The Westpac Banking Group (ASX: WBC) share price was trading 8% lower today following news of more measures to curb COVID-19 and special measures introduced by the banks.
For context, the broader Australian share market or S&P/ASX 200 (ASX: XJO) was trading at 4542.1, down 5.7%.
Westpac Banking Group
Westpac Banking Corporation, more commonly known as Westpac, is one of Australia’s ‘Big Four’ banks and a financial services provider headquartered in Sydney. It is one of Australia’s largest lenders to homeowners, investors, individuals (via credit cards and personal loans) and businesses.
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Stimulus up, banks down
Shares in each of Australia’s largest banks, including Westpac and ANZ Banking Group (ASX: ANZ), have been hard hit today.
Last week, Westpac announced its plan to support small business customers as well as those with a home loan.
Westpac’s acting CEO, Peter King said the bank was acting now to support Australia and its customers during an extraordinary moment in our history.
“We are determined to assist customers through this extraordinary period,” King said.
“This is a once in a lifetime event and a united response by government, regulators and corporate Australia is exactly what we need.”
Westpac announced it will support small business customers by reducing the interest rates on overdraft funding by 2%, would cut 1% from variable interest rates on small business loans, and introduce 2.29% p.a. fixed rates on owner-occupier loans which are part of its Premier Advantage Package.
The bank also said it would introduce a special 12-month term deposit savings rate of 1.7%, an increase of 0.7%, up to $500,000. And for over 65 year-olds, Westpac will make it 2% interest.
On top of that, Westpac will introduce a $10 billion home lending fund to support the economy by assisting more Aussies with homeownership.
“As Australia’s oldest bank, we have a long history of helping customers and communities through times of uncertainty and we are using this experience to put the plans and processes in place to support our business and retail customers through the challenges ahead,” King added.
Time to sell?
It’s been pretty scary for all types of investors in the sharemarket lately. This morning, I put together an article discussing what bank shareholders could expect next, both in the short and long run. You can read my article by clicking here.
My quick take is that it makes sense to now consider diversifying some investment money away from bank shares and towards better long-term opportunities (such as those I identify in the free investment report below). Or at least to consider using the recent dividend payments to open new positions in ETFs and shares.
I’m not saying sell everything, but maybe consider how to optimistically position your portfolio for the inevitable rebound. Whether it’s taking some cash off the table, seeking protection through hedging or currencies, or simply slowly redeploying capital to your best ideas over the next 6 to 12 months.
That’s what I’m doing. I recently provided a full review for Rask Invest members.
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Disclosure: at the time of publishing, Owen does not have a financial interest in any companies mentioned.