It certainly has been a great year for shareholders of Westpac Banking Corp (ASX: WBC).
Thanks to a series of positive catalysts, the banking giant's shares are up over 15% since the start of the year.
This return is going to be given an added boost later today when eligible shareholders are paid the bank's fully franked interim dividend of 94 cents per share.
Including this dividend, its shares will have generated a total return of 19% year to date.
Can Westpac's shares go higher from here?
Whilst Westpac's shares are certainly not the bargain buy that they were six months ago, I still see a lot of value in them at the current level.
Especially given signs that the housing market downturn is coming to an end and a rebound in house prices could be just around the corner.
This would be a big boost to Westpac and its big four rivals Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), and National Australia Bank Ltd (ASX: NAB), as it could lead to solid demand for mortgage loans.
In addition to this, when house prices increase it often boosts consumer sentiment and spending. This could have a positive impact on business confidence, lifting demand for SME loans.
One broker that believes Westpac's shares are in the buy zone is Morgans.
A note out of the broker last month reveals that its analysts have an add rating and $33.00 price target on the company's shares.
This implies potential upside of almost 17% for its shares over the next 12 months.
Morgans likes Westpac due to its relatively low risk profile (in relation to loan book positioning) and its low reliance on treasury and markets income.
It also notes that concerns over "the asset quality and margin ramifications of WBC's relatively high interest-only home loan exposure continue to weigh on the share price."
However, it believes "these concerns are overblown", noting that Westpac has reduced its interest only exposure from 50% of its Australian home loan book in March 2017 to 32% at December 2018 without its asset quality underperforming peers in any material way.
I agree with this and feel it makes Westpac one of the better bank shares to buy on the ASX right now.
