It has been a tough couple of weeks for the Westpac Banking Corp (ASX: WBC) share price following the release of a mixed half-year result and the latest federal budget.
Month-to-date Westpac's shares have lost just over 6% of their value and are trading close to a three-month low.
Is now the time to snap them up?
Whilst I do think that Westpac looks to be far better value now than it did at the start of the month, I wouldn't necessarily be in a rush to invest in Australia's oldest bank just yet.
Although at this stage the impact of the new $6.2 billion bank levy is reasonably uncertain, it does look like there is a reasonably high chance that shareholders will be amongst the biggest losers from the move.
With the banks unable to pass these costs onto their customers, a dividend cut seems like one of the only options available to Westpac, Commonwealth Bank of Australia (ASX: CBA), and the rest of the big four banks.
Should the banks be forced into cutting their dividends, I believe it could weigh heavily on their respective share prices over the next 12 months.
So for this reason I would suggest that investors stay clear of the banks for the time being. Ultimately I believe there is far more downside risk than upside potential at this stage and investors can find far better value elsewhere in the market.
