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Own CBA shares? Here’s what to expect from the bank’s FY22 results

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All eyes will be on the Commonwealth Bank of Australia (ASX: CBA) share price next week.

On 10 August, Australia’s largest bank will be releasing its highly anticipated full-year results.

Ahead of the release, let’s take a look to see what the market is expecting from the banking giant.

What is the market expecting from the CBA result?

According to a note out of Goldman Sachs, its analysts are expecting the banking giant to outperform consensus expectations with its second-half cash earnings.

The broker has pencilled in cash earnings from continued operations (before one-offs) of $4,742 million for the six months. This will be a 1% decline on the prior corresponding period, but ahead of the consensus estimate of $4,546 million.

This will take its full-year cash earnings to $9,488 million for FY 2022, up 9.7% year over year.

From these earnings, Goldman Sachs is expecting the bank to pay a 205 cents per share fully franked final dividend. Interestingly, despite forecasting higher than consensus earnings, the broker’s estimate is lower than the consensus estimate of 208 cents per share.

Goldman’s estimate would mean a full-year dividend of 380 cents per share, up 8.6% on FY 2021’s payout.

What else should you look out for?

Outside its earnings and dividend, arguably the key focus for investors will be CBA’s net interest margin (NIM). Goldman is expecting an improvement in this metric thanks to the rising cash rate. It explained:

We estimate CBA’s 3Q22 NIM was 1.87%, and supported by the early benefits of cash rate rises. We estimate a 2H22E NIM of 1.88%. However, we expect the market will focus more on any updated commentary around the leverage of its NIM to cash rate rises and/or commentary around exit NIMs.

In addition, the broker is expecting the bank’s asset quality to remain strong. It said:

Despite rising interest rates, high inflation, and supply chain disruptions, asset quality has remained strong with CBA reporting a BDD contribution of A$48 mn (-2 bp of total loans) in 3Q22 driven by a slight reduction to credit provisions. For us, the key focus will be around how CBA frames its downside and severe scenarios as part of its expected credit losses (ECL) modeling, which we suspect will need to shift from scenarios based around Covid-lockdowns, to be more focused around stagflation.

Is the CBA share price good value?

Unfortunately, Goldman Sachs continues to believe that the CBA share price is overvalued at the current level.

It has retained its sell rating and $90.45 price target on the bank’s shares.

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