Commonwealth Bank of Australia (CBA)
HOLD

CBA - Stock Update

 13 May 2022
Sector: Financials

Event – CBA 3Q22 Trading update

3Q update implies FY22e market forecasts are comfortably achievable.

  • 3Q earnings A$2.3bn implies 2H22 consensus earnings of $4.4bn are comfortably within reach. Low bad debt charges continue to benefit earnings.
  • Earnings growth has slowed for CBA, with 3Q growth flat on the 1H22 average.
  • Home lending growth has moderated to be in line (~1.0 - 1.1x) with system growth.
  • Business lending continues to take share, running at ~1.5x system growth.

We see this as an inline trading update, with small upgrades to consensus earnings forecasts for FY22E likely. Peer banks ANZ, NAB, WBC have seen ~2% EPS upgrades for FY22E post results over the last week.

For our investment view and risks associated with CBA see our last research note and stock-specific disclaimers and disclosures contained therein.

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Company overview

Commonwealth Bank of Australia is Australia’s largest retail bank and operates in Asia, the UK, NZ, and Europe.

We have a HOLD rating for CBA primarily due to its premium valuation relative to peers, and the prospect of slower earnings growth.

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