The Westpac Banking Corp (ASX: WBC) share price has dipped 9.91% since 14 February 2025. When an ASX blue-chip share falls by that much, I think it's a good opportunity to consider how appealing the lower value is.
The chart above shows how investors have lost some confidence amid the growing tariff trade war between the US and several other countries, such as Mexico, Canada, and China.
There are both positives and negatives to buying Westpac shares currently, so let's look at the situation from both angles.
Negatives about Westpac shares
The ASX bank share is navigating a somewhat difficult trading environment.
In its recent FY25 first-quarter update, Westpac reported that its core net interest margin (NIM) slightly decreased to 1.81%. The "modest decline" reflected "prudent management in the context of ongoing mortgage competition and further deposit mix shift towards lower spread savings and term deposits".
An NIM tells investors how much profit a bank is making on its lending by comparing the overall rate on its lending with the funding (such as term deposits and savings accounts).
The broker UBS said that Westpac's first-quarter NIM was worse than expected.
UBS decided to reduce its forecast earnings for Westpac by "~2% on aggregate" for between FY25 to FY27, with this cut mainly being related to NIM.
The bank has also seen a slight worsening of its loan book amid the high interest rate environment for borrowers. Westpac reported that impairment charges loans were 5 basis points (0.05%), up from 4 basis points (0.04%). However, Westpac did say that the impairment charges "remain low and reflect continued resilience".
Positives about Westpac shares
On the positive side, despite the tricky trading conditions, Westpac was able to eke out a little bit of profit growth in the first quarter, which I think is a positive sign. In the first three months of FY25, Westpac's underlying net profit grew to $1.9 billion, a 3% rise on the quarterly average of the FY24 second half.
I also found it intriguing that the ASX bank share was able to lure the chief financial officer (CFO) of National Australia Bank Ltd (ASX: NAB) to Westpac to take up the same role. I'd take that as a vote of confidence for Westpac.
Another positive is that the bank continues to grow at a pleasing pace. In the FY25 first quarter, customer deposit growth was $14.4 billion, and loan growth was $13.4 billion. That included 2% Australian housing loan growth excluding RAMS, 3% business loan growth, and 6% institutional loan growth.
UBS is bullish on the ASX bank share, with a price target of $38. A price target is where the broker thinks the share price will be in 12 months from today. That $38 price target suggests a possible rise of more than 21% from today.
Finally, UBS thinks Westpac share owners could receive a fully franked dividend yield of 5.5% in FY26, which is a solid level of passive income.
