Better buy: Westpac or CBA shares?

Which of these big four banks should investors be buying today?

| More on:
Woman in striped long sleeved top holds both hands up and looks to one side signifying a comparison between two ASX shares

Image source: Getty Images

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

If you're looking for banking sector exposure, then Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) shares are likely to have crossed your mind.

But which would be the better buy? Let's see what analysts are saying.

Should you buy Westpac or CBA shares?

Firstly, it is worth highlighting that it is widely agreed that there is a gulf in quality between these banks.

CBA is regarded as Australia's highest quality bank by some margin. So clearly, all else equal, you would want to own CBA ahead of others in the sector.

But the share market isn't equal.

Because of its quality, CBA shares trade at a significant premium to the rest of the big four banks. Unfortunately, this means that getting hold of the bank's shares at a fair price can be difficult.

For example, at present none of the major brokers have a buy rating on the shares of Australia's largest bank.

The most bullish is UBS, which has a neutral rating and $105.00 price target. This still implies potential downside of almost 11% for investors over the next 12 months.

And while brokers aren't overly enamoured with Westpac, there are a couple of brokers that are tipping Australia's oldest bank as a buy.

One of those is Ord Minnett, which has an accumulate rating and $28.00 price target on Westpac's shares.

Based on its current share price, this implies potential upside of almost 16% for investors between now and this time next year.

In addition, the broker is forecasting a fully franked $1.45 per share dividend in FY 2024. This equates to a 6% dividend yield and stretches the total potential return to approximately 22%.

Overall, at current prices, analysts appear to believe investors would be better buying Westpac shares over CBA shares.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Dividend Investing

Are CBA shares still a good buy today for passive income?

Looking to earn passive income from ASX dividend stocks? Here’s my take on CBA shares.

Read more »

Shocked office worker staring at computer screen with colleagues working in the background.
Bank Shares

The ASX bank share beating CBA in 2025

Many investors might not realise this smaller bank stock is leading the pack this year. 

Read more »

man thinking about whether to invest in bitcoin
Bank Shares

Here's what needs to happen for the CBA share price to try and reach $200

What could drive the CBA share price higher?

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

Why now could be an opportune time to sell CBA shares

A leading expert offers his verdict on the outlook for CBA shares.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Bank Shares

The Westpac share price is a buy – UBS

The broker is optimistic on Westpac shares.

Read more »

Bank building with the word bank on it.
Bank Shares

The biggest buyers and sellers of ASX 200 bank stocks revealed

Macquarie breaks down who’s been buying and who’s been selling the ASX 200 bank stocks.

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Resources Shares

Should I switch my ASX 200 banking stocks for ASX 200 miners before earnings season?

The ASX 200 Index is dominated by Australia's bank and materials/mining sectors, which together account for around half of the…

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Bank Shares

Here's when Westpac says the RBA will now cut interest rates

The RBA surprised everyone by keeping rates on hold last week. So, when will the next cut happen?

Read more »