Own CBA shares? Here's what to look out for with the bank's Q3 update

MotleyFool05-01

Commonwealth Bank of Australia (ASX: CBA) shares will be in focus next week when Australia's largest bank releases its third quarter update. Ahead of the release, let's see what analysts are watching ...

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Here's what to look out for with the bank's Q3 update","media":"MotleyFool","content":"<div>\n<p>Commonwealth Bank of Australia (ASX: CBA) shares will be in focus next week when Australia's largest bank releases its third quarter update.\nAhead of the release, let's see what analysts are watching ...</p>\n\n<a href=\"https://www.fool.com.au/2024/05/01/own-cba-shares-heres-what-to-look-out-for-with-the-banks-q3-update/\">Source Link</a>\n\n</div>\n","source":"motleyfoolau_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Own CBA shares? 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Here's what to look out for with the bank's Q3 update\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-01 12:59 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com.au/2024/05/01/own-cba-shares-heres-what-to-look-out-for-with-the-banks-q3-update/><strong>MotleyFool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Commonwealth Bank of Australia (ASX: CBA) shares will be in focus next week when Australia's largest bank releases its third quarter update.\nAhead of the release, let's see what analysts are watching ...</p>\n\n<a href=\"https://www.fool.com.au/2024/05/01/own-cba-shares-heres-what-to-look-out-for-with-the-banks-q3-update/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1668664300.SGD","symbol_name":"Blackrock World Financials A2 SGD-H","start_time":0,"source_url":"https://www.fool.com.au/2024/05/01/own-cba-shares-heres-what-to-look-out-for-with-the-banks-q3-update/","article_id":"2432901275","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2432901275","pubTimestamp":1714539557,"sourceInfo":{"source_id":"motleyfoolau_stock","name":"MotleyFool"},"weMediaInfo":null,"summary":"Commonwealth Bank of Australia  shares will be in focus next week when Australia's largest bank releases its third quarter update.Ahead of the release, let's see what analysts are watching out for when the big four bank reports.Management noted that while there has been some improvement in mortgage profitability, largely due to the removal by most banks of cash back offers , margin pressure from home lending will continue in FY24  and management further noted that competition has actually been more intense in New Zealand than in Australia, highlighting new mortgage spreads in New Zealand were currently about half that of Australia. The headwind from deposit mix switching has started to stabilise.In the current environment, costs control will be very important for CBA and other ASX bank shares.As a reminder, CBA's cash profit was down 3% and its net interest margin was down 6 basis points to 1.99% during the first half. 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Its analysts stated:\n\nManagement noted that while there has been some improvement in mortgage profitability, largely due to the removal by most banks of cash back offers (led by CBA), margin pressure from home lending will continue in FY24 (but has lessened) and management further noted that competition has actually been more intense in New Zealand than in Australia, highlighting new mortgage spreads in New Zealand were currently about half that of Australia. The headwind from deposit mix switching has started to stabilise.\n\nAnother area of interest for investors to focus on is bad debts. Particularly given how rising interest rates have yet to show a meaningful impact on this metric. It adds:\n\nTo date, the expectation of BDD [bad and doubtful debts] and asset quality normalization (on the back of mortgages rolling off lower fixed rates to higher variables rates) post the rate hiking cycle has yet translate to a deterioration back to longer-term averages.\nWhile loan losses and asset quality have continued to outperform expectations, we do continue to see a steady trend towards mid-cycle. According to company commentary, management teams across the majors are comfortable with current levels of provisioning but remain cautious on the macro outlook.\n\nIn light of this, Goldman advised that it \"will be looking for signs of asset quality deterioration, whether it be in new problem loans, single name exposures, or evidence of a marked change in spending habits, via the banks' payments data.\"\nWhat else?\nIn the current environment, costs control will be very important for CBA and other ASX bank shares.\nGoldman thinks productivity will be the key to overcoming soft revenue growth. It explains:\n\nIn light of the soft revenue growth environment, it has become increasingly important for the sector to take a more proactive approach in cost management. Adding to this challenge has been stickier than expected inflation which was a headwind to costs in FY23 with its impact broadly based across i) staff, ii) third party, iii) and investment spend. Overall we are of the view the key to offsetting these inflationary pressures will be the banks' ability to deliver productivity improvements.\n\nAs a reminder, CBA's cash profit was down 3% and its net interest margin was down 6 basis points to 1.99% during the first half. This reflects flat operating income and higher operating expenses, offset by a decrease in loan impairment expense.\nCBA is releasing its results on Thursday 9 May.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2432901275"}