Westpac share price: Why UBS has a ‘Buy’ rating on the bank

In this ‘quick take’ we look at how Westpac’s stock has performed over the last five trading sessions and why UBS remains constructive on the beleaguered bank.

Quick take: Why UBS has a ‘Buy’ rating on Westpac

The Westpac Banking Corporation (ASX: WBC) has seen its share price struggle over the last five sessions – dipping over 3.5% in that period, to last trade at $17.32 per share.

This comes after the retail-focused bank reported a weak set of full-year FY20 results on Monday, October 2 – revealing lower profits, a weaker dividend, and noting that close to $17 billion worth of its mortgage accounts were currently in a state of deferral.

Read our full coverage of Westpac’s FY20 results here.

UBS analysts agreed that these full-year results were lacklustre, to say the least – describing them as ‘annus horribilis’, literally, in Latin translating to a ‘horrible year’. Despite that, the Swiss investment bank retained its Buy rating and 12-month price target of $20.50 per share on Westpac – implying modest potential upside from current price levels.

The investment bank looks to have remained constructive on WBC for two main reasons:

  1. On valuation grounds, with UBS analysts noting that WBC, at current price levels trades at just 0.9x FY21e book value – the equal second lowest in the investment bank’s Big Four coverage universe.
  2. As an extension of this humble valuation and according to UBS, the share price performance of Westpac ‘is likely to be driven by the economic outlook, expectations around asset quality and potentially higher dividends in coming periods. Given the improving economic outlook, we expect WBC to continue to re-rate.’

Of course, UBS is not oblivious to the headwinds that Westpac and indeed Australia’s entire banking complex currently faces – noting that these broad issues are expected to persist over the short-term. This, says UBS, in the short-term may lead to persistently weak lending volume growth, net interest margins (NIMS) remaining under pressure and expenses staying elevated.

Want to take a position in Westpac – long or short?

Create an IG trading account or log in to your existing account to get started now.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.