CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Commonwealth Bank share price: key things to watch for in full-year results

Here’s the four most important things you should know before the Commonwealth Bank reports its 2019 full-year results on August 7.

The Commonwealth Bank of Australia (CBA: ASX) share price has risen consistently in the last six months, following the resolution of the Hayne Royal Commission earlier in the year.

Yet as we near CBA’s full-year results – set to be announced on August 7 – investors will likely turn their focus to how the bank can maintain and grow its profits in the year ahead.

Here's the top four things you need to know before CBA announces its full-year results early next month.

The all-important dividend announcement

Income-focused investors will likely be keen to see concrete details of CBA's full-year dividend. The bank currently boasts a dividend yield of 5.19%.

Indeed, given the big four’s concentrated market share, very few have questioned CBA's ability to maintain the payment of this hefty dividend in the past.

Moreover, even with the sizable remediation costs stemming from the Royal Commission, there has been no indication that CBA will reduce its dividend any time soon.

Commonwealth Bank's loan book in focus

Given the volatility of Australia’s housing market in the last two years, the strength of CBA’s loan book will likely gain increased scrutiny during the bank's full-year results.

For example, in the third quarter, CBA noted that:

‘Consumer arrears were impacted by seasonal factors in the quarter and continued to trend higher from a low base, influenced by subdued levels of income growth and cost of living challenges, most pronounced in outer metropolitan areas of Perth, Melbourne and Sydney.’

With the bank further adding that:

‘Accounts in negative equity represent just over 3% of total accounts, based on 31 March 2019 valuations. Approximately three quarters of the negative equity relates to Western Australia and Queensland.’

Though the Reserve Bank of Australia’s recent move to cut interest rates to a historic low of 1.0% should theoretically provide some relief to homeowners with mortgages; in practical terms, the overall conditions for consumers remains weak.

Indeed, by CBA’s own admission: income growth remains stagnant and the rising cost of living has created a number of difficulties for its customers. Because of this, it will be interesting to see if consumer arrears continued to trend higher in the fourth quarter and how such trends could impact the bank’s negative equity rates.

Capital requirements under pressure

In the third quarter, the Commonwealth Bank of Australia's all-important Common Equity Tier 1 (CET1) ratio came in at 10.3% – 0.2% below the levels required by APRA.

Mind you, CBA only came in under this threshold after the bank paid out its 2019 interim dividend.

Moreover, with the bank set to complete its divestment from CommInsure Life (pending regulatory approval), this should help lift CBA’s CET1 ratio by roughly 120 basis points in the near-term.

The sale of CommInsure should be finalised during the second half of the 2019 calendar year.

Commonwealth Bank share price: analysts cautious

Finally, according to the Wall Street Journal, of the 13 analysts covering the Commonwealth Bank of Australia, only one analyst rates it a buy.

By comparison, five analysts rate it a sell; with the overall consensus for CBA’s shares being underweight.

Even with this mixed outlook, CBA's stock remains one of the most heavily traded in Australia.

This, as noted above, is likely due to CBA’s consistently high dividend, as well as its enviable market leading position as the most valuable of the big four banks.

Year-to-date, the Commonwealth Bank of Australia's share price has risen 17.9%.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.