The Commonwealth Bank of Australia (ASX: CBA) share price had a rough month in November. Here’s how it performed compared to the ASX 200 (ASX: XJO).
Last month, the ASX 200 declined by 3%, but the ASX bank share declined by much more.
The Commonwealth Bank share price dropped 11%, which was significant underperformance and a large drop for the ASX’s biggest business.
During the month, the ASX bank share reported its update for the first quarter of FY26, so let’s see what was unimpressive about it.
Disappointing quarterly update
It reported that for the three months to September 2025, it made cash net profit after tax (NPAT) of around $2.6 billion. This represented year on year growth of 2% for the quarter, while it was 1% growth compared to the quarterly average of the FY25 second half.
The bank reported operating income growth of 3% thanks to lending and deposit volume growth, higher non-interest income and 1.5 additional days in the quarter.
It did report solid loan growth, with 10.4% business lending growth, 9.5% household deposit growth and 6.1% home lending growth.
Commonwealth Bank said that the net interest margin (NIM) – how much profit it makes on the lending (including costs such as savings accounts and term deposits) – has reduced due to the mix effects of strong growth in “lower yielding liquid assets and institutional repos”.
Operating expenses rose 4% (excluding restructuring and notable items) because of wage and IT vendor inflation.
It noted the loan impairment expense was $220 million, with collective and individual provisions broadly flat. Commonwealth Bank lending quality has remained “sound” with lower consumer arrears and corporate troublesome and non-performing exposures. Home loan arrears decreased by around 4 basis points (0.04%) over the quarter to 0.66%.
Outlook for the Commonwealth Bank share price
The ASX bank share needs to generate more growth than low single digits to send the share price higher, in my opinion.
Commonwealth Bank is generating solid lending growth, but the business is also seeing expenses increase at a noticeable rate.
Unless the bank’s profit growth picks up, I don’t think it’s attractive for the current valuation. The forecast on Commsec suggests it’s trading at 23x FY26’s projected profit.
This doesn’t seem like a cheap price considering it’s only growing by 2%. Shareholders should want to see stronger growth, so it’ll be interesting to see if the bank can accelerate its earnings growth in the medium-term.
Competition is strong in the sector, but CBA is able to stay ahead because it captures so many borrowers through its own channels rather than heavily focusing on growth through mortgage brokers.
There are other ASX dividend shares that are more appealing to me.
