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Commonwealth Bank of Australia CBA

Morningstar Rating
A$120.73 −0.77 (0.63%)
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Company Report

Commonwealth Bank: Low Bad Debts and Moderating Margin Pressure Underpin Earnings

The largest and most profitable Australian bank is not immune from industrywide margin pressures. Commonwealth Bank reported a third-quarter profit of AUD 2.4 billion, down 3% on the quarterly average of the first half of fiscal 2024. The decline is tracking marginally better than we expected, though, thanks to lower expense growth and bad debts. Bad debt expenses and arrears are low at 0.08% of loans, compared with our medium-term forecast of around 0.15%. While continuing to rise, home loans behind on payments are below historical averages, and we suspect equity buffers, the strength of the labor market, and strong house prices will keep actual bank losses manageable even as household stress rises.

Price vs Fair Value

CBA is trading at a 192% premium.
Price
A$120.73
Fair Value
A$66.00
Uncertainty
Medium
1-Star Price
A$279.60
5-Star Price
A$13.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Commonwealth Bank of Australia's well-managed net interest margins, sound asset quality, and strong balance sheet continue to consistently deliver solid financial results.

Bears

Increased regulatory, political and public scrutiny could erode the bank’s pricing power and over time, its wide economic moat.

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News

Trading Information

Previous Close Price
A$121.50
Day Range
A$120.23121.00
52-Week Range
A$95.32122.55
Bid/Ask
A$120.30 / A$120.85
Market Cap
A$202.01 Bil
Volume/Avg
1.6 Mil / 2.0 Mil

Key Statistics

Price/Earnings (Normalized)
21.45
Price/Sales
7.94
Dividend Yield (Trailing)
3.74%
Dividend Yield (Forward)
3.53%
Total Yield
4.49%

Company Profile

Commonwealth Bank is Australia's largest bank with operations spanning Australia, New Zealand, and Asia. Its core business is the provision of retail, business, and institutional banking services. The bank has emphasized its focus on banking in recent years with a numbers of asset divestments in wealth management and insurance.
Sector
Financial Services
Industry
Banks - Diversified
Stock Style Box
Large Core
Total Number of Employees
48,930

Competitors

Valuation

Metric
CBA
ANZ
WBC
Price/Earnings (Normalized)
21.4512.2314.81
Price/Book Value
2.771.211.29
Price/Sales
7.944.554.93
Price/Cash Flow
12.0413.49
Price/Earnings
CBA
ANZ
WBC

Financial Strength

Metric
CBA
ANZ
WBC
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
CBA
ANZ
WBC
Return on Assets (Normalized)
0.80%0.65%0.68%
Return on Equity (Normalized)
13.77%10.25%9.72%
Return on Invested Capital (Normalized)
Return on Assets
CBA
ANZ
WBC
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