Commonwealth Bank of Australia (ASX CBA) is Australia’s largest bank listed on the ASX and in turn, is the largest financial institution included the ASX Top 20. CBA has held the crown for Australia’s largest bank for the last 2 decades with business lines spread across retail and wholesale banking services, insurance and for the time being, asset management.
CBA’s mortgage business makes up the largest market share in residential property out of all of the major 4 Australian banks. It is the most exposed to Australian property prices on a relative and absolute basis. To offset the high residential exposure, it maintains the highest Tier 1 Capital ratio out of all Australian banks.
But as we saw during the financial crisis, capital can be eroded very quickly just when the non-performing loan ratchet up exponentially, especially if you are predominantly focused in markets with a high degree of correlation. i.e, if you only Australian focused with no material overseas earnings.
CBA Share Price Prediction for The Rest of The Market?
The CBA share price trends broadly in line with the rest of the listed banking sector however, it is known to outperform on a relative basis. As the financial sector is typically one of the largest sectors in the major Australian market index. The price trend of the bank share prices has a strong weighting to the overall market’s direction.
Like post the mining boom in 2013, the major miners listed in Australia dragged down the overall market returns. We expect given the upcoming headwinds in the property sector, that the bank share prices will weigh on the Australian market’s overall performance in the near term.
CBA Dividend Yield
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CBA Dividend History
The yearly CBA dividend history shows that overtime, earning growth can be considered more important than the dividend investors receive today. The company was able to maintain dividend payout and increase overtime with the growth in the earnings.
The 10 year dividend history of CBA highlights the fact it has consistently grown its fully franked dividend in the past, but we do not see this to continue going forward and expect dividend cuts in the near term.
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Key CBA Dividend Dates – Typical Months
Interim Ex-Dividend Date: February
Interim Record Date: February
Interim Dividend Payment Date: March
Final Ex-Dividend Date: August
Final Record Date: August
Final Dividend Payment Date: September