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Why Westpac shares are a sell before any RBA interest rate cut

The article from MSN Money discusses why Westpac Banking Corporation (ASX: WBC) shares might be considered a sell before any potential interest rate cut by the Reserve Bank of Australia (RBA). It highlights that despite Westpac's shares being up 12% in the last year, the bank's recent financial performance has been lackluster, with a 16% drop in net profit for the first half of the fiscal year 2024. This decline is attributed to several factors including higher operating expenses, increased competition in the mortgage market, and a significant rise in loan impairment expenses. The article suggests that an RBA rate cut could further pressure Westpac's margins, as lower interest rates typically reduce the net interest margin for banks. Additionally, concerns are raised about Westpac's exposure to potential economic downturns, its relatively high operational costs, and the possibility of regulatory changes affecting the banking sector. The author concludes that these elements make Westpac shares less attractive for investment in the near term, especially with the anticipation of an RBA rate cut.

Read the Full MSN Article at:
[ https://www.msn.com/en-au/money/top-stocks/why-westpac-shares-are-a-sell-before-any-rba-interest-rate-cut/ar-AA1yIw6m ]