Westpac Banking Corporation [ASX:WBC] is Australia’s first and oldest banking institution, establishing its roots in 1817. Westpac is one of Australia’s ‘Big Four’ banks, which are often viewed as the pillar of the country’s financial sector. Given their importance to Australia’s economy, the merger between any of the Big Four is prohibited by law in order to maintain a competitive banking market.
At its core, Westpac is a consumer and business bank, offering retailing banking services alongside a host of business-oriented products and services. WBC also owns BT, which operates the wealth management arm of the bank. BT at one time managed $95 billion in funds via investments, superannuation, and retirement funds. However, unethical practices exposed during the Banking Royal Commission led to the bank’s exit from the wealth market. The bank has also been embroiled in a string of money laundering and child exploitation controversies.
Westpac is the fourth largest company traded on the ASX and, like other blue chip stocks, is attractive because it pays a good dividend. Like some of its peers, the WBC share price has been in a decline for the past five years.
Declining interest rates may be a contributing factor for this poor share price performance. While banks are typically seen as a safe investment, investors should be wary about the increased competition Australia’s banks are now faced with. As well as broader, macro factors impacting Westpac’s margins.