Westpacs 3Q26 trading update was poorly received by a market that focused on a clear slowdown in mortgage applications and the prospect of softer housing credit growth into FY27 covered here. We’ve seen nothing in the recent bank results to make us consider increasing our underweight stance towards the influential sector although we are conscious most pundits are backing the same horse on this call. The banks ~4.5% fully franked yield should be supportive into weakness, but its elevated valuation is similarly likely to cap any short term attempts to test/break above $40.
- We can see WBC trading between $33 and $38 over the next 6-12 months – selling options around these levels could be a worthwhile strategy for sophisticated investors.
MM is long and cautiously bullish toward WBC around $35
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