Westpac Banking Corp (ASX: WBC) shares haven't exactly flown under the radar lately.
After climbing around 37% over the past year, they've delivered the kind of return investors usually hope for from growth stocks, not major banks.
But with that strong performance now behind it, the more important question is whether there's still value on offer today for a $10,000 investment?
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Westpac shares look fully valued after strong run
After a rally like this, I always ask whether the upside is already priced in.
Westpac's latest quarterly update shows a steady, improving business. It delivered around $1.9 billion in quarterly profit, with growth supported by lending momentum and cost discipline.
That's solid. But it's not exceptional enough, in my view, to justify chasing the shares after such a strong run.
Margins are still under pressure, with net interest margin slipping slightly, reflecting competition and a changing rate environment.
So while the business is performing well, I think the share price is already factoring in a lot of that progress.
I wouldn't sell… but I wouldn't buy either
If I already owned Westpac shares, I wouldn't be rushing to sell them.
The bank remains well capitalised, profitable, and positioned to benefit from steady credit demand. Its capital ratio sits comfortably above target levels, and its outlook remains stable.
But investing is about opportunity cost.
And right now, I don't think Westpac offers a compelling risk-reward profile.
Why I prefer CBA instead
If I'm going to invest in a bank, I want the best one.
For me, that's Commonwealth Bank of Australia (ASX: CBA).
Its latest first-half results highlight why. The bank continues to deliver strong and consistent profitability, with cash NPAT of $5.45 billion for the half and a return on equity of 13.8%, which remains sector-leading.
It also declared a fully franked dividend of $2.35 per share, supported by a strong balance sheet and resilient earnings.
What stands out to me is consistency.
CBA continues to execute well, invest in technology, and maintain strong credit quality. Its scale, brand, and operational discipline have allowed it to outperform peers over time.
Yes, it often trades at a premium valuation. But in my experience, there's usually a reason for that.
Quality over alternatives
I tend to lean toward owning the highest-quality business in a sector rather than spreading exposure across multiple similar names.
That's especially true in banking, where differences in execution, margins, and returns can compound over time.
Westpac is improving, but I don't think it's operating at the same level as CBA right now.
And if I already have exposure through CBA, I don't see a strong case to add Westpac on top.
Foolish takeaway
Westpac shares have performed well and the business is on a solid footing. But after a 37% rise over the past year, I think the valuation looks full.
I wouldn't sell if I owned them. But if I had $10,000 to invest today, I'd be looking elsewhere.
For me, that means sticking with the highest-quality option in the sector rather than chasing a bank that has already had a strong run.
