The Westpac Banking Corp (ASX: WBC) share price is charging higher again on Thursday.
In afternoon trade, the banking giant's shares are up almost 3% to $23.05.
This means the Westpac share price is now up 7% over the last two trading sessions.
Why is the Westpac share price charging higher?
Investors have been buying the bank's shares following the release of the Bank of Queensland Ltd (ASX: BOQ) full year result on Wednesday.
Although Bank of Queensland's actual results disappointed the market, its exit net interest margin (NIM) caught the eye and has got investors excited that rising interest rates are boosting profitability in the banking sector.
And given Westpac's positive leverage to rising rates, this could bode well for its performance in FY 2023.
Westpac remains Goldman Sachs' top pick
This morning, while Goldman Sachs was responding to Bank of Queensland's results, it took the opportunity to reiterate its bullish view on the Westpac share price.
Goldman commented:
We reiterate our Neutral call on BOQ. Despite valuation support, we believe its NIM leverage will ultimately underperform peers and its expenses will remain under pressure given the current inflationary environment and headwinds from running legacy systems along with building its new digital bank, which are expected to offset ME Bank synergies and restructuring benefits.
BOQ's strong 4Q22 NIM and commentary around an even stronger exit NIM bodes well for the major banks, who we believe will provide more positive leverage to higher rates than BOQ. We would particularly highlight our Buy recommendation (on CL) on WBC, whose year-to-date consensus NIM upgrades have significantly lagged peers, despite i) a comparable exposure to rate inert deposits, and ii) a shorter-duration replicating portfolio.
Goldman currently has a conviction buy rating and $27.08 price target on Westpac's shares.
This implies potential upside of over 17% for investors over the next 12 months, even after its strong gains this week.
