Commonwealth Bank of Australia

CBA: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$66.00	Bwp	Qltzyjbvj

Commonwealth Bank Earnings: Margin Trajectory Expected to Turn Positive, but Valuation Is Stretched

Nathan Zaia

Feb 14, 2024

We reiterate our AUD 90 fair value estimate for wide-moat-rated Commonwealth Bank. First-half fiscal 2024 profit fell 3% to AUD 5 billion. Our full-year forecast of AUD 9.7 billion implies a slightly weaker second half. We trim our fiscal 2024 net interest margin forecast by 3 basis points to 1.97%, but the impact on profit is offset by modestly lower bad debt expenses and higher noninterest income. Shrinking NIM, down 11 basis points from first-half fiscal 2023 to 1.99%, reflects industry headwinds from customer deposit price competition and switching, and home loan discounting.

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