Here’s what big brokers think about the Commonwealth Bank (ASX:CBA) share price 

The Commonwealth Bank of Australia (ASX: CBA) share price has pushed north following its first quarter results. Do big brokers agree?
The post Here’s what big brokers think about the Commonwealth Bank (ASX:CBA) share price  appeared first on Motley Fool Australia. –

positive asx share price represented by lots of hands all making thumbs up gesture

The Commonwealth Bank of Australia (ASX: CBA) share price lifted almost 3% last Wednesday following its resilient first quarter FY21 results.

First quarter results recap 

Considering the response from brokers, CBA delivered a fair result. Its home loan growth grew twice as much as the wider banking system, benefiting from higher application volumes and a continued focus on credit decision turnaround times. The domestic business lending growth was also above system, with solid growth across diversified sectors. Its strong operational performance helped offset ongoing margin pressures due to lower interest rates. Its unaudited cash net profit after tax was $1.8 billion for the quarter, down 16% on the prior corresponding period. 

The bank’s CET1 ratio was 12.1% as at 30 September, significantly above APRA’s ‘unquestionably strong’ benchmark of 10.5% and well in excess of the prudential minimum of 8%. This compares to the rest of the big four banks which currently maintain CET1 ratios between 11.13%–11.47%. 

What do the economic indicators suggest?

Economic indicators relevant for businesses, consumers and property suggest that the worst is behind us.

Australia’s November consumer confidence hit seven-year highs as consumers are more optimistic about the economy with the coronavirus pandemic now largely under control. The Westpac-Melbourne Institute index of consumer sentiment was tracking at 107.7 in November, 11% higher than its level a year ago. 

Similarly, in October, the Roy Morgan Business Confidence index jumped 13.1 points or 15.3% to 98.7, the highest monthly reading for more than 8 months since February 2020. The recovery in business confidence in October means the index has performed an unprecedented near-perfect ‘W’ pattern over the last 9 months. 

Auction clearance rates have been consistently strong around Australia, perhaps reflective of the recent strength in the REA Group Limited (ASX: REA) share price. This has been supported of course by the RBA’s recent interest rate cut and the ‘guarantee’ of rates remaining low for at least 3 years. 

Bank loan deferrals have been consistently falling. In the case of CBA, as at 31 October, approximately 46,000 home loans remained in deferral down from 125,000 loans in June 2020. 

Broker moves 

Macquarie raised its CBA share price target from $58.50 to $65.00 and retained its underperform rating. It likes the bank’s balance sheet strength, improvement in deferrals but risks remain with respect to lower margins. 

Similarly, Jefferies raised its CBA share price target from $52.85 to $75.50. It reacted positively to the bank’s quarterly trading update and upgrades its rating from underperform to hold.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here’s what big brokers think about the Commonwealth Bank (ASX:CBA) share price  appeared first on Motley Fool Australia.

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.

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 App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!