Insights

CBA share price pushes higher on consensus-beating quarterly update

CBA’s Q3 update has smashed expectations. Here’s by how much…
The post CBA share price pushes higher on consensus-beating quarterly update appeared first on The Motley Fool Australia. –

The Commonwealth Bank of Australia (ASX: CBA) share price is rising on Thursday.

In morning trade, the banking giant’s shares are up 0.7% to $102.19.

This compares favourably to a decline of 0.8% by the ASX 200 index.

Why is the CBA share price rising?

Investors have been bidding the CBA share price higher today after responding positively to the bank’s third-quarter update.

For the three months ended 31 March, compared to the quarterly average during the first half, Australia’s largest bank reported a 1% decline in operating income to $6,103 million and flat cash earnings of $2,400 million.

This reflects 3% volume growth and higher non-interest income, which helped offset continued margin pressure from elevated swap rates, mix effects, and competition.

How does this compare to expectations?

As you might have guessed with the CBA share price outperformance today, this result was better than the market was expecting.

For example, the team at Goldman Sachs note that the bank’s quarterly cash earnings are run rating 10% ahead of its second half forecasts. It said:

Cash profit from continuing operations in 3Q22 of c.A$2.4 bn was flat on the 1H22 quarterly average but run-rating c.10% ahead of what is implied by our 2H22E forecasts.

And while the broker acknowledges that a bad and doubtful debts (BDDs) benefit helped drive the stronger than expected result, it highlights that its pre-provisioning operating profit (PPOP) was still ahead of expectations. Goldman said:

The better-than-expected cash earnings result was largely due to lower-than-expected BDDs (benefit of A$48 mn), but PPOP was also run-rating c.4% above our implied 2H22E forecasts on better performance on costs (NIMs and revenues largely in line with GSe).

CBA smashes consensus estimates

CBA also outperformed Citi’s estimates, which were already sitting 3% ahead of consensus forecasts. The bank’s cash profit was 6% ahead of the broker’s expectations and 9% ahead of the analyst consensus estimate.

Another positive was CBA’s net interest margin (NIM). While the bank didn’t reveal what its NIM was, Goldman Sachs estimates that it was 1.87%. Although this is down from 1.92% during the first half, it is ahead of Goldman’s second half estimate of 1.86%.

All in all, CBA has been given the tick of approval for its third quarter. However, at this stage, both Citi and Goldman don’t see enough value in the CBA share price to recommend it as a buy.

They continue with their sell ratings. Though, that could change once they have updated their financial models.

The post CBA share price pushes higher on consensus-beating quarterly update appeared first on The Motley Fool Australia.

Should you invest $1,000 in CBA right now?

Before you consider CBA, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and CBA wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

More reading

ASX 200 midday update: CBA’s Q3 update impresses, Xero and Block crash
CBA share price on watch following $2.4bn Q3 cash profit
5 things to watch on the ASX 200 on Thursday
Why is the CBA share price outpacing the ASX 200 in 2022?
What’s the outlook for ASX 200 bank shares amid rising interest rates?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!