Westpac Banking Corp (ASX: WBC) shares are sinking today.
Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $39.91. During the Friday lunch hour, shares are changing hands for $39.56 apiece, down 0.9%.
It's not just Westpac under pressure today. The ASX 200 is down a sharp 1.9% at this same time following the overnight sell-off in US stock markets.
Despite today's slide, Westpac shares remain up 16.4% over the past 12 months, smashing the 2.4% one-year gains delivered by the benchmark index.
Atop those capital gains, Westpac also paid out two fully franked dividends over this period, totalling $1.53 a share. The ASX 200 bank stock currently trades on a fully franked trailing dividend yield of 3.9%.
Looking to the months ahead, however, Morgans' Damien Nguyen sees headwinds building for the bank (courtesy of The Bull).
Image source: Getty Images
Time to sell Westpac shares?
"Weaker consumer sentiment in an uncertain policy environment cloud the earnings outlook," said Nguyen, who has a sell recommendation on Westpac shares.
"Recent economic commentary highlights creeping pessimism among Australian consumers," he noted. "Uncertainty around interest rate expectations creates a challenging setting for major banks to profitably grow credit."
According to Nguyen:
Westpac's long-term projections show acceptable returns. However, in our view, near term momentum appears constrained by operational adjustments, margin pressure and a more cautious economic tone.
Mguyen concluded, "Given limited earnings catalysts on the horizon, we see better opportunities elsewhere."
What's been happening with the ASX 200 bank stock?
Westpac reported its full year FY 2025 results (covering the 12 months to 30 September) on 3 November.
Westpac shares closed up 2.8% on the day, with the bank reporting a 3% year-on-year lift in its net interest income to $19.5 billion. The bank's total loans were up 6% from FY 2024 to $851.9 billion, with customer deposits increasing by 7% to $723 billion.
But with operating expenses also up 9% to $11.9 billion, Westpac's full year net profit after tax (NPAT) declined by 1% year-on-year to $6.99 billion.
"This has been a solid year at Westpac, and I'm pleased with the result we are delivering today," Westpac CEO Anthony Miller said following the results release.
Miller added:
With a very strong balance sheet and momentum in our target segments, the opportunity to deliver more for our customers, people and shareholders is exciting…
We've managed margins in a competitive environment, and our capital position is strong, providing us with plenty of flexibility as we execute our strategy.
