Commonwealth Bank of delivered a respectable 2H26 result, with strong balance sheet growth, stable margins and lower-than-expected impairments supporting a modest earnings beat. However, mortgage applications have fallen 15% since the Budget, while increasing competition could pressure future growth and margins.
The key concern remains valuation. CBA trades at around 26x earnings and a 50–70% premium to peers, leaving limited room for disappointment despite the solid result.
Commonwealth Bank of is under Algo Engine buy conditions.
Commonwealth Bank of is under Algo Engine buy conditions from the original signal in 2023 at $100. The subsequent signal last week at $134 represents a new higher low formation, and the buying range is $120 – $134.
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Commonwealth Bank of is scheduled to report its 1H22 result on 9 February 2022. Forecasting 1H22 cash earnings of $4.3bn with the FY22 interim dividend of $1.74 per share.
We remain underweight Australian banks.
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Commonwealth Bank of posted a 21% fall in half-year net profit to $4.88bn in the six months through December from $6.16bn a year earlier. Cash earnings fell 11% to $3.89bn.
An interim dividend of A$1.50 a share, down 25% on year.
We remain cautious on the local banks following the strong run-up in share values.
Commonwealth Bank of is under Algo Engine sell conditions and the company will report earnings on 10 Feb.
Our preference has been to be long the BetaShares Global Banks and the AXW:AXW fund.
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