The Westpac Banking Corp (ASX: WBC) share price is the best performing big four bank so far this year, up 32% to February 2020 levels of $26.
In terms of recent performance, shares in the leading bank boomed bewteen January and mid-June, rallying from $19.37 to a year-to-date high of $27.12.
The Westpac share price has plateaued since mid-June, broadly coinciding with the peak of lending indicators from the Australian Bureau of Statistics (ABS).
Despite Westpac shares trading sideways for the past 4 months, it has held up relatively well amid the volatile S&P/ASX 200 Index (ASX: XJO) and concerns about rising interest rates.
In an interview with Livewire, head of equities at Tyndall Asset Management Brad Potter was particularly excited about Westpac, his top bank holding.
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Why this broker is bullish on the Westpac share price
Potter is bullish on the banking sector, with an overweight rating.
He views Westpac as a top pick in the sector, expecting the bank to announce a "very large" off-market buyback as part of its full-year results announcement on 1 November.
Just a week ago, the Commonwealth Bank of Australia (ASX: CBA) completed its $6 billion off-market buy-back, representing around 3.82% of its shares on issue.
CBA management described the move as "the most efficient and value-enhancing strategy to distribute CBA's surplus capital and franking credits".
With bank dividend yields bouncing back to the 5% level and an excess amount of capital, Potter said:
We think these buybacks and dividends will continue for a number of years given the huge amount of capital that the banks have got.
Despite a positive outlook, Potter warned that banks may struggle to keep up the momentum in the near term, facing net interest margin challenges on the back of ultra-low interest rates.
The Westpac share price closed 0.39% higher on Monday to $26.06.
