You can bank on this

Founder and Chief Investment Officer of Montgomery Investment Management
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Let’s take a look at everyone’s favourite: the banking sector.

From a low of $70.87 in September 2016, Commonwealth Bank has touched a high of $87.66 and paid $6.51 in dividends. And from its low of $28.27, Westpac has risen to a high of $35.06 and paid $1.88 in dividends.

But since those highs have been achieved, bank shares have been sold down heavily in response to a number of factors. CBA’s shares have fallen 13% and Westpac 10.3%. And despite these lower prices, bank share prices still only represent fair value at best, and at worst, are trading at price-to-book multiples well above long-term averages.

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