Westpac Banking Corp (ASX: WBC) shares are on the slide on Thursday morning.
At the time of writing, the banking giant's shares are down 0.5% to $30.93.
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Why are Westpac shares falling?
The big four bank's shares are falling today despite announcing that it is making another divestment.
According to the release, Westpac has entered into an agreement to sell its auto finance loans and lease receivables to Resimac Group Ltd (ASX: RMC).
The bank revealed that the deal is expected to complete in the first half of 2025, with an expected transaction value of $1.4 billion to $1.6 billion. However, management advised that it is not expected to have a material impact on Westpac's financial statements.
This sale represents the end of Westpac's divestment of its auto finance business, following the partial sale in 2021.
That transaction saw Westpac sell its motor vehicle dealer finance and novated leasing businesses to Angle Finance, a portfolio company of Cerberus Capital Management.
Commenting on the sale at the time, Westpac Group's chief executive of specialist businesses and group strategy, Jason Yetton, said:
This sale brings certainty for our customers, new opportunities for our people and continues the progress we are making on becoming a simpler bank. Angle Auto Finance is committed to the Auto Finance industry and will provide the capability and strategic focus to grow and improve the business.
Resimac shares are rising on Thursday morning on the back of the news. In a separate announcement, the non-bank lender and multi-channel distribution business commented:
The transaction supports the strategic growth objectives of Resimac's asset finance division and follows a number of business and portfolio acquisitions in recent years. The transaction is expected to complete in first half of 2025 and is not expected to have a material impact on Resimac's FY25 financial results.
Should you invest in Westpac?
Unfortunately, none of the major brokers are tipping Westpac's shares as a buy right now.
In fact, even after a recent pullback, almost all brokers are forecasting further material declines for the bank's share price.
For example, Goldman Sachs has a sell rating and $25.84 price target. It said:
We remain Sell-rated on WBC given: i) WBC's technology simplification plan (details here) comes with a significant degree of execution risk, given historically banks' large-scale transformation programs have struggled to stay on budget, and we note management today has flagged ongoing inflationary pressures, and ii) of the major banks, WBC's balance sheet is the most overweight domestic housing, which we expect will be more growth constrained than commercial lending over the medium term. Therefore, trading on a 12-mo forward PER of 15.3x, nearly two standard deviations above its 15-yr average, we stay Sell.
