Is the Commonwealth Bank of Australia (ASX: CBA) share price a buy today?
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.
Is The CBA Share Price A Buy?
The CBA share price has fallen 0.1% after the release of the latest monthly house price index by CoreLogic.
During August 2019 alone, Sydney house prices increased 1.6% and Melbourne house prices rose by 1.4%.
What effect will this have on CBA, Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC)?
The true answer is that no-one can know, but it’s adding more confidence into the share market and property market.
Whilst the Royal Commission had a financial effect on the FY19 result, the result wasn’t too terrible with cash profit down 4.7% to $8.5 billion and statutory net profit down 8.1% to $8.57 billion.
What the FY19 report said to me was that CBA’s loan book may be in better shape than the other large ASX banks. At June 2019 CBA’s mortgage arrears actually fell 0.02% from 0.7% at June 2018 to 0.68% at June 2019. The only worrying sign was that personal loan arrears increased 0.12% to 1.56%.
If house prices manage to stabilise and increase over the next 12 months then everyone’s worst fears about an economic downturn may not come to fruition, although there are still issues regarding household debt and housing affordability.
Time To Buy CBA Shares?
The big ASX bank’s dividend was flat at $4.31 per share for FY19, meaning that today it offers a fully franked dividend yield of 5.5%. Is it possible to find other high quality sources of dividend income? I think there are, but only a few.
CBA and the housing market may not be out of the woods yet, but things do look a bit better. I’d still rather buy shares of very reliable businesses like the ones in the report below for my portfolio.
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