The Commonwealth Bank of Australia (ASX: CBA) share price has seen plenty of ups and downs over the last 12 months. It’s now time to consider if the ASX bank share is a good buy or not.
What makes the ASX bank share appealing?
The biggest bank in Australia is one of the highest-quality banks in the world. It’s an impressive operation with its national branch network, its ability to reach customers, and its consistent dividend.
While it’s usually priced more expensively than ASX bank share peers, history has shown it’s sometimes/often worth paying more for the best of the best.
One of the main things that sets CBA apart is how it’s able to win customers through its own channels as opposed to relying on mortgage brokers. This can help the business achieve a higher lending margin because it doesn’t need to compete as much on the loan interest rate.
With such a large loan balance at CBA, any slight positive (or negative) changes with its margins can make a big difference to its profitability. In the FY26 first quarter, the bank’s net interest margin (NIM) was “slightly lower” due to deposit switching, competition and the lower RBA cash rate environment. Hopefully, that trend turns around soon enough.
Is the Commonwealth Bank of Australia a buy?
It doesn’t seem as though the company’s net profit is going to soar in 2026, making even the current Commonwealth Bank share price seem expensive (after falling quite a bit over the past six months). FY26 first quarter cash net profit only grew by 2% year over year.
The prediction on Commsec suggests the business could generate $6.64 of earnings per share (EPS) in FY26. That means the CBA share price is valued at 24x FY26’s estimated earnings. The forecast then suggests a possible 4% or so rise of EPS in FY27.
While the bank is higher-quality than its competitors, I don’t think its earnings growth is likely to justify the high valuation it currently trades at.
Let’s take a look at the potential dividend income, or passive income, from the business.
The prediction on Commsec suggests the major bank could pay a dividend of $5.25 per share. That would be a dividend yield of 4.6% including the bonus of franking credits.
It’s already a huge business and its growth rate is likely to be slow for the foreseeable future, unless credit demand picks up substantially.
The Commonwealth Bank share price is not as expensive as it was, but I reckon there are plenty of other ASX dividend shares that would be better buys.
