It's one of Australia's most established and reliable financial institutions, with a place at the table as one of the country's big 4 banks.
Westpac Banking Corp (ASX: WBC) shares are 0.21% lower this morning, changing hands at $33.84 per share at the time of writing.
The company's share price has experienced several peaks and troughs over the past year, but has still come out ahead 22.52% higher.
But over the past 10 years, the share price has risen just 5.9%.
That means that $10,000 invested in Westpac shares 10 years ago would now be worth just $10,590.
For context, over the same period, the S&P/ASX 200 Index (ASX: XJO) has risen 61.3%. The S&P/ASX 200 Banks Index (ASX: XBK) only goes back to May 2019.
What happened to Westpac shares?
The bank's 10-year share price change is relatively flat, mostly due to margin pressure and cost issues. The bank also adopted technology more slowly than its peers.
The bank's lending exposure is heavily tilted towards the residential mortgage market, so it is sensitive to interest rates and borrower stress. This means the bank suffered during the prolonged low-rate lending era, when the interest rate fell to a record low of 0.1% during the COVID-19 recession.
This was represented in its share price too. Westpac shares dropped sharply to an all-time low of $14.10 a piece in March 2020. The share price has since recovered the losses, but growth beyond pre-pandemic levels has been limited.
Westpac's slower tech adoption also meant missed opportunities and higher costs later.
What do analysts expect next?
Macquarie has an underperform rating on Westpac and a target price of $27.50. That represents a potential downside of 18.7% at the time of writing.
According to TradingView data, most analysts (10 out of 15) have a sell or strong sell rating on the stock. The average 12-month forecast is for a downside of $28.06, but some expect the share price to drop as low as $21.26. This represents a potential downside of as much as 37.2% for investors at the time of writing.
Analysts are cautious on Westpac shares due to a mix of headwinds and a subdued outlook for growth. Thanks to its heavy mortgage exposure, Westpac faces intense mortgage competition, which will dampen its interest rate margins and make it vulnerable to further interest rate cuts.
But not all analysts agree. After seeing the recent FY25 half-year result, UBS noted the result was in line with market expectations in terms of the cash net profit after tax (NPAT). The broker has a buy rating on the stock and a $36 target price, meaning it expects the share price to rise by around 6.4% within the next year.
