
Westpac was also the only big four bank to entirely write off its 2020 interim dividend. The other banks delayed their payments but Westpac skipped its payout entirely, the first time it had done so in decades.
Not only did shareholders have to contend with a skipped dividend but Westpac's finances were also dealt a further blow when it received a $1.3 billion fine in September for breaching anti-money laundering laws.
These factors may have contributed to Westpac being the worst-performing ASX bank share out of the entire sector (not just the big four) in 2020.
But perhaps Westpac's wooden spoon last year has helped it regain the most ground in 2021 so far. The bank has indeed had a relatively pleasing year. Biannual dividends have been restored and Westpac's interim dividend for 2021 came in at 58 cents per share, a good 87% above last year's final payment.
Then, in August, Westpac flagged that it might be considering a potential capital return program, possibly via a share buyback.
It's these positive developments, helped no doubt by the contrast with Westpac's horror 2020, that may have helped give shareholders a 30% capital return on Westpac shares in 20201 thus far.
At the current Westpac share price, this ASX bank has a market capitalisation of $93.84 billion and a dividend yield of 3.48%.
