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Commonwealth Bank of Australia CBA

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Morningstar’s Analysis

Valuation
Currency in AUD
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Economic Moat

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Capital Allocation

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Not Even the Great Commonwealth Bank Is Immune From Margin Pressure, Still Expensive

Nathan Zaia Equity Analyst

Analyst Note

| Nathan Zaia |

Wide-moat-rated Commonwealth Bank continued to take market share in home and business lending during first-quarter 2022, but it was no longer enough to offset margin pressure. Management noted net interest margins, or NIM, were considerably lower in the quarter, echoing comments from Westpac just weeks ago. We estimate that adjusted for remediation costs last year, pretax profit was down around 5% on the quarterly average of second-half fiscal 2021. Cash NPAT of AUD 2.2 billion is down 9% due to the release of loan loss provisions which boosted second-half fiscal 2021 earnings.

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Company Profile

Business Description

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 emphasised its focus on banking in recent years with a numbers of asset divestments in wealth management and insurance.

Contact
201 Sussex Street, Ground Floor, Tower 1
Sydney, NSW, 2000, Australia
T +61 293782000
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings
Fiscal Year End Jun 30, 2022
Stock Type
Employees 46,189

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