Are ASX bank shares still worth buying?

A disappointing result from National Australia Bank Ltd (ASX: NAB) has spooked investors, but are the ASX bank shares still worth buying?

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It's been a tough start to the week for ASX banks shares. National Australia Bank Ltd (ASX: NAB) shares were placed in a trading halt yesterday after posting a $1.4 billion half-year profit.

On its own, that seems like a good result. But everything in the share market is relative and the bank's $1,436 million in cash earnings represents a 51.4% slump from the previous year.

I would expect to see the NAB share price fall lower on the back of the weak result. Clearly, the coronavirus pandemic is going to have at least a short-term impact on the ASX bank shares.

But does that mean you should steer clear or is now the perfect time for a bargain buy?

Should you buy ASX bank shares in 2020?

It's worth keeping in mind that Commonwealth Bank of Australia (ASX: CBA) had already reported its earnings before the COVID-19 impact really kicked in. That doesn't make Australia's biggest bank immune but we just won't see the numbers for a little while.

NAB is looking to raise equity to shore up its balance sheet and maintain its capital adequacy ratios. The big issues I see for ASX bank shares like NAB are a deteriorating loan book and potential loss of earnings from a weaker residential property market.

Now, no one has a crystal ball so we don't know what's ahead in 2020. But I don't think we should let short-term movements drown out the potential for a bargain buy.

Beyond the daily share price moves, it's worth considering structural changes for ASX bank shares in the future. The popularity of neobanks is rising and we could see a shift away from the Big 4 to a more decentralised banking system.

That may mean that the big banks never return to their former glory, but that doesn't mean now isn't a good time to buy. The CBA and NAB share prices are down 26.31% and 36.01%, respectively, in 2020.

However, ASX bank shares are still churning out consistent profits and could be solid dividend shares for quite some time in my view.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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