Why the Westpac Banking Corp share price just sank to a 52-week low

The Westpac Banking Corp (ASX:WBC) share price sank to a 52-week low on Monday. Here's why…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It has been yet another disappointing day of trade for the Westpac Banking Corp (ASX: WBC) share price.

At one stage today the banking giant's shares were down 1.5% to a 52-week low of $24.52. This brought its year to date decline to a sizeable 21%.

Why is the Westpac Banking Corp share price at a 52-week low?

While the majority of its decline in 2018 has been brought about by the Royal Commission, concerns over falling house prices, and the budget levy, its latest decline has been caused by events across the Tasman sea.

On Friday the Reserve Bank of New Zealand released a consultation paper seeking the public's view on a proposal to significantly increase the level of regulatory capital in the New Zealand banking system. This includes wanting to increase its current tier 1 minimum capital ratio from 8.5% to 16%.

The central bank believes the proposed changes will further strengthen the New Zealand banking system and protect the economy and depositors from bank failure.

According to the AFR, Macquarie analysts have estimated that if the Reserve Bank of New Zealand follows through with its plans, it may mean each of the major banks has to deploy an "additional $3.5 billion to $5.8 billion into their NZ operations over the next five years, or a total of about $18 billion."

In order to achieve this, Macquarie suspects that the banks would have to raise capital, which is likely to be dilutive to existing shareholders. Alternatively, its analysts have suggested that the banks could potentially look into divesting their New Zealand operations instead.

A decision is not expected to be made by the central bank until June 2019, which unfortunately means that this is likely to hang over the banks until then.

Should you buy Westpac shares?

While I think that Westpac shares are great value at these levels even after factoring in this latest development, I suspect that investors may not be in a rush to buy them and the shares of rivals Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) until a final decision is made.

In light of this, I still see Westpac as a buy but I wouldn't be surprised to see them trade flat for the next six to seven months. This could make it worth considering other options in the meantime.

Should you invest $1,000 in Australia And New Zealand Banking Group right now?

Before you buy Australia And New Zealand Banking Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Australia And New Zealand Banking Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on 52-Week Lows

A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.
52-Week Lows

Guess which ASX 200 stock is sinking to a new 52-week low today following an update

This stock is having a poor finish to the week. But why are investors hitting the sell button?

Read more »

A woman sits with her hands covering her eyes while lifting her spectacles sitting at a computer on a desk in an office setting.
52-Week Lows

Market slump drags 26 ASX 200 shares to multi-year lows

Heavyweight ASX 200 companies like CSL and Wisetech are among them.

Read more »

a man holds his arms out and shrugs his shoulders as if indicating he doesn't know the answer to a question he's been asked.
Materials Shares

Why is this ASX 200 mining stock crashing 28% today?

Investors are rushing to the exits in large number. But why?

Read more »

Piggy bank sinking in water symbolising a record low share price.
52-Week Lows

16 ASX 200 shares that hit multi-year lows on Friday

Markets are nervous as US President Donald Trump winds back tariffs on some Canadian and Mexican imports.

Read more »

Investor looking at falling ASX share price on computer screen
Earnings Results

2 ASX All Ords shares crashing 16%+ on earnings updates

It's a red day for the market on Friday.

Read more »

Woman disappointed at share price performance with her hands on her face.
52-Week Lows

The Sayona Mining share price just hit a 4-year low

Things have gone form bad to worse for this lithium stock.

Read more »

Three people skydiving.
52-Week Lows

These ASX tech stocks just hit multi-year lows! Are they cheap?

A cheap share isn't always a bargain...

Read more »

Dollar sign in yellow with a red falling arrow in front of a graph, symbolising a falling share price.
Materials Shares

Ouch: The Pilbara Minerals share price just hit a multi-year low

It's been a tough day for lithium investors.

Read more »