The Commonwealth Bank of Australia (ASX: CBA) share price was trading sharply higher today as the broader market, or S&P/ASX 200 (INDEXASX: XJO), trended higher.
Commonwealth Bank of Australia or CBA is Australia’s largest bank, with commanding market share of the mortgages (24%), credit cards (27%) and personal lending markets. It has 16.1 million customers, 14.1 million are in Australia. It is entrenched in the Australian payments ecosystem and financial marketplace.
The Royal Commission Just Handed The CBA Share Price A Golden Goose
In its final report yesterday, the long-awaited banking Royal Commission gifted banks like CBA and Westpac Banking Corp (ASX: WBC) a golden goose in the form of mortgages.
According to many onlookers (myself included), the Commission’s final report was supposed to address and make changes to unethical behaviour, dodgy financial advice, poor governance and vertical integration of banks and their sales force (banks call them their “financial planners”).
However, the final report barely touched the edges and instead it only served to up-end the mortgage broking industry. This business isn’t always perfect, I’ll admit, but removing the mortgage brokers has effectively handed CBA, Westpac, NAB (ASX: NAB), ANZ Banking Group (ASX: ANZ) and Macquarie Group (ASX: MQG) a golden goose.
You see, few independent brokers will be able to exist after the Commission’s changes are implemented. And with their extensive branch networks, army of ‘mobile bankers’, deep pockets and millions of customers, the big five banks will likely continue to dominate the market for lending. They already control more than 70% of the market.
We covered in detail the losers and winners from yesterday’s report in this article, “Your 30-second guide to the banking Royal Commission report”.
Is it Time to buy CBA Shares?
The Royal Commission was just one dark cloud hanging over shares in the major banks. While its clear skies for now, on the horizon the stormy clouds of falling house prices, slowing demand for lending, the potential for rising bad debts and interest rates remain.
Therefore, as I said here, “1 Share I’d Own Before Commbank“, there are other dividend-paying shares I’d consider first. Three of which can be found in the free report below…
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