The CBA Stock Price at a Glance Today – Your 3 Minute Research Guide

When it comes to ASX bank stocks, find out what is or what is not – a fair price to pay Commonwealth of Australia Bank (ASX: CBA) Stocks can seem a little intimidating, especially in today’s environment. In this short article on CBA stocks, we’ll take a look at the key factors to consider when looking for a bank stock.

CommBank of Australia or CBA is Australia’s largest bank, with the largest market share in mortgages (24%), credit cards (27%), and personal loans. It has more than 15 million customers, of which around 14 million are in Australia. Basically, it is embedded in the Australian payments ecosystem and financial market.

The CBA Stock Price at a Glance Today – Your 3 Minute Research Guide

Culture Assessment at the Commonwealth Bank of Australia

For long-term investors looking to invest in large companies and own them for five, 10 or 20 years, at Rask we think it’s fair to say that a good work environment and a good culture of staff can lead to better retention of high quality staff and, in turn, the long-term financial success of a business.

One way for Australian investors to take a peek inside a company like the Commonwealth Bank of Australia or ANZ Banking Group is by using human resources / employment websites such as To look for. Seek’s website includes corporate HR data, including things like employee reviews. According to the most recent data we gleaned from the ABC, for example, the company’s overall workplace culture rating of 3.5 / 5 was more … than ASX banking sector average score of 3.23.

Are CBA Loans Profitable?

ASX bank stocks like CBA need debt and good profit margins to make their business profitable. This means that a bank obtains money from term deposit holders and wholesale debt investors and lends that money to owners, businesses and investors. The difference between what a bank is pay to savers and what made of mortgage holders (for example) is the net interest margin or NIM. Remember: When it comes to NIMs, the wider the margin, the better.

If you are considering approaching the profits of a bank like CBA or Macquarie Group Ltd. (ASX: MQG), it is essential to know how much money the bank is lending and what it earns per dollar loaned to borrowers. This is why the NIM is arguably the most critical measure of CBA profitability. Among the major bank stocks in ASX, we calculated that the average NIM was 1.92% while the Commonwealth Bank of Australia bank line of credit was 2.03%, which means the bank has produces a better– Higher than average return on loans of money to clients compared to peers.

The reason analysts are studying the NIM so closely is that the Commonwealth Bank of Australia earned 78% of its total income (akin to income) just from loans last year.

Return on equity (using balance sheet)

Return on equity or simply “ROE” helps you compare a bank’s profit against its total equity, as shown on its balance sheet. The highest the ROE the best. The ROE of the Commonwealth Bank of Australia over the last full year was 11.2%, which means that for every $ 100 of the bank’s equity, it generated $ 11.20 in profit. annual. This was expected to average 7.46% for the industry.

ABC capital structure

For Australian banks, the CET1 ratio (aka “common equity tier one”) is essential. CET1 represents the bank’s capital cushion that can be used to protect it against financial collapse. According to our figures, the Commonwealth Bank of Australia had a CET1 ratio of 13.1%. This figure was higher than the industry average.

Dividends and valuation for banks like CBA or MQG

A dividend discount or DDM template is one of the most effective ways to create an ASX bank stock forecast. To do a DDM, we need to come up with a calculation of the bank’s future dividends (i.e. the next dividend for the full year) and then apply a risk score. Suppose the CBA dividend payout increases at a constant rate every year in the future, somewhere between 2% and 3%. We will use multiple risk rates (between 6% and 11%) and then average the valuations.

According to this quick and simple DDM model, a stock valuation CBA is $ 59.48. However, using an “adjusted” or expected dividend payment of $ 3.98 per share, which is the preferred metric because it uses expected dividends, the valuation rises to $ 67.64. The valuation compares to the current CBA stock price of $ 102.28. Since the company’s dividends are fully franked, we may make an additional adjustment and valuation based on a “gross” dividend payment. Using gross dividend payments, which account for postage credits, calculate the valuation at $ 96.63.

This means that while the CBA stock price may seem expensive using our simple DDM model, do not make a decision based on this article. Please go now and consider all of the risks and ideas that we have presented here, including the benefit of better dividends and the good impact of postage credits. Consider receiving our free investment report by email (keep reading).


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