In the last 30 days the Westpac Banking Corp (ASX: WBC) share price has been one of the better performing shares on the local share market.
During this time the shares of Australia's oldest bank have risen 7%.
Is it too late to invest?
Whilst I wouldn't class Westpac's shares as being a bargain buy anymore following this gain, I still believe there is reasonable upside potential left to make them worthy of an investment today.
Especially considering they currently provide investors with a market-beating trailing fully franked 5.8% dividend.
There had been concerns that APRA's new unquestionably strong capital benchmarks could have put pressure on its business and ultimately its dividend, but this seems unlikely now.
Much like rivals Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks, Westpac has advised that it is well positioned to meet the new benchmark thanks to the proactive steps it has taken to boost its CET1 capital ratio.
At present Westpac boasts a CET1 capital ratio of 10% and will need only to lift it to 10.5% by the start of 2020 in order to meet the new benchmark.
That's not to say that there aren't other risks that could impact its business. A housing market crash and a rise in bad debts are two key risks that are worth considering.
Whilst bad debts could rise as rates increase, I think it will be some time until the cash rate increases. And when it does I expect the Reserve Bank to raise it very carefully to avoid such an occurrence.
All in all, based on its current outlook, strong business, current share price, and dividend, Westpac would have to be my first pick in the banking sector at this point.
