“Westpac (WBC) is known as one of the big 4 banks that has a large exposure to residential mortgages and rising interest rates will benefit the banks in the short term,” Michael said.

“However, we need to be mindful that bad debts are at risk of rising, especially as fixed rate mortgages start to roll over to higher variable rates.

“The bank will release its second half results in early November, and it will be interesting to see what guidance they provide for next year.

“Despite all this, it’s worth considering the bigger picture around WBC’s share price performance. “WBC peaked in early 2015 and has been trending lower ever since.

“No amount of dividends since then were able to make up for the almost halving of its share price. “We can see that the stock has almost perfectly obeyed this downtrend line.

“Every time it rallied up to that line, it was met with selling.

“This tells me that until it can overcome that line, WBC is going to continue to be a losing investment for those willing to hold it for a very long time,” Michael said.

Westpac (WBC)

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